House-Senate negotiations on deficit reduction collapsed abruptly yesterday in a deadlock over freezing Social Security benefits.
The impasse cast doubt over chances for enactment of a comprehensive plan to cut deficits by half over three years, as proposed by President Reagan and both chambers of Congress. But some House and Senate negotiators indicated that it could create a crisis climate to increase pressure for compromise.
The collapse was the most serious breakdown in six months of efforts by the Reagan administration and Congress to agree on spending cuts of up to $300 billion by fiscal 1988, starting with more than $50 billion next year.
Although budget conferences periodically break down, this was the most dramatic collapse in the 10 years since Congress began writing its own budget guidelines for tax and spending legislation.
But some conferees indicated that the move was largely tactical, aimed at building public and marketplace pressures for a settlement during the one-week congressional recess that is to begin this week.
"This isn't the final move," Senate conferee Nancy L. Kassebaum (R-Kan.) said, acknowledging that the breakup was "choreographed to some extent" to get the House-Senate conference off dead-center, where it had been since it began two weeks ago.
Senate Budget Committee Chairman Pete V. Domenici (R-N.M.) formally suspended the negotiations at the start of yesterday's session, indicating that he would not return to the bargaining table until House conferees are willing to cut Social Security cost-of-living increases.
House Democrats, blaming Senate Republicans and the administration for the stalemate, said they would return to the talks at any time but indicated no willingness to back down on Social Security.
In a low-key response, the White House expressed hope that the conference would resume quickly and confidence that the conflicts, on Social Security, other domestic programs and defense spending, are resolvable.
In their separate versions of a fiscal 1986 budget, the Senate proposed to eliminate inflation increases for Social Security and other government pension programs for one year, while the House insisted on full payment of the increases. At stake are deficit reductions of $7.5 billion in fiscal 1986 and $28.3 billion over three years.
House conferees yesterday suggested a compromise under which defense spending and Social Security would be allowed to grow to cover inflation. The House originally proposed to freeze defense spending, while the Senate wanted an increase for inflation. But Domenici said the House had rejected even modest Social Security cutbacks and the Senate could not accept a budget that did not include constraints on pension spending.
While both sides held the door ajar for resumption of the talks after Congress returns July 8, Domenici expressed pessimism about the outlook and House Democratic leaders said they will immediately begin drafting spending bills under guidelines set in the House version of the budget.
House Speaker Thomas P. (Tip) O'Neill Jr. (D-Mass.) said earlier in the day that, if the conference broke up, he would ask the House Rules Committee to take action binding authorization and appropriations bills to levels set by the House budget.
There were conflicting assessments of whether Congress could achieve its deficit-reduction targets without agreement on a comprehensive budget plan.
House Budget Committee Chairman William H. Gray III (D-Pa.) vowed that the House would achieve at least $50 billion in spending cuts next year through enforcing its spending limits in appropriations and authorization bills. But he was less certain about whether House-Senate compromises on individual bills would result in actual savings approaching $50 billion.
Domenici indicated that the Senate might try to enforce its own budget but held out little hope that adherence to separate sets of budget guidelines would get anything like $50 billion in spending cuts. "It's very doubtful to me we're going to make any dent in the deficits," he said.
Responding to the conference collapse, presidential spokesman Larry Speakes said: "We would hope that the conferees would get back to work, whether now or after the recess -- the sooner the better."
Congress "doesn't want to have the responsibility for failure to produce another budget in a time when we're faced with a serious deficit problem, and it's essential that we attack it," he said, expressing doubt that the savings could be achieved through the "tortuous route" of the appropriations process.
Despite Speakes' emphasis on the importance of a budget agreement, the White House has been faulted, privately by Republicans and publicly by Democrats, for contributing to the stalemate. Republicans have complained that Reagan has stressed other matters at the expense of the budget, while Democrats contend he seeks to exploit congressional stalemate for political purposes.
"It is a political plus for this president not to have a budget," said Gray after the conference broke up. He speculated that the collapse might have been "a tactic . . . done in concert with the president" because, he said, Reagan probably would not like any compromise that the House and Senate reached.
Left hanging as the conference ended was a proposal by Sen. Ernest F. Hollings (D-S.C.) to take the lower of Senate and House numbers for all categories of domestic spending, allow for inflation increases for defense and include $76 billion in tax increases over three years. The plan would have reduced deficits by $386 billion over the three years.
But it also included the Social Security freeze that the House refused to accept. House Majority Leader James C. Wright Jr. (D-Tex.) said it was an "exercise in futility" to discuss a tax increase when Reagan "boasts he would shoot it down with a veto."
However, conferees on both sides expressed a desire to continue seeking agreement. Some suggested that the impasse might help focus attention on finding common denominators.
"There's been more negotiation in the last 10 minutes than in the last 10 days," grumbled Rep. Jack Kemp (R-N.Y.) as the conference broke up.