President Reagan turned against Senate Republicans and killed their budget compromise this week, risking deep wounds in his own party, because he believed a tax increase would "violate the last commitment" of his 1984 reelection campaign, informed White House officials said yesterday.
Reagan also doubted that Democrats would accept Social Security benefit cuts and feared that in next year's elections, voters would blame Republicans for the cuts, the officials said.
Reagan privately acknowledged that he already had shifted positions on Social Security this year, recalled the taunts by Democratic nominee Walter F. Mondale in last year's presidential debates and vowed not to break the one promise he has kept since his 49-state reelection victory: no tax increase, the officials said.
Reagan also concluded that House Speaker Thomas P. (Tip) O'Neill Jr. (D-Mass.) would never accept the oil import fee and Social Security benefit delays proposed in the Senate plan, and these politically volatile issues would backfire on Republicans in the 1986 congressional elections, the officials added.
"I don't want to be the skunk at the picnic," Reagan told some of the Republican leaders yesterday at the White House.
A senior White House official said yesterday "there was a realization" that the Senate Republican proposal would not pass the House. "So, the last offer out there would be to raise gasoline prices 10 cents a gallon, raise winter heating costs in the Northeast, and Social Security" benefit cuts, he said. Reagan, he added, "knew it was bad politics for him and the Republicans who had to run."
Reagan's decision to reject the Senate Republican budget, after several days of silence, marked a significant turning point in this year's long battle to reduce projected $200 billion annual federal deficits.
The decision caught Senate Majority Leader Robert J. Dole (R-Kan.) by surprise and raised the prospect of a bitter Reagan confrontation with Congress on spending and taxes this autumn. It also prompted many on Capitol Hill to complain that Reagan was throwing away the best opportunity of his second term to reduce the deficit.
Other factors were prominent in the White House discussions Monday. Senior officials acknowledged they had made some mistakes in handling the budget this year and expressed a desire not to get deeper into the issue with a drawn out debate over the Senate plan.
"At this stage, we've got to get out of the budget. The longer we're in it, the worse it gets," said one presidential adviser. "There are a lot of bruised feelings, but we we've got to get it behind us."
Another factor was the calculation of several officials, including White House chief of staff Donald T. Regan, a former Wall Street executive, that the financial markets would be satisfied with a deficit reduction of somewhat less than the $65 billion for next fiscal year envisioned in the Senate Republican plan.
Regan and other officials concluded that House and Senate budget negotiators could still produce more than $50 billion in deficit savings the first year without the tax increases and Social Security benefit delays in the Senate Republican plan, officials said.
The president, recuperating from cancer surgery, gave the first indication that he disliked the Senate Republican plan last Thursday at a Cabinet meeting when it was described by departing Office of Management and Budget Director David A. Stockman.
"Stockman brought it up, and he knocked it down," said one official who was there.
Dole and Senate Budget Committee Chairman Pete V. Domenici (R-N.M.) brought their plan to chief of staff Regan later, but the White House did not reject it outright. The senators sought a fee on oil imports and delays in both Social Security inflation adjustments and indexing of tax brackets for inflation.
On Monday, the White House Legislative Strategy Group met for two hours. Those present included Regan, Stockman, congressional liaison Max L. Friedersdorf, political director Edward J. Rollins, communications director Patrick J. Buchanan, domestic policy adviser John A. (Jack) Svahn, spokesman Larry Speakes and Cabinet secretary Alfred H. Kingon.
The consensus was that Reagan would not accept an oil import fee, officials said. "And if we pushed on Social Security and failed, the Democrats would have a campaign issue" for next year, said one participant.
Reagan vowed not to tamper with Social Security last year in response to Mondale's charge that he had a "secret plan" to cut benefits. Reagan then broke the pledge in April when he and Senate GOP leaders came up with a plan to cut roughly in half Social Security cost-of-living benefit increases. Regan said then that he proposed the cut on the president's behalf.
Officials said yesterday that, in retrospect, this was a mistake, leading to a rebellion by House Republicans and threatening the GOP with a campaign liability that contributed to the loss of 26 House seats in 1982. Now, "the administration gets tagged with Social Security one way or the other," said a prominent Republican strategist.