Senior congressional budget conferees neared agreement early today on a deficit-reduction compromise, but remained at odds over several "contentious" issues that stood in the way of a final accord.
The House-Senate conferees, however, said they were close enough to a settlement to schedule a meeting of the full budget conference this morning to resolve the remaining disagreements.
"We don't have an agreement . . . but we are close to having something," said House Budget Committee Chairman William H. Gray III (D-Pa.) at the end of a second day of lengthy closed-door bargaining to wind up the seven-month effort to nail down major deficit reductions.
Neither Gray nor Senate Budget Committee Chairman Pete V. Domenici (R-N.M.) said they had final figures on the total deficit reductions in the budget compromise and they declined to specify the unresolved issues, although Domenici indicated the plan would achieve or surpass the earlier goal of $50 billion in deficit cuts for next year.
Earlier in the night, however, sources said the last remaining major disputes were over defense, Medicare and other domestic issues ranging from transportation to housing.
The final push for agreement came only two days before Congress was scheduled to recess until September, intensifying pressure for a conference agreement, even if time is too short for ratification by both chambers.
Despite the unresolved issues, Domenici said he was "prepared to recommend to our side Senate conferees this is the best we can do."
Senate conferees were particularly edgy going into the final round of bargaining because of intense frustration among senators over previous tax and Social Security victories scored by the House and the White House at their expense.
It was unclear whether Congress would be able to complete action on the budget by Friday, in part because of technical difficulties in processing the measure in the Senate. House Speaker Thomas P. (Tip) O'Neill Jr. (D-Mass.) indicated earlier that the House would act as soon as it could. Senate Majority Leader Robert J. Dole (R-Kan.) appeared less certain that the Senate would act by Friday.
The early-morning partial accord, which Domenici described as "tentative agreement on as much as we can," was negotiated by Domenici, Gray and the ranking minority members of the two budget panels, Sen. Lawton Chiles (D-Fla.) and Rep. Delbert L. Latta (R-Ohio), in frequent consultation with other conferees and leaders of the two chambers.
The way appeared paved for possible agreement on defense spending earlier in the day when O'Neill indicated that a full inflation adjustment for military accounts would be acceptable to the House, which earlier approved a defense spending freeze. He said Democrats would push in any case for a "better," meaning lower, allocation for defense in the military appropriations bill later this year.
The Republican-controlled Senate had been holding firm for the inflation increase for the Pentagon, but there was resistance from House negotiators, despite indications they would eventually settle on what the Senate wanted or close to it. But settlement on domestic spending items was expected to tilt closer to levels set earlier by the House, which was less eager to cut or eliminate domestic programs than was the Senate.
A source said last night that the biggest sticking points were defense and Medicare, with lesser disputes over funding for mass transit, highways, Amtrak, Medicaid, veterans health care and housing assistance.
Although the conferees have dropped the Senate's proposal to increase out-of-pocket costs of beneficiaries, they were reportedly still several billion dollars apart on Medicare.
While the conferees appeared to have met the goal of at least $50 billion in deficit reductions for fiscal 1986, it was unclear how much savings would be achieved over a three-year period. The original goal had been to cut spending sufficiently to halve deficits now hovering around $200 billion within three years. Originally, the Senate approved $295 billion in three-year deficit reductions; the House approved $259 billion.
The second day of marathon negotiations came as Senate Republicans continued grumbling over White House torpedoing of their earlier proposed compromise.
Dole, derisively referring to what may emerge from conference as this "watered-down, nothing budget," said he saw no reason for Congress to remain in session beyond Friday if there are objections to immediate Senate consideration of the plan. Normally a three-day wait is required.
He said he thought the plan would pass, however. "We know it will pass the House because it doesn't do anything, and the White House will be happy with it," he said, adding that the Senate was ready to pass it and get on to other matters.
Dole, dismissing the chances of achieving major deficit reductions this year as "gone," said the Senate is likely to try again next year. He said he thought there would be a "different approach" but did not elaborate.
In another dig at the White House and the Democratic-controlled House, he said the Senate is "prepared to make the hard choices, as opposed to others in this town."
This was a reference to the latest Senate offer to break the budget impasse, which included an oil import fee and biennial instead of annual adjustments in income taxes and Social Security benefits to reduce deficits by $338 billion over three years. The proposal was killed by President Reagan, who objected to both the tax increases and the delay in cost-of-living increases for Social Security.
O'Neill brushed aside Dole's characterization of the budget as a "nothing" plan, saying, "That's Bob. I like Bob. I'm sorry he and the president are feuding."
All in all, O'Neill said, "we have a good chance of getting a budget." Even if the House bows to the Senate in accepting a full inflation increase for the military budget, he said, the plan probably would pass the House with a majority of Democratic votes and some help from Republicans.
The House approved freezing defense spending authority at $292 billion. The Senate approved $302.5 billion, which would allow growth for inflation but no more. The House indicated that it might go as high as $298 billion, but Senate Republicans, fearful of losing votes critical to passage of the budget on the floor, refused to budge.
"We all know if we can't get our numbers on defense it's no ball game," said Chiles.