House and Senate leaders yesterday narrowed their differences over legislation to force a balanced budget over five years, but remained divided over two critical points.
Those differences include the timing and size of spending cuts for this fiscal year, and how many low-income programs would be exempt from cuts over the life of the proposal.
The issue of exemptions had been the thorniest point of contention, but the differences were narrowed when Senate negotiators offered to exempt some poverty programs and subject others, mostly involving health benefits, to relatively minor cuts.
Suspending their talks until after Congress returns Dec. 2 from its Thanksgiving recess, chief negotiators from both chambers expressed optimism that a conference agreement on the legislation could be worked out within a few days after talks are resumed.
"I am confident we are going to reach an agreement," said Senate Finance Committee Chairman Bob Packwood (R-Ore.). Senate Budget Committee Chairman Pete V. Domenici (R-N.M.) said he expected that an agreement will be reached well before the December 13 deadline for raising the debt limit -- must-do legislation that is attached to the budget bill, all but forcing a resolution.
At a press conference last night, the two senators, House Majority Whip Thomas S. Foley (D-Wash.) and Democratic caucus Chairman Richard A. Gephardt (Mo.) said agreement was near on most, if not all, other issues, including provisions for flexibility in budget cuts during recessions.
The Senate's offer to shield some programs for the poor from spending cuts was a significant breakthrough.
To win support of black lawmakers for the House version of the legislation, Speaker Thomas P. (Tip) O'Neill Jr. (D-Mass.) had promised that House Democrats would stick by a House provision to shield nine programs, including food stamps, Aid to Families with Dependent Children and child nutrition, as well as veterans' compensation and pensions. O'Neill since has said he is "in concrete" on the issue.
But senators had wanted to limit exemptions to Social Security, which would be protected under both the Senate and House versions of the legislation.
House negotiators had suggested a formula that would require equal cuts from defense and domestic programs if such cuts are necessary to achieve deficit targets.
The Senate counteroffer would limit cuts for Medicare, Medicaid, veterans' health and several other medical programs to no more than inflation rate or the average of spending cuts of other programs. The other programs for the poor that the House would exempt would also be exempt under the Senate offer.
The legislation, passed in different form by the two chambers, sets targets to reduce current $200 billion deficits to zero by 1990 or 1991 and requires automatic cuts in most programs to achieve the targets if the White House and Congress fall short.
Meanwhile, the House Appropriations Committee approved a $479 billion continuing resolution to fund most government programs for the rest of fiscal 1986.
The funding is for departments and agencies, including the Pentagon, that have not received their regular appropriations.