House Speaker Thomas P. (Tip) O'Neill Jr. (D-Mass.) angrily accused President Reagan to his face yesterday of "insensitivity" to the plight of the jobless and of spreading "a bunch of baloney" about the reasons for unemployment, according to participants in an acrimonious White House meeting of congressional leaders.
While accounts of what happened differed in detail, both Democratic and Republican participants agreed that O'Neill became irritated by Reagan's assertion that a number of the unemployed do not want to work.
"I thought you would have grown in five years," O'Neill was quoted as saying to the president.
The morning meeting, which began two hours before the space shuttle tragedy changed the course of the day, started tamely with Reagan reading from four-by-six cards about the budget he will send to Congress next week. Then the president called on the chairman of his Council of Economic Advisers, Beryl Sprinkel, who was sharply questioned by O'Neill about unemployment rates.
Reagan followed up by saying that unemployment statistics are misleading and should be lower because the employment generated by membership in the military forces is not counted. Then he added that some people should not be counted in the statistics because they don't want to work.
According to two accounts, he then told a story of a welfare recipient who made three telephone calls in response to offers of employment. When the welfare recipient was told on the third call that there was a job waiting for him, he hung up.
The story provoked what one participant called "an angry lecture" from O'Neill, who said Reagan's stories about the reasons for unemployment are "a bunch of baloney" and that they ignore structural employment in a number of industries.
Appearing to become more angry, O'Neill then assailed Reagan's practice of telling anecdotes to prove his points and said, "I never did believe your story about the Chicago welfare queen."
This story, told often by Reagan in the late 1970s, was about a Chicago welfare recipient who lived a lavish life style and received some 100 government checks under different assumed names.
Reagan, who has sometimes angrily responds in kind when challenged by O'Neill, tried to deflect the charges softly yesterday, according to participants. But he did defend his assertion that some welfare recipients do not want to work, and he cited Democratic Gov. Michael S. Dukakis' launching of a "workfare" program in O'Neill's home state of Massachusetts.
As the argument between Reagan and O'Neill continued, Sen. Alan K. Simpson (R-Wyo.), intervened, admonishing both the president and the speaker "not to talk to each other in this way" and saying that they gave a "wrong impression" of government to the American people when they do so.
The meeting ended on an amiable note, participants said, with both men saying that they had not intended to give personal offense.