President Bush's retreat from his "no new taxes" pledge may have solved one potential political problem that faced Democrats in budget talks with the White House, but it raises other problems for both parties, lawmakers said yesterday.

For Democrats, the president's announcement that "tax revenue increases" must be included in a deficit-reduction package may neutralize GOP attacks on the tax issue, but it also confronted them with the question of whose taxes should be raised -- a question Democratic lawmakers said goes to the heart of what their party stands for.

Bush administration officials, on the other hand, found themselves yesterday having to contend with a continuing revolt among GOP lawmakers, many angry that none of them had advance notice of the president's statement. That left the White House facing possible abandonment by members of its own party if the budget summit produces a deficit-reduction package with significant tax increases.

"Even good teams occasionally throw an interception," House Minority Whip Newt Gingrich (R-Ga.) said yesterday. "Yesterday was an interception."

Bush's recipe for paring the federal budget deficit also includes domestic spending cuts, which lawmakers in both parties are likely to find hard to swallow, and a cut in the capital gains tax rate and budget process changes that Democrats oppose.

"This thing is a minefield," said Rep. Charles E. Schumer (D-N.Y.). "Taxes is the most prominent one, but you can be blown up by 10 others."

The presidential statement did serve to get the stalled budget talks moving again. Participants said the mood was better in yesterday's sessions than it was last week. "The whole tenor has changed," said Sen. Pete V. Domenici (R-N.M.). "Whatever the deadlock was seems to have disappeared."

Yesterday afternoon, Democrats raised the thorny question of cutting such programs as Medicare and farm subsidies -- the so-called entitlements -- for which spending is set by formulas in permanent law. To get the discussion going, House Budget Committee Chairman Leon E. Panetta (D-Calif.) suggested saving $5.6 billion from such programs, less than one-third of the cut Office of Management and Budget Director Richard G. Darman proposed last week.

Among the options discussed were a one-year reduction of cost-of-living increases for a variety of inflation-adjusted programs, including Social Security, and an increase in the portion of high-income recipients' Social Security benefits that is taxed. The talks were inconclusive and are to resume today.

"We're trying to be even-handed," said Senate Budget Committee Chairman Jim Sasser (D-Tenn.). "They're talking about taxes, we're talking about reducing entitlements."

But rancor is likely to return before the talks are over, participants said. For one thing, having yielded on taxes, administration officials and GOP lawmakers will probably be more persistent in pressing for such goals as a line-item veto and a cut in the rate at which capital gains are taxed.

And the question of whose taxes should be raised can also be expected to split the negotiators. "Simply to say there will be revenues is akin to saying we're going to build a ship, but not say what kind," Sasser said.

Democrats are adamant that any new taxes not increase the burden on middle-income families -- as they argue excise taxes would -- and stand vehemently opposed to Bush's call to cut the tax rate on capital gains, a cut whose direct benefit would be proportionately greater for the wealthy.

Yesterday, 134 House Democrats wrote to House Speaker Thomas S. Foley (D-Wash.) to warn they would not support "any agreement with the White House that puts a further burden on {middle-class} families rather than the very wealthy."

"We expect to be very tough on the question of who pays for the fiscal mistakes of the past decade," said Rep. Martin Olav Sabo (D-Minn.), who organized the effort.

"The prospect of giving more tax breaks to the wealthiest of Americans is just repugnant to me," said Rep. Richard J. Durbin (D-Ill.). "I wouldn't want to go back to my district and defend it."

Many Democrats have argued that raising income tax rates on the rich should be the price for cutting taxes on capital gains. But Schumer said that would be a mistake. "The message will be that Democrats are for raising the rates and Republicans are for cutting them," he said. "That trade-off is politically as big a loser as you could find."

Cutting domestic spending presents potential pitfalls to both sides, too. Democrats will want to protect social programs important to key constituencies, including those affecting children, education, health care and transportation.

But Republicans will also have turf to protect, including the space program and other programs strongly backed by the administration.

"The fact of the matter is the {deficit} number is so big, nobody will be exempt," said Rep. Steny H. Hoyer (D-Md.), chairman of the House Democratic Caucus. "There is peril on both sides."

"Democrats are at risk when you start cutting domestic programs, but I don't think Republicans can do that with impunity themselves," said Sasser.

The White House, meanwhile, continued its efforts to soothe angry GOP lawmakers. Rep. Robert S. Walker (R-Pa.), who organized a letter to Bush vowing to oppose new taxes, said he had spoken with administration officials about the letter at a White House barbeque on Tuesday night. "They were not angry," he said. "We were not on the same wavelength."

Last night, Sen. Jesse Helms (R-N.C.) offered an amendment to a pending housing bill urging the budget negotiators to look for savings in "waste, fraud and mismanagement" rather than in higher taxes. After being significantly weakened, the amendment was adopted by voice vote.

Sen. Phil Gramm (R-Tex.), a member of the Republican summit negotiating team and an ardent opponent of taxes, said Walker and other Republicans must face the "cold reality" that they do not have the votes to pass the kind of budget they prefer. "We can't pick up our marbles and go home," he said.

But he also warned the Democrats that if they now fail to agree to a sizable package of spending cuts, Bush will be in a position "to rear back and start swinging."

It is not a serious problem," Gingrich said of the House GOP opposition to Bush's tax statement. "It is a signal that the base of the Republican Party opposes raising taxes and that the package had better be awfully good" to get their votes. "The most dangerous thing the summit could do is delude itself into thinking that a single statement from the White Wouse could convince the Republican Conference to accept an agreement that emphasizes taxes."

Administration officials continued to lay low yesterday, refusing to discuss the factors that led the president to issue his statement on Tuesday.

Treasury Secretary Nicholas F. Brady ducked questions about Bush's switch on taxes, saying only, "I think the president's actions were an exercise of leadership and that's why he was elected president."

Staff writer Tom Kenworthy contributed to this report.