Concerned that Democrats have controlled the public debate over the budget negotiations, Republicans launched a counteroffensive yesterday to combat the impression that President Bush's insistence on a capital gains tax cut is holding up a deal to reduce the deficit.
One Republican called it "100 percent wrong" that capital gains remains the principal obstacle in the talks, while an administration official, speaking on the condition of anonymity, said the two sides were far apart on a variety of issues, including enforcement mechanisms to ensure that any agreement to cut spending is implemented.
Top White House and congressional leaders met privately for more than six hours yesterday in an attempt to narrow the differences over cuts in entitlement programs and domestic spending as well as taxes. One official said the talks were "constructive," but it was not clear whether the leaders had made any real progress.
The group of eight -- Senate Majority Leader George J. Mitchell (D-Maine), Senate Minority Leader Robert J. Dole (R-Kan.), House Speaker Thomas S. Foley (D-Wash.), House Majority Leader Richard A. Gephardt (D-Mo.), House Minority Leader Robert H. Michel (R-Ill.), Treasury Secretary Nicholas F. Brady, White House Chief of Staff John H. Sununu and budget director Richard G. Darman -- will meet again today.
As the mini-summit played out in private, the political warfare over the negotiations continued, with Republicans seeking to shift the focus away from the tax issue and Democrats contending that Republicans are nervous about losing the public relations war. On that point, some Republicans agreed.
"I've never seen a better job of handling the media," one Republican said.
House Minority Whip Newt Gingrich (R-Ga.) accused the Democrats of "a deliberate press strategy of disinformation" and said it will eventually backfire.
Still, capital gains looms as the most difficult political call for Bush.
The Democrats appear willing to yield on the issue, but in return they are insisting on higher tax rates for the wealthiest Americans. The Republicans have countered with proposals they say are designed to ensure progressivity in any new tax package without increasing rates.
In the end, Bush may be forced to resolve the deadlock, either by agreeing to the Democratic demand or jettisoning his capital gains proposal.
On the broad parameters of a deal, the two sides do not appear far apart. The most recent Democratic proposal would save $505.7 billion over five years, $52.7 billion in the first year. The GOP last offered a plan that would save $503 billion over five years, more than $50 billion of that in the coming fiscal year.
Each side would cut defense spending about $170 billion over five years, pare between $120.6 billion and $123.3 billion from benefit programs and hold other domestic spending programs to the projected rate of inflation.
Even on tax issues other than capital gains the differences are small. Each would raise between $130.1 billion, the Democratic figure, and $138.1 billion, the GOP level, in new revenue over five years. Tentative agreement has been reached on tax provisions that would raise $12.3 billion next year and $59.2 billion over five years -- roughly half the amount the bargainers want.
Republicans say those numbers mask significant differences, but Democrats argue that a deal on taxes would be a catalyst to resolving other disputes. But Republicans disagree, saying those other issues could still scuttle a package even if the tax issue is resolved. White House negotiators are deeply concerned about avoiding a repeat of a 1982 agreement, in which Democrats agreed to spending cuts in return for tax increases but, say Republicans, never lived up to the deal.
"We don't think Democrats can reach agreement among themselves on enforcing the spending cuts that would be acceptable to us," one Republican official said.
Meanwhile, lawmakers in both parties appeared to be growing restless with the negotiating process as the current fiscal year nears an end on Sept. 30. "There's a lot of bitterness out there," said Rep. Bill Frenzel (Minn.), the House Budget Committee's ranking Republican.
"The summit has failed," said Rep. Tom DeLay (R-Tex.). "It has become a political posturing maneuver . . . for the Democrats."