Washington — They are at it again, the White House and Congress, staring each other down from opposite ends of Pennsylvania Avenue, each waiting for the other to blink first in the annual contest of wills that ensues when lawmakers try to write a federal budget. This year, both sides may not have long to wait. Congressional hearings on the President's budget proposal are already under way, a month earlier than usual. Democratic budget aides say Congress has its best prospects ever for fashioning a budget on schedule - an almost unheard-of occurrence.
Lawmakers also believe that the White House, faced with Democratic control of both houses, will be more flexible in its budget negotiations with Congress than in past years.
Democratic leaders are faced with the enormous task mandated by the Gramm-Rudman law of reducing the federal budget deficit from this year's estimated $174.5 billion to $108 billion for the next fiscal year. They hope to get the administration to agree to relax the Gramm-Rudman target for fiscal 1988, or accept an undisguised tax increases, or both.
Democrats say the Reagan budget settles last year's major political issue - whether or not to raise taxes. They claim that by counting some $22 billion in new revenues from asset sales, user fees, and some other sources, the White House has reframed the debate on taxes.
``The question now - the President has said it in his budget - is what kind of taxes should be increased, and by how much,'' says House Budget Committee chairman William H. Gray III (D) of Pennsylvania. ``We're going to make sure that everybody out there knows those taxes, which the White House says aren't taxes, are taxes.''
Democrats also say the President used unrealistically optimistic assumptions of economic growth in figuring the program cuts and new revenues required to bring the deficit within the limits allowed by Gramm-Rudman. The Reagan administration budgetmakers are counting on $42 billion in savings to meet the deficit target, including $19 billion in domestic program cuts. But Senate Budget Committee chairman Lawton Chiles (D) of Florida says White House figures would result in a deficit $27 billion higher than planned.
Democrats are pushing for an economic summit between administration officials and lawmakers so that a face-saving budget compromise can be worked out in secret. Democrats pushed the idea at last week's Senate Budget Committee hearings. White House budget director James C. Miller III called the idea ``worth exploring'' - unless the subject of raising taxes were to come up.
Some lawmakers are unenthusiastic about the budget summit idea as well. ``We've had them before, and they didn't accomplish much,'' says Sen. Nancy Landon Kassebaum (R) of Kansas, a member of the Budget Committee.
But the White House may be forced to change its mind. In the spring, lawmakers are slated to consider a bill that would restore one version of the automatic budget-cutting mechanism contained in Gramm-Rudman, which the Supreme Court struck down last year.
According to the law, the automatic cuts are supposed to fall evenly across defense and nondefense programs. But many entitlement programs, such as social security, are sheltered from Gramm-Rudman. So the defense budget would take the worst beating if the automatic mechanism were employed to bring the fiscal 1988 deficit within line.
If Congress voted that mechanism into place, President Reagan would have four choices: He could bargain with Congress to come with a budget that comes within $10 billion of the Gramm-Rudman target, as allowed by law. He could allow the cuts to fall into place. He could ignore the law and ignite a political firestorm. Or he could bargain with Congress to pass a law changing the deficit targets.