Deficit-cutting group looks past deadline. Panel hits bumps but no roadblocks

After making a speech earlier this week, National Economic Commission co-chairman Robert Strauss was headed out of a Washington hotel when reporters ambushed him. From Mr. Strauss's hallway comments, reporters deduced that the bipartisan NEC was unlikely to meet its self-imposed deadline of Dec. 21 to report to the President-elect on ways to cut the budget deficit.

By the next day, Strauss says, his phone would not stop ringing. ``It makes it difficult to talk when people are writing about every nuance,'' he says.

In fact, the report will not likely be done by the December date, and some of the NEC's 12 appointed members are dismayed.

They believe a December or January deadline is essential to allow input into the budget for fiscal year 1990, which is to go before Congress by February.

But Strauss says the idea of a report deadline is immaterial. ``The date is a pimple on a watermelon,'' he says. ``There is nothing magic about the date.''

According to Carol Cox, head of the Committee for a Responsible Federal Budget, even if the NEC report is not ready by February or even March, it could be useful later in the year if Congress and the White House are deadlocked over how to reduce the $155 billion deficit.

Formed in response to the stock market plunge of October 1987, the commission and its recommendations would likely be of value in September, for example, when the government may be bumping the congressionally imposed debt ceiling.

Aside from the deadline question, finding ways to reduce the deficit is also an issue that budget-watchers say has split the commission along party lines.

The GOP members are opposed to any new taxes, while the Democrats refuse to agree to any budget cuts unless there are tax increases.

Caspar Weinberger, former Secretary of Defense and Republican Donald Rumsfeld, former United States congressman from Illinois, are hardliners on cuts in defense, but believe there should be trims in entitlement programs.

But Sen. Pat Moynihan (D) of New York and Rep. Bill Gray (D) of Pennsylvania are adamently opposed to any paring of Social Security benefits.

``That is as close to a deadlock as exists,'' says Stan Collender, a budget specialist at Price Waterhouse.

Such a bipartisan commission was also formed under Alan Greenspan in 1983 to devise ways of funding the Social Security deficit. Despite some divisiveness, the commission was effective.

As a matter of course, Strauss regularly plays with a computer model that allows NEC members to find out the impact of their suggestions on the budget.

In his latest attempt at the model, Strauss theoretically lowered the deficit by $41 billion. At one point, it was incorrectly reported he had found $68 billion in budget cuts. Not so, he says. ``There are 40 different plans.''

Strauss is convinced that whatever plan is adopted will combine budget cuts with tax hikes.

``People who think we can balance the budget with budget cuts don't understand that 75-80 percent of the budget is Social Security, defense, and interest,'' he says. ``You don't have to be a genius to understand that.''

Although some in the Bush campaign have been antagonistic toward the NEC, the President-elect is now entitled to appoint two members - a Republican and a Democrat.

Richard Darman, a former Reagan Treasury official who is now at Shearson Lehman Hutton, is rumored to be the top choice as head of the Office of Management and Budget. If Mr. Darman were appointed to the commission, says Mr. Collender, then the NEC would be sure to have greater political capital in the Bush administration.

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