Budget tension amid Washington's August languor

In Washington, August is normally a somnolent month, remarkable only for a humidity level worthy of a swamp. But this year, as the struggle to draft a budget drags into late summer, the capital is alive with tension, talk, and late-night legislative sessions.

Small scenes reveal how the political flow has changed from last year, when ''supply side'' was the reigning economic buzzword. Taken together, these anecdotes illustrate some of the complex political crosscurrents now affecting the budget process:

Donald W. Riegle Jr. is at it again on a favorite topic, and Pete Domenici is getting testy. Senator Riegle (D) of Michigan, a member of Budget Committee, which is chaired by New Mexico Sen. Pete Domenici (R), has lately become a stuck record on the subject of deficits. He has been haranguing a series of administration witnesses on the evils of red ink.

But on this summer day in the first week of August, while Senator Riegle bores in on Treasury Secretary Donald Regan, Senator Domenici's temper begins to unravel. Finally, Domenici stares off into space (with him, a sure sign of an imminent rebuke) and breaks in:

''You can't dictate answers!'' he says loudly. ''Stop badgering [Regan]. You talk about reduced budget deficits and you never vote for them.''

A brief and lively exchange of views follows.m

Some background on the vignettes:

1. Projected $100 billion-plus deficits have become an extremely powerful political symbol. Fear of them helped push through the Senate a $100 billion tax increase bill and a proposed constitutional amendment to balance the budget.

Also, Democrats by the droves are scrambling for political advantage by throwing the deficit back at the White House. Riegle, up for reelection in an economically hard-pressed state, is but one example.

A pair of congressional aides, wearing almost identical dress-for-success suits, dash into an elevator just as the doors close. The following is a verbatim transcipt of their conversation:

''Bob Dole,'' says one.

''Yep,'' says the other, referring to the Kansas Republican's almost single-handed efforts on the tax bill. ''Bob Dole. Walking a high wire over there in the Senate.''

''A heck of a politician,'' says the first, as the doors open and they spill out into the Rayburn House Office Building lobby.m

2. Senator Dole and his fellow Senate Republicans, instead of the White House , have taken the lead in shaping GOP economic policy. Last year, congressional elevator gossip often centered on President Reagan's ability to extract budget and tax cuts from an acquiescent legislature. This year, Finance Committee chairman Dole is seen as having the political hot hand for cobbling together a $ 20.9 billion tax bill without overt White House support.

But Republican senators aren't wild about being the most visible force behind this year's tax increases and budget cuts. They say presidential support is needed or the House won't pass the measures.

''I do hope we'll have the President become a little more vocal on the tax bill and budget cuts,'' Senator Domenici said before a recent hearing. ''It appears we'll need him out front very soon.''

On Aug. 4, President Reagan urged passage of the tax bill at a series of meetings with congressional leaders. Currently there are no plans for a TV speech promoting the increases to the public.

An administration official, who asks to remain nameless even though there are 50 reporters and a battery of TV cameras in the room, confesses his crystal ball has gone cloudy.

''The economy is in a unique, unprecedented, and difficult-to-predict state, '' he says, attempting to defend the economic assumptions used in the White House midyear budget review.

Over the last year, he admits, the economy has not exactly performed the way the White House predicted.

''The process of wringing inflation out of the economy is costing more than we thought,'' he says.m

3. Administration officials are noticeably less optimistic when talking about the short-term economic outlook. The White House took pains to distance itself from the rosy forecast of last week's midyear budget review, pointing out that the economic assumptions were simply lifted from Congress's first budget resolution. To a man, a string of high administration officials said this week that the forecast was reasonable but that it wouldn't necessarily be their own best guess.

In February, Treasury Secretary Regan said the economy would come ''roaring back in the late spring.'' Now administration officials say GNP has simply hit bottom, and is now slowly turning around.

''I wish recovery could be easier and faster,'' said President Reagan at his July 28 press conference. ''Unfortunately, it isn't. It's tough, slow work, and it's going to require enormous effort and patience from every one of us to correct the problems we inherited.''

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