Stitching a patchwork budget

The federal budget process that appeared to be torn in shreds may yet be pieced together on Capitol Hill. While the final plan may be a patchwork quilt of compromises and contingency funds, congressional budget leaders have apparently determined that they will produce a tax and spending proposal for 1984.

As of this writing, members of both houses were working out the details of an agreement reached earlier by Pete V. Domenici (R) of New Mexico, chairman of the Senate Budget Committee, and chairman James R. Jones (D) of Oklahoma of the House budget panel.

As the House-Senate budget conference moved toward its midnight Monday deadline for agreement, members were still bickering over whether new taxes would slow down the economic recovery. But aides were optimistic that the basic outlines of a 1984 federal budget have been drawn.

The final plan that has some hope of passing both the Democratic House and the Republican Senate would probably lean toward the Senate-passed version. As worked out by Representative Jones and Senator Domenici late last week, it would allow for $12 billion in new taxes in 1984, far lower than the House proposal for $30 billion.

The plan under consideration calls for $73 billion in added revenues from 1983 to 1986. But by far the biggest increase would be delayed until 1986, when revenues would be raised by $46 billion to offset the huge deficits expected that year.

President Reagan, who has taken a strong antitax stand, can be expected to fight the tax portion of the budget at every opportunity. However, Domenici reminded his budget conference Monday that even the President's budget included deficits.

Congressional tax-writing committees ''could choose to go the President's route,'' Domenici said, and ''make that tax a contingent tax.'' By that plan, the tax hikes would be canceled if the economy grew fast enough to wipe out some of the ''out-year'' deficits.

Rep. Jack Kemp (R) of New York, a supply-sider and a member of the budget conference, held that new taxes would damage the economy, even if they are no more than loophole closings now being discussed.

''I'm not arguing for deficits,'' he told his fellow conferees, but he held that it was unrealistic to plan for tax increases to reduce the future deficit since we ''cannot predict what it's going to be in 1986 and 1987.''

But in the mainstream of both parties, members are concerned about prospects of $200 billion in red ink. And they appear to be listening to economic arguments that Congress must prove its intent to lower future deficits, or otherwise the financial markets will become jittery and send interest rates higher.

As one Democratic budget analyst told the conference, if the budget has ''teeth'' guaranteeing lower deficits in the future, that ''would tend to lower the current interest rates'' and ''would give you a better recovery and certainly a more balanced one.''

House budget chairman Jones called for a need to ''give confidence to the financial markets.''

If some Republicans are signing on to the middle-of-the-road budget plan, the GOP White House continues to wage its opposition battle against it. The proposal calls for more taxes, less domestic spending, and about half the 10 percent defense growth President Reagan requested.

Domenici, who chairs the joint budget conference, defended his proposed compromise as ''not significantly different from the President's'' plan. If totals are added up in spending and taxes, he said, ''there's not a lot of difference. I think it boils down to priorities.''

Both houses put more emphasis on domestic spending and less on the military than did the White House, he said, but the overall figures are comparable.

In fact, the House-passed budget would add billions to domestic programs ravaged by two years of Reaganomics. The Senate conferees, refusing to go that far, have apparently agreed to a planned ''reserve fund'' for domestic programs.

The plan, somewhat novel for budgets, would set aside some $8 billion to $9 billion for recession relief in 1984. The special money could only be spent if selected bills are passed by Congress and enacted, however. Those bills would include health insurance for the unemployed and a major community renewal project. If the bills are not enacted, that money could not be spent, according to the proposal.

With the contingency fund, the budget would project a federal deficit of nearly $180 billion, if the compromise now being discussed is enacted.

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