U.S. deficit pact near

Press, 20 November 1987, Page 10

U.S. deficit pact near

NZPA-Reuter Washington White House and Congressional bargainers were yesterday hammering out the final details of an emergency plan to cut United States budget deficits, amid signs that their grand design may face partisan opposition. With the Friday deadline looming, the delicate negotiations were to resume amid appeals to critics and world financial markets to withhold judgment until the accord is reached.

“The closer we get, the harder it gets,” the chairman of the talks, House of Representatives Democratic leader Thomas Foley, told reporters at the conclusion of yesterday’s talks. Unless an agreement is reached by tomorrow (New Zealand time), automatic across-the-board spending cuts of SUS 23 billion will go into effect — a development that could create as much symbolic' damage as it would generate havoc among United States defence and domestic programmes.

Some negotiators suggested it may be necessary to bring President Reagan and the Democratic leaders of the House and Senate into the talks to resolve the last sticking points. The talks were hastily begun four weeks ago in response to the stock market crash felt around the world. The huge United States budget deficit, along with its imbalance in trade, was blamed for

the instability. President Reagan and Congressional leaders agreed to the negotiations to establish world confidence in Washington’s ability to cope with its economic problems.

A failure to reach an agreement between the White House and Congress could have devastating consequences. As one of the negotiators, Silvio Conte, a Massachusetts Republican, put it, “financial markets all over the world would drop like a rock.”

Although the final accord has not been reached, members of Congress have been briefed on the direction of the talks.

The objective is to cut $3O billion from the Federal deficit in the current fiscal year, which began on October 1, and a further 5458 the next year. It would be achieved through spending cuts and tax hikes, although the details would be worked out later. Senator Pete Domenici, a Republican from New Mexico, emerged from the talks to tell reporters: “Until we have this package put together ... I don’t think judgment can be passed on it” “I believe there will be a change once they understand whats in it” he said.

A fellow Republican negotiator, Senator Bob Packwood of Oregon, did little to publicly hide his disappointment with the package being put together.