WASHINGTON - President Clinton's $500 billion deficit reduction goal and his tax-exempt bond initiatives were in danger of being scaled back Friday as a result of a decision by congressional negotiators to adopt only the low-level gasoline tax increase contained in the Senate budget package.
Negotiators said they were trimming back some spending and tax initiatives contained in a tentative compromise reached on Thursday because key Senate Democrats had rejected the plan's proposed 6.5-cent-a-gallon fuels tax increase and were insisting on sticking with the Senate's original 4.3 cent proposal.
By late Friday, however, it became apparent that the decision to go to a 4.3 cent fuels tax had raised concerns among House members who favored the package's tax incentives, and the movement toward a final package appeared to slow considerably.
"Every senator over there has a loaded gun to stick up the President and the Democratic Party, and each one of them is willing to use it," said Rep. Charles Rangel, D-N.Y., a House tax conferee.
An aide to House Speaker Thomas Foley, D-Wash., said late in the day that there were many decisions left to be made and "there is no closure on major things."
The tentative accord reached on Thursday had included permanent extensions of the tax exemption for mortgage revenue bonds and small-issue industrial development bonds, which expired on June 30, 1992, as well as Clinton's proposed high-speed rail bond proposal.
The provisional agreement also contained a scaled-down urban enterprise zone plan that administration officials said preserved most of Clinton's original provisions for expanded tax-exempt bond use within the zones.
"All of the extenders are in danger of being cut when you're trying to come up with $9 billion to $12 billion" to replace the revenues that went down the drain as a result of the decision to go with the Senate's fuels tax increase, said Sen. Donald Riegle, D-Mich., a tax conferee.
Riegle said he strongly supports the tentative plan's permanent extension for mortgage bonds, and would be "sorry" to see that cut back by the conferees. Since he was not among the core group of top-level administration and congressional leaders negotiating the final plan Friday, however, he said he did not know how much the extensions were likely to be cut.
Rangel, who participated in the top-level negotiations, said the tentative plan's tax incentives were being trimmed back because there was little hope of making up for the lost gas tax revenues any other way.
"There will be some shavings here and there," Rangel said.
But late Friday, another conferee indicated that the two bond exemptions would not be scaled back in the final agreement. Coming out of a private meeting with House Ways and Means Committee Chairman Dan Rostenkowski, D-Ill., Rep. Sam Gibbons, D-Fla., said conferees were close to an agreement. When asked if he expected the bond extensions to be temporary or permanent, Gibbons said "permanent."
Rangel and Rostenkowski said the negotiators were not likely to trim any of the incentives deeply enough to ensure that the final bill will reach the $500 billion deficit reduction goal laid down by Clinton at the beginning of the negotiations.
"We're trying to see how close we can get to $500 billion, knowing we're not going to reach it," said Rangel. "What's got to give substantially in the end will be the $500 billion goal - the goal has got to come back."
Rostenkowski agreed that the $500 billion goal was likely to be scaled back substantially. "We committed to $500 billion, and I'd like to be there. But we can't do it at 4.3 cents," he said.
White House press secretary Dee Dee Myers said that the President now expects negotiators to approve only 98% of the his original goal - confirming that they had lowered their sites to $490 billion. "That's an A-plus by any objective measure," she said.
But the apparent decision to lower the goal was not welcome to all. Rep. Mel Reynolds, D-Ill., said after a meeting with the negotiators that a significantly lower goal, coupled with the small but unpopular increase in the gas tax, might not get enough votes to pass in the House.
"The easiest way to sell this plan is to have $500 billion" in deficit cuts that members can take at least partial credit for, Reynolds said. "When you start talking $480 or $483 billion, that's going to be a problem," he said.
But Reynolds calculated that it would take a 7 cent gas tax increase both to support the tax incentives in the tentative plan and to arrive at the $500 billion goal - a gas tax level long ago rejected by Senate conferees.
"What do the members want?" asked Foley, when questioned about the plan's goals. "They want $500 billion, no gasoline tax, and more investments - they want what can't be done mathematically," he said. "So we are trying to do the best we can."
Sen. Bob Packwood, R-Ore., a Republican conferee who has not been involved in the negotiations, said there was "no way" the budget plan could reach the original goal now without resorting to "alchemy."