The Summit That Failed

As the economy continues to stumble, the budget talks break down

The diplomatic negotiations had dragged on for five long weeks, featuring secret meetings at carefully guarded locations, as second-echelon officials delicately probed for areas of possible compromise. Finally, both sides agreed that the moment for deadline was nigh, and a summit session of the two leaders was arranged. Three hours later, it broke up in an impasse, marking the onset of a new political war.

The central figures in that untidy scenario were Washington's two prideful old Irishmen, Ronald Reagan and House Speaker Tip O'Neill, and their failure to agree abruptly ended efforts to find a bipartisan alternative to the President's deficit-laden budget for fiscal 1983. The collapse of the talks raised questions for which no one last week had any ready answers:

>Can Congress, with its houses divided, produce an alternative budget that is both economically sound and acceptable to the White House?

> How will the breakdown in talks affect a recessionary economy staggered by high interest rates and an unemployment rate that this week threatens to exceed the postwar record of 9%?

> Will enough of the politicians involved in the budget crisis have the courage to make tough, responsible decisions in what promises to be a bitter election year?

Defending his position, the President wasted no time in turning to his most effective political weapon. The day after that inconclusive and sometimes acrimonious summit meeting with Speaker O'Neill, Reagan took to prime-time TV to urge Americans to tell Congress that "this is no time for politics as usual—that you too want an end to runaway taxes, spending, Government debt and high interest rates." Although he bogged down slightly while reeling off a slew of figures and his red marker pen failed him as he tried to make a point with a chart, the President smoothly presented his central argument. The Democrats, he said, "want more and more spending and more and more taxes," while "I believe we should have less spending, less taxes and more prosperity."

If the differences were that simple, of course, there would be no valid argument. Still, the President had a point when he said that he had been willing to make substantial changes in the budget he had first proposed last February. He said that he had sought a cut of $101 billion in spending over three years. He was willing to limit those reductions, which Democrats claim would severely hurt the poor, to $60 billion. When Democrats suggested at the final bargaining session that the nondefense cuts be held to only $35 billion, Reagan said that he offered to split the difference at $48 billion. "And that was rejected," he declared. "The meeting was over." The impasse was actually far more complicated, but the President had indeed taken steps to "go an extra mile" to reach a compromise.