
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: FRIDAY, May 18, 1990                   TAG: 9005180788
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A/6   EDITION: EVENING 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

SMALLER BUDGET CUTS FAVORED

Budget negotiators should limit next year's deficit cuts to $50 billion to $60 billion, far less than the law requires, say top fiscal experts for Congress and the Bush administration.

The advice, if followed, would make it easier - and less politically painful - for participants in the budget summit to reach a deficit-reduction deal for 1991.

White House officials and congressional leaders met in the Capitol Thursday for their second round of talks on the $1.2 billion budget for fiscal 1991, which begins Oct. 1.

That spending plan will have to contain an enormous amount of taxes or spending cuts to meet the $64 billion deficit ceiling mandated by the Gramm-Rudman balanced budget law.

At Thursday's session, negotiators did not agree on what size of budget-cutting package they need.

"It's bouncing all over the ballpark, $60 billion, $45 billion, $50 billion," said Senate Budget Committee Chairman James Sasser, D-Tenn.

Their own analysts gave them wildly differing figures about the size of the looming shortfall.

The non-partisan Congressional Budget Office said next year's budget gap looks like it will be $149 billion to $159 billion. That would mean savings - either new taxes or spending slashes - of $85 billion to $95 billion to shrink the shortfall to the Gramm-Rudman target of $64 billion.

The White House's Office of Management and Budget projected a shortfall of $123 billion to $138 billion. That would necessitate $59 billion to $74 billion in cuts to hit the Gramm-Rudman ceiling.

Neither set of figures includes the cost of rescuing the country's savings and loan institutions, a bailout that could cost the government tens of billions of dollars next year.

Yet according to participants, CBO Director Robert Reischauer and OMB Director Richard Darman agreed that savings should be limited to $50 billion to $60 billion.

The two budget experts said deficit cuts exceeding that amount could slow an already weak economy. Many economists worry that could prompt a recession.

by CNB