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

DATE: WEDNESDAY, June 27, 1990                   TAG: 9006270146
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A1   EDITION: METRO 
SOURCE: Cox News Service
DATELINE: WASHINGTON                                LENGTH: Medium

BUSH RELENTS ON TAXES

"It is clear to me," Bush said in a carefully written statement, that the nation needs to confront its huge budget deficit with "tax revenue increases" as well as reforms in entitlement programs.

Democrats hailed Bush's move as a way to jump-start the stalled budget talks between the administration and Congress.

"The president has concluded that tax increases are necessary," said Senate Majority Leader George Mitchell, D-Maine. "And we share the president's view."

Rep. Dan Rostenkowski, D-Ill., who chairs the tax-writing House Ways and Means Committee, called Bush's statement "an important step in the right direction."

Wall Street temporarily responded with a sharp 30-point jump in the Dow Jones average Tuesday morning. However, by the end of the day, profit taking ate up the gain, and the market closed down 2.7 points, continuing its recent decline.

Bush issued his statement after a two-hour breakfast session with bipartisan leaders of Congress. Neither side would predict any specific revenue increases or cutbacks in entitlements as the budget negotiators prepared for a new round of "budget summit" meetings today.

Without Bush's declaration, those talks had been making almost no progress, as both parties waited for each other to introduce the bitter medicine for the deficit.

House Republican Whip Newt Gingrich of Georgia, an outspoken foe of higher taxes, did not attend the breakfast, but said he had been reassured by White House Chief of Staff John Sununu that Bush did not promise a tax increase.

"Sununu said this represents no change," said Gingrich, who noted Bush has already agreed to leave everything, including taxes, in the budget negotiations.

Bush spokesman Marlin Fitzwater steadfastly rejected the suggestion that the president has backed off his "no new taxes" vow.

The White House declined to offer any specifics about the budget elements Bush listed as necessary. Besides taxes and entitlement changes, Bush called for "orderly" cuts in defense and unspecified "incentives" for economic growth. Those incentives could include his long-called-for cut in the capital gains tax.

The White House has set the end of July as a target for completing a tax-and-spending plan that must reduce the deficit by $45 billion to $60 billion in the fiscal year beginning Oct. 1.

Both parties have agreed they must find savings of $400 billion to $600 billion over the next five years.