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Yet in the past, conciliatory talk by the President's men has not always been borne out by Reagan's subsequent unyielding positions. Baker in particular has got ahead of Reagan on other issues and is being kept on a tight rein now. White House Aide David Gergen announced that Baker has only "the authority to listen" to Jones and Rostenkowski "and doesn't have the authority to negotiate" with them. O'Neill, for his part, said almost exactly the same thing about Rostenkowski and Jones. He instructed them to make no offers of compromise that were not first cleared by the Speaker.
Basic elements of any deficit-slashing deal are obvious: slower increases in defense spending; a reduction of, or freeze on, future rises in Social Security and other entitlement benefits; an increase in revenues, to be achieved either by trimming or delaying income tax cuts or by raising other taxes. But actually making any deal would require budging two obstinate elders, Reagan and O'Neill, each of whom wants the other to move first.
Some House Democrats are pressing O'Neill to agree to Social Security reductions just as firmly as White House aides have been urging Reagan to give in on defense spending and taxes—so far with equally little result. O'Neill is opposed to touching Social Security, and he is as heartened as the White House is troubled by polls showing a drop in Reagan's popularity. The Speaker also remembers vividly that when House Democrats offered compromise tax and budget plans last year, Reagan used the offers as levers to ram his own far more sweeping proposals through Congress.
O'Neill last week proposed a conference of three representatives from the White House, three House Democrats and three House Republicans to work out a compromise budget. But one of the Speaker's aides asserted that O'Neill will go along with an actual deal only if the President declares a national economic emergency, which he is clearly not about to do. Reagan has repeatedly said that it is all up to Congress; if it dislikes the budget he presented in February, it should come up with a suitable alternative. Says an aide to House Republican leaders: "They're both Irishmen, and they're both stubborn. It's like watching a game of chicken to see which one will flinch first."
A protracted game of budgetary chicken, however, could have grave consequences, shaking the economic confidence of the public and the financial markets almost as badly as the prospect of giant deficits already has. No amount of calm talk from the White House or kind words for critics is likely to dispel that anxiety.
—By George J. Church. Reported by Lawrence I. Barrett and Evan Thomas/Washington