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"Millionaires and Medicare' stall talks

Negotiators are honing in on remaining differences in hopes of crafting a budget that can pass both House and Senate and win President Bush's approval within a few days. The deadline remains Wednesday at midnight, when the government once again will run out of money. By then, the government must either have a budget or must vote itself the authority to keep on spending until it does.

House Budget Committee Chairman Leon Panetta, D-Calif., said that disputes in drafting a compromise $500-billion, five-year anti-deficit plan continue to revolve around "the M&M problem _ millionaires and Medicare":

Democrats are considering a 7.5 percent surtax on the estimated 36,000 taxpayers with million-dollar-a-year incomes. Republicans are pushing an extra limit on itemized deductions for the million-dollar-a-year crowd atop a 4 percent limit on people with more than $100,000 in taxable income. That was part of the bipartisan Senate version of the bill.

Democrats want about $44-billion in Medicare savings, while Republicans are seeking $47-billion. About $30-billion in both plans would come from savings required of doctors and hospitals, but the issue is how much of the rest would come from higher fees on the 33-million elderly and disabled who subscribe to optional Medicare insurance coverage of doctor bills and outpatient care.

Both issues were major obstacles during weekend budget sessions that featured a walkout Sunday by White House chief of staff John Sununu and budget director Richard Darman in a spat with Democrats over how to tax millionaires.

On Monday, Darman was back for closed-door meetings on Capitol Hill. Sununu wasn't.

White House press secretary Marlin Fitzwater downplayed the significance of Sununu's walkout. He said they were merely leaving to brief Bush and didn't signify a major impasse in the final hours of the monthslong effort to agree on the deficit reduction plan.

Democrats agreed to accept a 5-cent increase in the 9-cents-a-gallon gasoline tax, or 2 cents less than Republicans wanted. The Senate bill includes a 9.5-cent boost, while the House version includes no increase at all.

Congressional negotiators on both sides of the political aisle confided that the problem isn't as simple as finding tax increases and spending cuts that won't prompt a veto by Bush.

"The White House has to understand this has to pass the House and Senate first before it ever gets to the president's desk," said one Democratic leadership source whose fears were echoed by Republican colleagues.

With most House Republicans in open revolt since Bush went back on his "no-new-taxes" pledge in June, the House Republican leadership caucused Sunday night to sound out potential support for the emerging package. But they were unable to muster much enthusiasm.

Senate leaders acknowledged the need to find a formula that can command bipartisan Senate backing as well as support by most House Democrats.

Differences already appeared to be narrowing on other key issues.

Sen. Jesse Helms, R-N.C., who led the last, unsuccessful fight against raising the gas tax in 1982, tried to stop the current effort Monday by proposing an amendment to a foreign aid bill that would have slashed 30 percent of all overseas programs this year in order to prevent a gas tax increase.

But Helms and other "no-new-taxes" senators, having lost an effort to scuttle the gas tax when the tax-and-spending bill passed the Senate last week, weren't expected to prevail Monday.

In addition, budget negotiators seemed poised to increase the income tax rate on the wealthiest Americans _ families of four with taxable income above $208,690 a year, for instance _ from 28 percent to 31 percent. Both parties also appeared willing to limit tax writeoffs that people making $100,000 or more can claim.

The final plan also is expected to include higher "sin" taxes on tobacco and alcohol, a 10 percent luxury tax on furs, yachts and the like, and an increase in the federal levy on airline tickets.

Also expected in the final bill are more than $13-billion in crop payment cuts to farmers; at least $100-billion in higher fees for federal services such as nuclear plant licensing, environmental inspections, Coast Guard rescues and recreational fees; and cutbacks in benefits for retired federal workers and veterans.

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