Coming Along Just Fine

By Jacob V. Lamar Jr

His voice may have been a bit raspy, his gestures a tad stiff and tentative, but as he greeted Chinese President Li Xiannian on the sun-drenched South Lawn last week, Ronald Reagan inspired pride rather than pity. The welcoming ceremony was the President's first formal event since leaving Bethesda Naval Hospital, where he underwent major surgery for cancer. Standing at attention beside his guest while a Marine band played the American and Chinese national anthems, the 74-year-old Reagan gave credence to the reports of his splendid recuperation. Nonetheless, the ceremony was shortened to 15 minutes so that Reagan, who lost 7 Ibs. in the hospital, could conserve his strength. He needed every bit of it: no sooner was he out of sick bay than he was back in the middle of the long-running battle over the budget.

The President followed an abbreviated schedule throughout his first week back on the job, conducting most of his business from the family quarters in the East Wing of the White House. All told, he spent nine hours in meetings and ceremonies before leaving for Camp David at week's end. Nancy Reagan carefully monitored her husband's convalescence, as she has since the July 13 operation that removed a portion of his colon containing a cancerous polyp.

Reagan displayed his usual aplomb and even cracked wise about his age at a White House banquet for Li. Toasting his 76-year-old guest, he said, "President Li comes from a nation whose people are known for their traditional respect for their elders. President Li, I can assure you that I'm doing my best to reestablish that tradition in our own country."

In more substantive dealings with his guest, Reagan approved the signing of an agreement that will allow U.S. companies to sell nuclear reactors and nonmilitary nuclear technology to the Chinese government. He had initialed the accord on his visit to China 15 months ago, but the signing was stalled when U.S. intelligence officials said that Chinese scientists had been spotted at a plant in Pakistan where nuclear weapons were being developed. Since then, the Chinese have made several verbal commitments not to help other countries build nuclear weapons. These assurances were enough to satisfy the Reagan Administration. Unless both the Senate and the House reject the pact, it will go into effect after 90 days.

The most pressing item on the President's agenda was the deadlock over the budget. Since midwinter, the Senate and the House have been unable to agree on a deficit-reducing budget resolution, wrangling most ferociously over defense spending and entitlement programs, particularly Social Security. Reagan has skirmished with both houses while trying to get them to compromise on a plan acceptable to him. Dressed in pajamas and a bathrobe, the President expressed his frustration to congressional leaders at a White House meeting last week. "How can the country go forward without a sound economic plan?" he asked. Reagan exhorted the legislators to settle their differences before Aug. 2, when Congress takes a month-long recess. At the end of the hour-long talk, House Speaker Tip O'Neill shook Reagan's hand and said, "Mr. President, you look good." Reagan shot back, "I'll feel better when I get a budget."

Tensions lingered between Republican Senators and the White House over Social Security cost of living adjustments. Majority Leader Robert Dole and Senate Budget Chairman Pete Domenici had persuaded their colleagues to tempt the wrath of constituents by proposing a one-year freeze on COLAs. Three weeks ago, Reagan withdrew his support for the freeze, and angry Senators took it as a double cross. White House Chief of Staff Donald Regan further enraged Dole by accusing the lawmakers of shying away from the deficit crisis. "They are afraid to come to grips with it," Regan said. Last week the chief of staff tried to make amends by presenting Dole with a genuine Chaska Indian peace pipe. "I just wanted Senate Republicans to know I'm at peace with them," said he. Dole put his ear to the pipe and asked, "Is it ticking?"

But it will take more than peace pipes to resolve the budget stalemate. At week's end the Senate offered a bold new proposal, one that would cut the deficit by $338 billion over the next three years. The original Senate budget contained only $295.2 billion in deficit reductions by 1988, while the House budget proposed an even less impressive $259. 1 billion in savings. The new plan has two particularly controversial features: a $5-per-bbl. fee on imported oil that would bring in some $25 billion over the next three years; and a biennial, rather than annual, inflation adjustment on income taxes as well as Social Security and other entitlement programs, which would save the Government $19 billion by 1988.

House reaction to the Senate offer was hardly encouraging. Said O'Neill: "I'm stubbornly opposed to any drop in COLAs this year or next year." New York Republican Jack Kemp blasted the oil-fee idea. "It hits consumers. It raises the cost of living. It's protectionist." But Pennsylvania Democrat William Gray, chairman of the House Budget Committee, was more cautious. Said he: "The question here is, Has the President now changed his position on revenues? Is the President prepared to support taxes?" If so, Gray added, "it's a new ball game."

At first there was little hope of a Reagan reversal. When Vice President George Bush sat in for Reagan at a meeting with Democratic members of the Senate Finance Committee, Spark Matsunaga of Hawaii asked if a convalescent Reagan might be open to the idea of a tax hike. Replied Bush: "Sparky, he didn't have a lobotomy; he had a cancer operation." Reagan told a reporter who asked about the oil fee, "I'm not for any taxes." But White House aides put out the word that the President, in what could prove a major concession, would go along with the oil fee if the House accepted most of the Senate deficit-reduction plan. "When the dynamics of this thing play out over the next week, it could happen," said a top Reagan adviser. "It is a bare possibility."

As frequently happens when a President is ailing, the American people rallied round Reagan. A New York Times-CBS News poll released last week gave him an approval rating of 65%, up 6% since June and his highest mark since the 67% rating he received after the 1981 assassination attempt. Unlike in 1981, however, he has not experienced a corresponding surge in congressional support. Despite some personal lobbying by Reagan, Dole was forced to abandon legislation that would have given the President broader power over the budget. Opposition to the "line-item" veto was led by Oregon Republican Mark Hatfield, chairman of the Senate Appropriations Committee. Waging a five-day filibuster on the Senate floor against the plan, Hatfield contended that it would upset the balance of power between the Executive and Legislative branches of Government. Dole tried three times to end the filibuster, but ultimately he fell two votes short.

The President's sole victory in Congress was one that will do absolutely nothing to reduce the deficit. Buckling to Defense Department pressure, a Senate-House committee approved a $302.5 billion military budget that will provide funds for programs that Congress had previously voted to eliminate. A legislative official complained that the decision showed that Congress is no more willing to eliminate weapons than is the military.

Congressional hassles and diplomatic issues aside, the biggest challenge Reagan faces is his health. Despite his doctors' optimism and the Administration's business-as-usual tone, the fact remains that Reagan had cancer. The possible recurrence of the disease could cast a shadow over the rest of his presidency. For the moment, though, the President has cheered the nation with his breezy nonchalance about the illness. To hear him tell it, his only health concern is whether he will be able to mount a horse when he visits his Rancho del Cielo on the West Coast in mid-August. "I'm going to have to walk around the ranch this time," Reagan told friends last week. "I'll probably see things I haven't seen before." --By Jacob V. Lamar Jr. Reported by Sam Allis and Laurence I. Barrett/Washington

With reporting by Reported by Sam Allis, Laurence I. Barrett/Washington