President Bush said today that the Middle East crisis and the resulting increases in oil prices have not reduced the necessity for a significant deficit-reduction agreement. ``I still think it's absolutely essential to get a budget agreement (with Congress) and that's going to require a lot of principle,'' Bush told a news conference. Congressional leaders and the administration have made little progress in devising a deficit-reduction plan, agreeing only to resume efforts next month. Bush implied that he soon will resume public criticism of Democrats' negotiating posture. ``I don't feel bound by an agreement that I've told the congressional leaders is no longer in effect,'' he said, apparently referring to an earlier concession to tone down political rhetoric about the negotiations. Congressional Republicans are unhappy that Democrats have refused to put forth a specific proposal, even after Bush backed away from a campaign pledge to oppose tax increases. Senate Republican Leader Bob Dole told reporters today the administration is still seeking a $500 billion, five-year deficit-reduction plan. He added, however, that there is little chance of raising gasoline taxes as part of that plan and questioned how deeply defense spending could be cut in light of U.S. military involvement in Saudi Arabia. Key members of Congress say they see no reason to ease up on efforts to reach an agreement. ``If the economy begins to look really bad, every element of the deficit-reduction package will be threatened,'' Rep. Bill Frenzel, R-Minn., ranking Republican on the House Budget Committee, said Tuesday. ``Right now, the major effect is to make an energy tax less likely.'' A military face-off with Iraq also could fuel arguments that slashing the $300 billion defense budget is a bad idea right now. ``It's living proof there are mean people in the world and we need a respectable national defense,'' said Sen. Phil Gramm, R-Texas. However, Senate Budget Committee Chairman James Sasser, D-Tenn., said the proposed $10 billion to $15 billion in military cuts ``really aren't that deep in the first place.'' Petroleum prices have jumped several dollars closer to $30 per barrel since Iraq invaded oil-rich Kuwait last week. Fuel costs in the United States are already rising, along with prices for other goods and services such as airline tickets and electricity. Bargainers concede that with fuel prices rising, raising taxes on gasoline or other sources of energy becomes less palatable. ``I think it probably will kill any effort to have a broad-based energy tax,'' Gramm said. Congressional leaders and Bush administration officials have struggled inconclusively since May to forge a package of tax increases and spending cuts totaling $50 billion for next year and $500 billion over five years. The summit talks are on hold for Congress' August recess. Iraq's takeover of Kuwait _ and resulting military and economic moves by the United States and its allies _ means the American economy could be weaker when the bargainers reconvene in September. Negotiators said they would watch economic performance closely. ``Anybody who thinks we're not being forced into a re-evaluation these next few weeks is kidding themselves,'' said House Budget Committee Chairman Leon Panetta, D-Calif. If the economy seems shaky, one option would be to lower the amount of taxes and spending cuts slated for fiscal 1991, which starts Oct. 1. ``Under any circumstances, we need to focus on significant deficit reduction over five years,'' said Panetta. But budget bargainers said no reasons have yet surfaced to shoot for a less ambitious deficit-cutting package. ``I don't think we can see clearly enough into the future to know how much we'll be affected,'' said Frenzel. ``I think the summiteers ought to go forward with the plan we've been discussing.''
