Congressional budget negotiators may reach an agreement this week on a 1988 budget plan, House and
Senate Budget Committee sources said.
    They held out hope that an agreement can be hammered out,
especially over the thorny issues of taxes and defence spending
levels.
    "It may come this week," a Senate source said. "They are
making progress," a House source said about back room
negotiations.
    Despite these new notes of optimism, earlier hopes for
quick agreement had been dashed when negotiators stalled.      

    House and Senate negotiators, working on different budgets,
have been stymied over proposals for new taxes and defence
spending levels. Both measures seek 18 billion dlrs in new
taxes in 1988, but the Senate proposes nearly 119 billion dlrs
in taxes over a four year span, while the House calls for only
57 billion dlrs over three years.
    The Senate plan would allocate about seven billion dlrs a
year for defence, a proposal not in the House plan which calls
for 1988 defence spending levels nearly eight billion dlrs
under the Senate plan.         
    The two sides have not had a formal negotiating meeting
since May 13. Both House and Senate would have to approve a
final compromise budget, which would be the working U.S. budget
for fiscal 1988, starting Oct. 1.
     Although the congressional budget proposes tax levels, the
actual approval of specific tax plans must be implemented
through legislationd rafted by the House Ways and Means
Committee and Senate Finance Committee which have been cool to
the idea of higher taxes.          
 Reuter
