DARMAN SEES PROGRESS IN BUDGET NEGOTIATIONS

DARMAN SEES PROGRESS IN BUDGET NEGOTIATIONS

Congressional and White House budget negotiators have made initial progress, but the deficit picture is "very negative," Richard Darman, director of the Office of Management and Budget, said Wednesday.

Mr. Darman emphasized the importance of reaching an agreement on the budget because without one there could be "extra pressure" on the bond market, which would mean higher interest rates and slower economic growth, which could lead to a recession.In testimony to a Senate Appropriations subcommittee, Mr. Darman said the thrift crisis, including the increased costs for working capital, has added to the strain on the deficit.

Mr. Darman also said the deficit is somewhat larger than was forecast by the White House in January because of the economy, and that the thrift crisis is "very much larger" than originally estimated.

Mr. Darman said he is hopeful that following the Memorial Day recess the budget negotiators will be able to complete the preliminary work, and do some ''serious negotiating."

Mr. Darman also said additional user fees that were not included in the administration's budget are being analyzed and could replace proposed fees that are rejected by negotiators.