Congress Leaders Fear Budget Will Curb Deficit Cuts

President Reagan’s new budget, a $973.7-billion spending blueprint in which proposals for massive domestic cuts are almost entirely offset by higher defense outlays, encountered swift criticism Sunday from leaders of both political parties, who warned that it may undermine congressional efforts to reduce the deficit.

The Administration’s budget for fiscal 1986, which was made public even before its official submission to Congress today as a result of widespread leaks, projects a deficit of $180 billion for the 12 months beginning next Oct. 1. That is about $12 billion more than the President’s own goal for deficit reduction but $42 billion less than the projected deficit for the current year.

Reagan, who proposes to add a dollar to this year’s defense spending for every dollar cut from domestic programs, acknowledged in an accompanying message to Congress that the plan is “still a far cry from our goal of a balanced budget.” Nonetheless, he defended it as “a significant step in the right direction.”

Congress will take final action on the 1986 budget only after months of debate. But, for now, members of Congress appeared to see Reagan’s failure to meet the deficit-cutting goal he had set for himself as a sign that Congress, too, will lose the battle against the soaring deficit.

Reduction Questioned

Rep. Richard A. Gephardt (D-Mo.) predicted: “The Congress is going to wind up changing this budget, but we may not get more in deficit reduction.”

Senate Republican leaders have been trying without success for more than a month to draft a plan to reduce the deficit by $50 billion from the level it would reach in 1986 if no spending cuts were made. That is about the range that Reagan had been seeking.

On Sunday, Senate Budget Committee Chairman Pete V. Domenici (R-N.M.) indicated that $38 billion to $40 billion may now be a more realistic goal for such a deficit reduction. “Reality is setting in,” Domenici said in an interview on the Cable News Network. “Now, we’re measuring goals against performance, and it’s getting very sticky and very tough.”

Gephardt agreed that the Senate Republican leadership will probably fail to come up with $50 billion in cuts. “I think it’s failing because it’s hard to do without presidential leadership,” he said. “It takes more than a bystander President.”

“It would appear that the President has really just walked away from the deficit issue and is leaving it in the hands of the House and Senate,” said House Budget Committee Chairman William H. Gray III (D-Pa.).

Members of Congress from both parties agreed with Reagan that there will be no tax increase next year to reduce the deficit.

But Republicans and Democrats alike predicted that Congress will give Reagan less for defense and more for domestic programs than he wants. Republicans, who control the Senate, are also considering a freeze on Social Security benefits, which the President and the Democratic majority in the House publicly oppose.

Senate Majority Leader Robert J. Dole (R-Kan.), in a television interview, said that Congress is likely to increase the defense budget by about 3% beyond inflationary growth, compared to Reagan’s proposal for a net increase of 5.7%.

“The President . . . says don’t touch Social Security, don’t touch defense, don’t raise taxes,” Dole said on ABC’s “This Week With David Brinkley.” “And you can’t touch the interest on the (national) debt. That doesn’t leave a great deal. So, those of us in Congress have to maybe look beyond some of the President’s promises in the campaign. Maybe we ought to bring Social Security back on the table. Maybe more spending restraint on the defense side will be back on the table.”

Although leaders in both parties voiced hope that Congress could still find ways to cut the deficit where Reagan had failed, they generally sounded less confident than they did a month ago. Rarely in recent years has Congress trimmed the deficit more than a President has requested.

Domenici explained that, even by freezing every budget item, including defense and Social Security, at current levels, Congress would save only $36 billion to $38 billion.

Several months ago, the President declared that his goal would be to trim the projected 1986 deficit to $168 billion--or 4% of the gross national product. He said that this was a necessary first step toward reducing the deficit to $100 billion--or 2% of GNP--by fiscal 1988. Not only did he fail to achieve his 1986 goal, but his projected 1988 deficit exceeds the goal for that year by $44 billion.

Seeking Compromise

Dole said that he hopes to schedule a vote on the budget in the Senate by March. House Democratic leaders indicated that they would wait to see what the Senate passes before taking any action themselves, but they pledged to work with the Senate GOP leadership to come up with a budget compromise.

“I think it can be reasonably predicted that the Democratic House will produce a budget resolution which will provide at least as much deficit reduction and probably more deficit reduction than that which is reflected in the President’s budget,” House Majority Leader Jim Wright (D-Tex.) said in an interview on Cable News Network.

But Wright and other members of his party faulted the President for doubling the national debt during his tenure. Even Dole refused to allow Congress to take the blame for the mushrooming deficit, which he blamed on increased defense spending and the tax cut of 1981.

“We haven’t exceeded the President’s requests,” he said. “We always add a few spending items a President doesn’t want, but he didn’t veto any bills last year because . . . they were in below budget.”

The Reagan budget requests $313.7 billion in military spending, which is $8.7 billion below Defense Secretary Caspar W. Weinberger’s original proposal. Weinberger already is resisting efforts by the Senate GOP leadership to trim an additional $11 billion from his budget, arguing that such cuts would jeopardize national security.

Pentagon Figures Questioned

Although Dole has been careful not to criticize Weinberger, he indicated that the savings already offered by the Pentagon reflected nothing more than a computation of lower fuel costs and lower inflation. “There’s about $2.5 billion in there that’s really program changes,” he said.

However, Senate Republicans are obviously having trouble finding places to make additional cuts in defense. “Congress clearly has voted in some substantial increases for defense that are needed,” Domenici said. “You can’t just whack that all back and start over and say let’s go back to the 1970s.”

Wright suggested that Congress should approach Reagan’s military buildup as it has in the past, by stretching out some of the programs for weapons development and thus reducing the costs in each fiscal year. He predicted that a stretch-out would shave at least $81 billion from the deficit over the next few years.

But Gephardt insisted that Congress must eliminate some weapons systems in order to reduce the growth in defense spending to Dole’s target of 3%. He specifically mentioned the MX missile and the B-1 bomber as good candidates for elimination.

In addition, Wright signaled the Democrats’ intention to restore some of Reagan’s proposed cuts in domestic programs. Reagan’s budget proposes to eliminate revenue-sharing, the Small Business Administration, mass transit subsidies, Amtrak, the Job Corps and Urban Development Action Grants.

Willing to Make Cuts

He said that the Democrats would be willing to hold domestic expenditures to current levels and to cut some programs.

However, Republicans indicated that they were not eager to restore much money to domestic programs. For example, Domenici said that he had been told by the Senate committee chairman with jurisdiction over Amtrak that “he’s got the votes to get rid of Amtrak.”

As for a freeze in Social Security benefits, Wright said that the Democrats do not intend to force the President to violate his campaign pledge to preserve those benefits.

“The President seems to be under a weird illusion that there exists in Congress some bipartisan demand that we make him renege on his promises to America’s retirees,” he said. “Not only are we not going to force that on him, we’re going to help him keep that promise.”

In keeping with practice, the five volumes containing the fiscal 1986 budget and supporting documents were made available to Congress and the news media on Saturday morning, under an embargo providing that their contents should not be published before 1:30 p.m. Monday.

Time to Study Budget

By giving copies to the media early, the Administration theoretically gives reporters and editors time to study the budget thoroughly and present a full analysis to readers.

As they have increasingly in recent years, however, details of the budget began to leak out ahead of the embargo--primarily through congressional sources--with the result that, by Sunday, several major news organizations had concluded that the embargo was ineffective and decided to present the detailed reports initially prepared for Tuesday’s papers.

The Times decided to publish its budget package in today’s editions after it learned that other major papers planned to do so.