GOP Senators Losing Ground in Budget Fight : Domenici Discouraged by White House Lobbying on Defense, New Estimate of Lower Tax Revenues

Faced with President Reagan’s unflagging opposition to cuts in the defense budget, Senate Republicans appeared Tuesday to be losing ground in their battle to trim the federal deficit.

Budget Committee Chairman Pete V. Domenici (R-N.M.), who has been leading the GOP drive to develop a deficit-reduction package, indicated that he is growing discouraged about his task after encountering new obstacles in separate meetings with Senate Republican colleagues and the President.

“The chances of getting anything at this point are not too good,” he said. “We’ve got a long way to go on the whole thing.”

Series of Developments

Domenici was downcast over a series of recent developments, including stepped-up lobbying by the White House; growing resistance among Senate Republicans to trim defense spending; a new estimate that tax revenues will be lower than expected next year and a continuing battle with Democrats on the Senate floor over emergency farm aid.

The only encouraging news that Senate GOP leaders got Tuesday was a resolution supporting their budget-cutting efforts from the National Governors Assn., which called for a broad spending freeze on all federal expenditures, including the Pentagon budget and cost-of-living increases to recipients of Social Security.

During a meeting with the President at the White House, Senate Republicans came under strong pressure to abandon efforts to trim the Administration’s request for a 6% increase in defense spending next year. A Senate aide said Reagan argued that the Senate Republicans should hold fast on defense to ward off even deeper cuts expected in the Democratic-controlled House.

Senate GOP leaders also were disappointed by the reluctance of their own colleagues to trim the President’s proposed Pentagon budget. Senate Majority Leader Robert J. Dole (R-Kan.) said he was dissatisfied with a proposal he received Monday night from the Senate Armed Services Committee that offered to cut the growth in defense spending to 4% after inflation.

“Defense has to do a bit more,” Dole told reporters. “We’re not trying to undercut the President. We’re trying to put together a deficit-reduction package big enough to have an impact on interest rates in the financial markets.”

House Minority Leader Robert H. Michel (R-Ill.) agreed with Dole, saying there have always been times like these “when Congress has just taken the bull by the horns and done what it had to do.”

Senate leaders appeared to be favoring a proposal by Sen. Warren B. Rudman (R-N.H.) that would trim an estimated $22 billion from the Pentagon budget over the next three years, primarily by eliminating non-combat personnel, both civilian and military. Rudman said his proposal would trim the growth in military spending next year to 3% after inflation.

During a two-hour, closed-door luncheon meeting of Senate Republicans, Domenici told his colleagues that the task of trimming the deficit also had been complicated by estimates from the Office of Management and Budget that tax revenues next year will be lower than expected. That would force Congress to find more than $10 billion in additional cuts to achieve their original goal of reducing the deficit to a level equivalent to 4% of the gross national product.

Meanwhile, Senate Democrats pressed for a floor vote on their proposals to provide more than $1.85 billion in federal funds to guarantee emergency loans to financially troubled farmers. Reagan and the Republican leadership have taken a strong stand against the legislation on grounds that it would add to the difficulty of trimming the budget.

However, sentiment for the Democrats’ agriculture bill appeared to be growing. Sen. Charles E. Grassley (R-Iowa), who co-sponsored one of the Democratic proposals, predicted that the emergency aid eventually would pass the Senate, causing a major setback for Dole and Reagan.

Senate Republicans began the year with the hope of coming up with a deficit-reduction plan by February. Although they still have not agreed on a plan a full month after their original deadline, Dole insisted that their effort is still “alive and well” and that they have not yet abandoned the task.

At the governors’ conference, Democratic governors blamed Reagan’s stubborn refusal to cut defense and Social Security for creating the deficit problem facing Congress. “The President just infuriates us,” Colorado Gov. Richard D. Lamm said.

The governors’ vote in favor of a spending freeze clearly was a setback for Reagan, even though Democratic governors failed to come up with the necessary two-thirds majority to add two amendments also aimed at the President.

Times political writer Robert Shogan contributed to this story.