Amtrak, Transit Aid Cuts Rejected : Senate Panel Refuses to Curb Student Loans, Deadlocks on Social Security

The Senate Budget Committee Thursday rejected many of President Reagan’s most controversial proposed spending cuts, including the elimination of Amtrak and mass transit subsidies and curbs on federal student loans.

And the committee reached a stalemate over whether to deny cost-of-living increases to Social Security recipients next year--an impasse that threatens to sabotage the Senate’s entire effort to put together a deficit-reduction package.

As the committee voted down one after another of Reagan’s proposed cuts--opting in most cases to freeze spending at current levels--it also slipped further away from Budget Committee Chairman Pete V. Domenici’s goal of reducing the projected 1986 deficit by $60 billion from the level it would reach if Congress did not act to curb it. The Congressional Budget Office estimates that level as $220 billion.

Fiscal Year Agenda

During its fourth day of putting together its budget recommendation for fiscal 1986, which begins Oct. 1, the committee:

--Voted 11 to 10 to leave the federal student loan program virtually intact. The committee approved a plan by Sen. Lawton Chiles (D-Fla.) to reject the Administration’s proposal to cap loans, grants and other aid at $4,000 a year per student and to exclude families earning more than $25,000 from the grant program and $32,500 from the loan program.

--Rejected 13 to 9 the Administration’s proposal to abolish Amtrak subsidies, choosing instead to freeze spending for the government-operated railroad and other federal transportation programs. It also froze transit subsidies, including the fund from which Los Angeles hopes to secure federal support for its proposed Metrorail subway system.

--Voted unanimously to reject an Administration proposal that would have required Medicare recipients to pay greater out-of-pocket medical expenses--both premiums and deductibles--although the committee would allow a freeze on federal reimbursement levels to hospitals, doctors and others who provide health care to the elderly under the program.

Medicaid Recommendation

--Voted 13 to 5 to allow the Medicaid health-care program for low-income persons to continue to operate at its present level, with growth for projected inflation and caseload increases. The Reagan Administration had recommended capping Medicaid at $1 billion lower than this amount.

--Voted 10 to 8 to freeze a wide range of community and regional programs, rather than terminate such popular subsidies as urban development action grants, as the Administration had asked.

--Rejected cuts in child nutrition programs, including the WIC (Women, Infants and Children) program.

--Refused to deny cost-of-living increases for federal civil service retirement, as Reagan had proposed, and for veterans’ benefits, as Domenici had sought.

Committee Chairman Domenici, a New Mexico Republican, said after the Social Security vote that Senate liberals apparently will accept cuts in Social Security and other benefit programs only if the Senate also approves a tax increase or additional defense spending cuts. But other committee members said the prospects are dim that conservatives will accept either of those alternatives.

On Social Security, the committee rejected all the choices before it: freezing Social Security benefits next year; freezing them for all but the poor, or allowing them to grow with inflation for everyone.

Domenici said: “That told me that, contrary to what I had thought, there is substantial support for freezing the (cost-of-living increase) if we come up with the right package at the end.” That package, he said, would probably contain either tax increases or defense-spending cuts.

The committee already has voted to let defense spending grow only with inflation in fiscal 1986, which is put at 4% to 5%, contrasted with the nearly 6% after-inflation growth sought by Reagan.

One of the strongest advocates of further tightening, Sen. Charles E. Grassley (R-Iowa), would also forbid inflation-driven growth. But he conceded that even his proposal would not guarantee sufficient liberal support for corresponding domestic spending cuts.

“If you really want to nail it down and get enough votes from the Democrats,” Grassley said, the only answer would be “probably a little tax increase.”

But a tax increase appears to be only a remote possibility. Budget Committee member Bob Kasten (R-Wis.) predicted that Reagan would veto any tax increase and that Congress would lack the two-thirds majorities needed to override him. Referring to Democrat Walter F. Mondale’s 1984 presidential candidacy, Kasten said: “It was a tax-increase statement that lost 49 states for the Democrats.”

The Budget Committee does not have the power to engineer a tax package, but its final recommendation could contain a tax-increase target that, if approved by the full Senate, would instruct the Finance Committee to decide which taxes should be raised.

On Social Security, the committee first voted 13 to 8 against Reagan’s proposal that benefits be allowed to grow with inflation. Then it voted 18 to 3 against letting benefits grow only for the poor, 12 to 9 against freezing benefits for everyone and 12 to 9 against a second effort to gain support for the Reagan proposal.

Chiles, the committee’s top-ranking Democrat, was one of those who voted against all three Social Security options. He told the panel that informal polls of his state’s large elderly population have suggested that retirees would support a Social Security freeze as part of an overall deficit-reduction package, but only if Congress corrected “those tax inequities that are so clear and so glaring out there.”

In a strange political twist, most committee Democrats voted for Reagan’s proposal to allow Social Security benefits to rise with inflation next year.