Reagan Reductions Rejected : Senate Panel’s Bid to Cut Deficit Turns to Shambles

As the Senate Budget Committee returns to its crowded meeting room today, its drive to patch together a deficit reduction is in shambles.

Both Republicans and Democrats on the committee have voted heavily to reject almost all of the deep spending reductions that President Reagan sought, choosing instead to freeze spending at current levels for most programs that benefit the middle class and to let poverty programs grow with inflation.

With only a small part of the budget left to consider, the committee has fallen about $20 billion short of Chairman Pete V. Domenici’s goal--slashing $60 billion from the projected $220-billion deficit in fiscal 1986, which begins Oct. 1.

But Domenici, a New Mexico Republican, has not given up hope. Although committee members refused to cut Social Security benefits, college student aid, transit subsidies and other popular programs when they were presented individually, he hopes that he can obtain a majority of votes by having the committee vote on a broad package that includes many of those reductions, particularly if that package is offered as an alternative to a tax increase.

An aide to Domenici said Monday that the stark choice between deeper domestic spending cuts and a tax hike is “exactly the decision we hoped they would have to make. We feel very comfortable where we are right now.”

Over the next few days, Domenici will be trying to figure out which programs are most critical to the Republicans, who hold a 12-10 majority of the committee, and which they would be willing to curb in exchange for deficit reduction.

“There are some things you could diagnose as very important to some Republicans,” Domenici said last week as the committee’s deficit-cutting resolve began to unravel. “I’m trying to see what the hot spots are.”

Domenici has already managed to shift the tone of the budget debate. Committee member Bob Kasten (R-Wis.) said last week that a freeze on spending at current levels, without adjustment for inflation or growth in the number of persons qualifying for federal benefits, was considered unrealistically severe. Now, he said, it has become a way of “copping out of the deficit.”

If Kasten is right, the committee has largely copped out.

Defense Cutback

For example, although its dramatic vote to allow no growth in defense spending beyond inflation next year may sharply cut the Administration’s request for a 6% after-inflation increase and save $8.4 billion, it is a reflection of public sentiment.

The Gallup Poll shows that public support for reduced defense spending is at its highest point. In a March 3 poll, 46% of the respondents said that they believe too much is being spent on defense, compared to only 11% who believe it should receive more money.

But, when it came to popular programs--the ones that affect the majority of middle-income voters who will be determining who controls the Senate after the 1986 elections--the committee has been reluctant to take political risks to ward off the nebulous economic threat posed by the deficit.

Social Security Issue

On Social Security, it refused to kill next year’s scheduled cost-of-living increase in benefits--a proposal that was the linchpin of Domenici’s overall plan for curbing the deficit. But it rejected also a counterproposal to allow those increases, which left the issue unresolved.

“We just keep on yapping and running off in all directions with scheming little ideas that come from political pollsters,” Sen. Ernest F. Hollings (D-S.C.) told other committee Democrats. “If we’re going to put meaning, balance and integrity into (the defense spending) vote, I feel very strongly that we have to face the music and balance it off” with a curb on Social Security increases.

Sen. J. James Exon (D-Neb.), the only committee Democrat besides Hollings to vote for a freeze on Social Security benefits, agreed: “We’re not going to get any roses for freezing Social Security now, but, somewhere down the line, (voters may appreciate) the courage to do what is necessary.”

Whatever the outcome, the committee’s recommendations will be only the start of what promises to be a long and protracted route to determine how much the government spends next year.

Seeking Compromise

Senate Majority Leader Robert J. Dole (R-Kan.) hopes to use the committee plan as his opening bid in negotiations with the White House aimed at producing a compromise that can be presented to the entire Senate. Then, negotiators for the Democratic-controlled House and the Republican-led Senate must meet to work out their differences and come up with a package that can obtain the support of a majority of both houses.

Even then, all Congress will have is a broad spending outline. Other committees will write the legislation that will determine how much the government will actually spend.

The Senate Budget Committee, for example, has rejected Reagan’s recommendation to abolish the trust fund from which Los Angeles hopes to draw money for its proposed Metro Rail subway project. But, even if the trust fund becomes part of the budget ultimately adopted by Congress, it will be up to House and Senate committees with jurisdiction over transit programs to recommend whether the project gets the $242 million it has asked for in fiscal 1986.