Panel Rejects Budget Plans, Reagan’s Cuts

The Senate Budget Committee, struggling to find a deficit-reduction strategy that a majority of its 22 members can support, rejected a series of budget proposals Wednesday--including, by an overwhelming majority, President Reagan’s own list of deep domestic cuts combined with a 6% after-inflation increase in defense spending.

Among the packages that were voted down were ones that would couple tighter curbs on defense spending with curbs on domestic programs, would avoid deep cuts in domestic spending by selling $245 billion in government loans to the private sector and would combine new taxes with a broad spending freeze.

Deficit Barely Dented

In turning to overall budget packages, rather than the list of individual spending cuts and tax increases that have occupied it for more than a week, the committee essentially has acknowledged that those earlier efforts failed to make a significant dent in the deficit.

For example, although it had earlier voted to slash Reagan’s defense request--choosing instead to limit growth in military spending to the approximately 4% inflation rate projected for next year--much of that saving was erased as the committee voted down almost all domestic spending cuts that had been sought by the White House.

“We’re not going to quit here, troops,” Chairman Pete V. Domenici (R-N.M.) told the committee after it tallied its list of spending cuts and discovered that it was only halfway to Domenici’s goal of cutting $60 billion from next year’s projected deficit of about $220 billion.

A package--if it can be agreed on--is likely to overturn many of the decisions the committee has made in the last week, but it might be able to resolve the crucial issue of whether to freeze cost-of-living increases for Social Security recipients, federal pensioners and those who receive a wide range of other federal benefits.

Even if the process leading toward a congressional budget resolution breaks down completely, other congressional committees can go about the business of setting spending levels for individual government agencies and programs. But, without the overall blueprint provided by the Budget Committee’s recommendations, it is almost impossible for the individual committees to muster the discipline that would be needed to curb the growing deficit.

Important Leverage

Moreover, Senate Majority Leader Bob Dole (R-Kan.) had hoped to use the Budget Committee’s recommendation as important leverage in negotiating a spending compromise acceptable to both the White House and the Republican-controlled Senate.

Taking an official vote to turn down Reagan’s budget has become something of a yearly ritual for the committee. In fact, the White House proposal was put forward by a Democrat, Sen. J. James Exon of Nebraska, in what he said was an effort to “get the President involved in some kind of working compromise that more than half of us could agree to.”

Domenici noted that the attempt to embarrass Reagan by demonstrating the lack of support that his budget has in Congress is “not likely to bring him to negotiations.”

With little debate, the “Exon-Reagan package” was voted down, 17 to 4. Exon abstained from voting.

Tax Hikes Rejected

The committee turned down also a plan by Sen. Ernest F. Hollings (D-S.C.) to raise $357 billion in new revenues over the next five years, primarily by narrowing popular investment tax credits, imposing a 5% minimum corporate tax and freezing next year’s scheduled tax indexing. That vote was taken only hours after Reagan had warned publicly that vetoing a tax increase would “make my day.”

The Hollings plan--which included an after-inflation freeze on defense spending and denial of cost-of-living increases in Social Security and other programs--failed, 16 to 4; but it drew support from two committee Republicans, Nancy Landon Kassebaum of Kansas and Mark Andrews of North Dakota, who was one of its sponsors.

Domenici, in arguing against tax increases, said that last November’s presidential election “stood for one proposition: taxes as a last resort. The last resort is not putting it up front.”

Also turned down by the committee, on a vote of 18 to 4, was a proposal by Sen. Daniel Patrick Moynihan (D-N.Y.) to sell to the private sector the bulk of the loans the government has made to veterans, home buyers, students, farmers and others.

Moynihan estimated that proceeds from the sales could slash the deficit to under $100 billion in three years, without many of the painful spending cuts suggested in other proposals.

‘Perpetual Motion’

But Sen. Slade Gorton (R-Wash.), noting that the government’s underlying problem of spending more than it takes in would remain after the loans sales were exhausted in 1988, said that the plan reflected “a constant human desire to believe in the possibility of a perpetual motion machine.”