Senate Budget Package Seen Facing Fight

As the massive deficit-reduction package approved by the Senate Budget Committee was given its finishing touches Thursday and sent to the full Senate, reaction from both liberals and conservatives indicated that it faces a long struggle before any of its provisions become law.

At the White House, spokesman Larry Speakes said that President Reagan was “disappointed in some elements of the package,” particularly the Republican-controlled committee’s refusal to go along with the Administration’s request for an increase in Pentagon spending of 6% after inflation. The committee instead limited defense spending growth to the pace of inflation, which is projected at about 4% for the next few years.

However, Speakes said that adoption of the plan by the Senate panel “gives us an opportunity to begin working closely with the Senate in order to develop a package more to our liking.”

Meanwhile, House Budget Committee Chairman William H. Gray III (D-Pa.), with whose forces the Senate eventually will have to compromise, dismissed the senators’ plan as merely an effort to “get the monkey off their backs” after the committee’s Republicans and Democrats were unable to agree on an overall deficit-reduction strategy.

Freeze on Benefits

The committee’s package, approved on a strictly partisan 11-9 vote Wednesday night, combines the reduction in Reagan’s defense buildup with deep cuts in domestic spending and a freeze on Social Security benefits.

By the estimates of committee Chairman Pete V. Domenici, the plan will cut the federal deficit--now projected at more than $220 billion in each of the next few years--to roughly $100 billion in 1988. However, the nonpartisan Congressional Budget Office estimated more pessimistically Thursday that the package would leave a deficit of more than $146 billion three years from now.

Committee Democrats, with some Republican support, had argued that the panel should increase taxes on corporations rather than force domestic programs to carry such a large share of the deficit-reduction burden. However, any tax increase would have put the committee squarely at odds with President Reagan, who invited the panel Wednesday to “make my day” by presenting him with new taxes to veto.

The Senate committee’s spending outline is the first step in producing a national budget. But, along the way, the package and other deficit-reduction plans will be haggled over by the Reagan Administration, the full Senate and House and almost every committee and subcommittee on both sides of the Capitol.

First Major Test

The first major test of the plan probably will occur within two weeks on the floor of the Senate, where senators will have a chance to change it--or even discard it.

Republicans supplied all the votes that the package needed to squeak through the committee. However, the majority leader, Sen. Bob Dole (R-Kan.), was guarded in his assessment of what he described as “a good step forward” in deficit reduction.

“Obviously, some parts of it will have problems,” Dole said. “It needs work.”

However, Sen. Alan K. Simpson (R-Wyo.), the Senate’s second-ranking Republican, said that he believes the package has a good chance of being passed by the Senate with few changes. “When this thing gets to the floor, Pete Domenici is going to be an awesome force,” Simpson predicted.

Nonetheless, the committee’s proposal to deny Social Security cost-of-living increases next year is certain to provoke strong opposition in the Senate. And, even if it is passed, it will face a new challenge in the House, where even the Republican minority is on record as against any cut in the program.

Position Unchanged

“Our position has not changed,” Michael Johnson, an aide to House Minority Leader Robert H. Michel (R-Ill.), said.

A top strategist for House Speaker Thomas P. (Tip) O’Neill Jr. (D-Mass.) said it is “unlikely, but not absolutely out of the question” that the House would go along with the Social Security freeze.

Now that the Senate committee has produced a package, he added, it puts pressure on the House Budget Committee to come up with its own spending plan to slice the deficit. “At a minimum, what we have to do is match their (overall deficit-reduction) number,” he said.

The Senate package contains cuts in numerous popular domestic programs that--although they are not as deep as those sought by Reagan--are certain to draw fire from almost every powerful interest group in Washington.

Among the programs that would be affected are federal student loans, mass transit subsidies, a variety of economic development grants, revenue-sharing grants to cities and counties and business-oriented agencies such as the Small Business Administration and the Export-Import Bank.

But Sen. Robert T. Stafford (R-Vt.), chairman of a Senate Labor and Human Resources subcommittee that will have much say over the budget for student loans, said that he is “happy with what they’ve done . . . . We can live with it.”