Lobby Groups Poised to Fight Budget Package

To understand why the Republicans’ deficit reduction package may unravel when it goes to the Senate floor today, look no further than the National Assn. of Home Builders.

If any industry should stand to gain from cutting the federal deficit, it is home building, which relies on low interest rates to keep business booming. Senate Republican leaders say that their package offers the only hope of preventing record federal borrowing from driving up interest rates.

But the NAHB, one of the biggest contributors to congressional election campaigns, has thrown its considerable political weight against the fiscal 1986 budget package. Even in the name of deficit reduction, it says, it cannot support cutting or eliminating federal programs that help the housing industry while allowing defense spending to grow 3% faster than inflation.

“You’re trading housing for howitzers,” complained Bob Bannister, association senior vice president.

The NAHB is only one of legions of lobby groups swarming over Capitol Hill to line up opposition to the deficit reduction package. Their opposition could spell disaster for the package at a time when many economists regard deficit reduction as necessary to maintain economic growth.

The whopping package, which would trim $52 billion from a deficit that would otherwise exceed $200 billion in the coming fiscal year, has something in it for almost everyone to dislike.

There are some major political land mines, chiefly a proposal to curb Social Security benefit increases. And there are plenty of smaller ones, including plans to charge “user fees” for government services that taxpayers expect for free.

In fact, the Republicans’ plan contains so many explosive provisions that it may self-destruct. Sen. Charles E. Grassley (R-Iowa) characterizes the budget proposal’s chances as “zero.”

Failure to pass the package, said Senate Budget Committee Chairman Pete V. Domenici (R-N.M.), would virtually doom efforts to slash the deficit this year.

“I don’t think the House is going to do anything significant unless the Senate, which is controlled by the President’s party, does something substantial,” Domenici said. The Democratic-controlled House is waiting for the Senate to act before piecing together its own version of a fiscal 1986 budget.

Added Senate Majority Leader Bob Dole (R-Kan.): “We just can’t fail. That’s the bottom line.”

Reagan Determined

Dole said Sunday in an interview on NBC’s televised “Meet the Press” that “the odds are very good” that President Reagan will deliver a televised appeal some time next week for public support of “Republicans and Democrats who are willing to stick their necks out to reduce the deficit.”

Conceding that Reagan had been slow to take urgent action, Dole said the President is now “very strong” in his determination to act against deficits as “a threat to our economy.” The deficit reduction package represents a compromise between Senate Republican leaders and Reagan, who gave up half of his requested 6% increase in military spending in exchange for three-quarters of the domestic spending cuts he had sought.

With Reagan promising to veto any tax increase that comes to his desk, the package relies on spending reductions as the only tool available to cut the deficit. Outside of the military and benefit programs expressly for the poor, almost every federal program would be cut, more than a dozen of them eliminated.

In lining up support for the package, Dole first must halt a crumbling of his own Republican ranks. Last week, as he conducted a series of closed-door meetings to lobby for Republican support on the most sensitive issues, he estimated he had “a pretty hard core of 35 to 40 votes” for the plan, at least 10 short of the number he needs.

Dole said in Sunday’s interview that the Administration will probably lose some votes on individual cuts, but added that he was “confident that we can even lose some of those and come back at the end with sort of a wrap-up amendment to restore some of those savings and have a good chance to succeed.” He conceded, however, that he will “need Democratic help” to win the deficit reduction fight in the Senate.

“I don’t believe the Democrats as a party can sit this one out and say, well, we’re going to try to kill this package,” Dole continued. “That would be very bad politics, and I think many Democrats are just as concerned about the deficit as I am.”

If the Senate’s 47 Democrats stand together, they can win almost any vote by picking off only a handful of Republicans. Almost half of the Senate’s Republican majority--21 of 53--will be up for reelection next year--and many of them cannot afford to enrage key groups of voters.

Florida’s Paula Hawkins, for instance, is facing a tough reelection fight next year in a state with a large elderly population. She has joined Democrats in opposing the Social Security curbs, which many say is the critical element holding the package together.

Sen. Charles McC. Mathias Jr. (R-Md.), many of whose constituents rely on Amtrak for transportation, literally rode the rails Friday to demonstrate his support for rescuing federal rail subsidies from the budget ax.

Grassley and other farm-state Republicans have pledged to defeat proposed cuts in agriculture programs. And eight Republicans were among 33 senators signing a letter opposing the proposal to eliminate rural housing programs--the provision that the National Assn. of Home Builders finds most objectionable.

“Whether it’s (Social Security), the Small Business Administration or Amtrak,” Dole said with exasperation, “certainly everybody can justify why we shouldn’t touch their programs. (But) we’re talking about the future economic growth of this country.”

Sen. Pete Wilson of California, a Republican who expects to support the plan, understands the pressures that are dividing GOP ranks. “Spending programs have a defined constituency,” he said. “The much more important goal we are seeking here also has a constituency, but it is not so well defined.”

Dole hopes to convince other senators that deficit reduction also has political appeal. “If everyone wants to knock out the hot ones and we don’t come up with a package,” he said, “then what will we tell the voters in 1986?”

Hottest Issue of All

The hottest of all is Social Security. It is one of the few issues on which Democrats have been able to put Reagan on the defensive in the past, and it was the focus of much of the debate in the 1982 congressional elections that brought down 26 House Republicans.

The proposal in the budget package would limit Social Security cost-of-living increases next year to 2 percentage points less than the inflation rate, with a guaranteed increase of at least 2%. If inflation equaled 4% this year, as projected, Social Security recipients would receive an increase next January of 2%, half what they would get under present law.

Democrats, armed with estimates that the plan would put at least 530,000 people below the poverty line, smell victory on this issue. They intend to force a separate vote to strike the Social Security provision from the deficit reduction package, thus making Republicans choose between sabotaging the budget resolution and outraging voters who receive Social Security benefits or expect to.

Senate Minority Leader Robert C. Byrd (D-W.Va.) explained: “We believe that it is appropriate that one of the first questions we address in changing (spending) priorities is on a contract we have with the American people--a contract they have counted on in planning their futures, a contract that keeps almost 14 million senior citizens out of poverty.”

One Republican strategist said that many GOP senators facing reelection will vote with the Democrats. “It’s a lightning rod issue,” he said, “and I don’t think the groundwork has been laid to cover them.”

Without the Social Security provision--which would produce $34 billion in savings over the next three years, many Senate leaders believe that the entire budget proposal would collapse.