Panel Approves Budget Package : Calls for Defense Freeze, Social Security Increases

The House Budget Committee, after failing to forge a bipartisan compromise on the fiscal 1986 budget, approved a Democratic plan Thursday that focuses spending restraint on the Pentagon and would retain next year’s cost-of-living increases for Social Security recipients.

“We did get flattened on almost every issue,” top-ranking Republican member Delbert L. Latta (R-Ohio) said after the 21-12 party-line vote.

Only one Republican sided with committee Democrats on the plan, which contrasts dramatically with the budget approved last week by the Republican-controlled Senate.

Both sides predicted that the Democratic plan will prevail when it is considered next week by the full House. If so, a conference committee of House and Senate negotiators then would meet to resolve the differences.

“We live to fight another day . . . and that fight will be in the conference committee,” Latta said.

If the Republicans do not win that fight, Reagan served notice Thursday night that he might oppose the budget when it goes back to the House and Senate floors for final approval.

In the interest of gaining Senate approval of a deficit reduction package, he told a fund-raising dinner for Republican congressional candidates, “we have already compromised greatly on defense by agreeing to freeze spending at last year’s level with only an adjustment for inflation.”

Although Reagan will not have an opportunity to veto the congressional budget, his support will probably be essential to secure the approval of the Senate for the compromise ultimately reached with the House.

The House committee plan, which matches the $56-billion in cuts that the Senate would make in next year’s projected deficit of almost $230 billion, would hold the Defense Department’s 1986 budget to this year’s level. That would save $6 billion compared with the Senate plan, which would allow the military budget to keep pace with expected inflation of roughly 4%.

At the same time, the House committee budget would make only two-thirds of the domestic spending reductions approved by the Senate. Most notably, it rejects the Senate’s politically explosive elimination of next year’s scheduled cost-of-living increase in Social Security benefits.

“I think we’ve done it (cut the deficit) with balance,” Budget Committee Chairman William H. Gray III (D-Pa.) said after the vote. The plan “provides for national security, protects low-income people, protects the elderly and, at the same time, achieves significant deficit reduction,” he said.

The transportation spending cuts in the House committee’s package, unlike those in the Senate plan, would be made in areas other than the fund from which Los Angeles hopes to obtain financing for its proposed Metro Rail subway system.

Budget Committee member Vic Fazio (D-Sacramento) said the panel’s plan “certainly opens up the possibility of a higher level of funding” for big new projects like Metro Rail. However, even if the budget makes room for more transit projects, other congressional committees will have to appropriate the funds and then distribute them among the projects vying for them.

Senate Majority Leader Bob Dole (R-Kan.) called the House committee plan “smoke and mirrors” and said it would fall “about $100 billion short” of the three-year savings projected under the Senate plan.

“They don’t terminate a single program,” he said. “They don’t touch any middle-class entitlements. I thought they were really for spending cuts, but apparently that was only for public appearances.”

The committee took the unusual step of closing its meeting to the public several times as Democrats unsuccessfully tried to win Republican votes by offering to add $2 billion to next year’s defense spending levels.

But their offer was limited to boosting defense outlays--spending that is governed largely by contracts already in the pipeline. It would not have increased the budget authority that allows the Defense Department to make new purchases.

After rejecting that offer, Republicans warned that the House committee’s package would endanger national security. Rep. Jack Kemp (R-N.Y.) described it as “a reduction in a modernization program, (a reduction) that I think and others think will seriously jeopardize our ability to negotiate” with the Soviets.

The committee rejected, by a 2-1 ratio, an effort by Rep. Tom Loeffler (R-Tex.) to boost budget authority to the level contained in the Senate plan.

Gray, dismissing the White House’s contention that it cannot accept lower defense spending, pointed out that “the President already in the last four months has changed his position three times on what is jeopardizing national security.” Reagan initially asked for a 6% after-inflation increase and then scaled his request back to 3% before accepting the Senate package, which would allow no growth beyond inflation.