Reagan Attacks House Budget : Big Part of Savings Only ‘Phantom Cuts,’ He Says

President Reagan today declared a House-passed budget “unacceptable to me and to the American people” and said a large part of its claimed $56 billion in deficit cuts “could only be charitably described as phantom cuts.”

The President coupled his criticism of the Democratic budget plan with a plug for the tax overhaul package that he will unveil in an Oval Office address next Tuesday night.

“Tax reform’s time has come,” Reagan said in a speech to the National Assn. of Manufacturers. “We propose to replace a tax system that is almost universally regarded as needlessly complicated and unfair with a simpler, fairer, more streamlined model.”

Zeroing in on the budget plan approved by the House on Thursday, Reagan said: “It is, frankly, unacceptable--unacceptable to me and to the American people. House sponsors claim that their plan would save some $56 billion. In fact, billions of those savings would come from what could only be charitably described as phantom cuts.

“Even worse,” Reagan added, “the House plan fails adequately to address the fundamental problem of unbridled domestic spending. Instead, it goes easy on the fat in domestic programs and turns instead to our armed forces, freezing the budget for our national defense at last year’s level--in real terms, a deep cut.”

Reagan said “such a further cut in defense spending would undermine our negotiating position in Geneva and put the defense of our nation at risk.”

Trading Accusations

Reagan’s criticism came on the heels of accusations traded by House and Senate leaders over major differences in defense spending and Social Security benefits as efforts got under way to negotiate a compromise 1986 budget.

While budgets approved by both chambers claim a savings of $56 billion next year, the one passed earlier this month by the Republican-led Senate would cut deeply into domestic programs, including the elimination of next year’s cost-of-living increases for 36 million Social Security recipients.

The spending outline approved Thursday by the Democrat-controlled House on a 258-170 vote would leave the Social Security increases and programs for low-income recipients intact, while sharply curtailing President Reagan’s defense buildup. (Story on Page 6.)

A House-Senate conference committee will meet after Congress returns June 4 from its weeklong Memorial Day recess to begin hammering out a compromise budget.

But leaders of the two chambers were digging in their heels, with Senate leaders suggesting that they won’t budge from the higher defense spending levels in their budget--roughly $6 billion more in 1986 than in the House bill--and House leaders voicing firmness on leaving Social Security alone.

At the White House today, spokesman Robert Sims said of the House budget, “The projected savings . . . are, for the most part, phantoms and those that are real come largely at the expense of the defense budget.”

Sims said the Administration will push for a compromise that is “very close to the Senate bill” and that “avoids undercutting defense.”