Reagan Blasts Democrat Plan to Cut Budget

President Reagan on Friday denounced a House-passed Democratic package of $56 billion in deficit reductions for next year as riddled with phony savings, a danger to national security and “unacceptable to me and to the American people.”

Reagan kicked off a week of economic speeches with an address to the National Assn. of Manufacturers in which he also called on business leaders to back the tax overhaul proposal he will unveil in a nationally broadcast address Tuesday night.

The Democrat-dominated House on Thursday voted 258-170 in favor of a $967-billion budget blueprint that would trim government spending by $56 billion next year, as does an earlier version passed by the Republican-controlled Senate.

However, the House package freezes Pentagon spending and leaves Social Security untouched, in contrast to the Senate plan Reagan backs that would freeze Social Security benefits and allow military spending to rise with inflation.

Negotiators from the House and Senate will meet after Congress returns June 4 from its week-long Memorial Day recess to begin hammering out a compromise package.

Reagan, though, rejected the savings claimed by the House plan.

“In fact, billions of those savings would come from what could only be charitably described as phantom cuts,” Reagan said.

“Even worse,” he 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.”

Since February, the President has steadily lowered his requests for next year’s Pentagon budget in negotiations with Senate Republican leaders over the deficit-reduction package passed by that chamber.

But the President insisted that military spending at the House level “would undermine our negotiating position (in arms talks with the Soviet Union) in Geneva and put the defense of our nation at risk.”

In addition, he kept up the pressure for further domestic spending cuts, saying that he thinks government spending “is like that old definition of a baby: An enormous appetite at one end and no sense of responsibility at the other.”

But he said the House plan doesn’t do the job. He said, “It is, frankly, unacceptable--unacceptable to me and to the American people.”

Rep. William H. Gray III (D-Pa.), chairman of the House Budget Committee, accused Reagan of exhibiting “hostility and partisan rhetoric” in his criticism of the House budget.

Cooperation Cited

“Let me remind the President that he asked for $50 billion in spending cuts and we gave him $56 billion. The President asked for no new taxes and we gave him no new taxes. He asked that senior citizens be protected against inflation, and we kept that promise for him--while he reneged on his commitment and endorsed the Senate plan to cut Social Security,” Gray said in a statement.

Reagan also used the speech to the manufacturers, which he touted as coming on “the eve of the second American Revolution,” to build interest in the tax overhaul proposal he will outline next week.

On Monday, Reagan will travel to Orlando, Fla., for an address that White House aides have said will be a prelude to his Tuesday tax speech. Then, next Thursday and Friday, Reagan is expected to discuss the tax plan in appearances in Williamsburg, Va., Oshkosh, Wis., and Malvern, Pa.

“We propose to replace a tax system that is almost universally regarded as needlessly complicated and unfair with a simpler, fairer and more restrained model,” Reagan told the business group.

“Most people will be able to fill out their tax forms without paying for help and in a fraction of the time they take now,” the President said, adding that by making the system simpler, there will be fewer chances for abuses in the form of tax avoidance schemes.

“Tax reform’s time has come,” Reagan said.

Just as Reagan has pushed to remove government’s influence on business through deregulation and reductions in domestic spending, he indicated it also is time for the government to stop trying “to run the economy through the tax code.”

He said: “Tax reform is the necessary next step, truly returning us to the free market principles that made the United States the land of opportunity and the greatest economic power in the world.

“Let’s remove government obstacles to growth, lower rates, close loopholes, and put this country on an ascending spiral of business formation, job creation and technological innovation.” The business leaders sat quietly as the President ticked off the benefits that he said would accompany a simpler tax system.

The aim of the plan Reagan will announce next week is to do away with a variety of tax breaks, especially for business, and to use the additional money the government takes in to lower rates for individual taxpayers.

However, some critics have said the Administration has been going too far in retaining some breaks for business, while others already are lining up against some of the changes.

Sen. Bill Bradley (D-N.J.), a co-author of another plan for streamlining the tax code, said Friday he is pleased with the Administration’s move toward tax revision, but he said he is concerned that the President’s version will eliminate deductions for state and local taxes.