Will Veto Excessive Outlays, Reagan Says : He Notes That Budget Is Only First Step in Curbing Spending

Although it has taken Congress seven months to agree on a federal budget, this is only the first step in determining how much the government actually will spend in fiscal 1986.

The budget “marks only a beginning, not an end,” President Reagan said Friday, warning: “I plan to examine each and every upcoming appropriations bill, line by line, and, if it is excessive, out of line or in any way jeopardizes our national security, I will not hesitate to use my veto pen.”

The $967-billion budget resolution adopted late Thursday by the House and Senate is a powerful tool because it sets spending ceilings that can be broken only through extraordinary means. But now it is up to the various committees in Congress, the two houses themselves and, ultimately, the President to force federal agencies and programs to live within the outlines of the document.

$230-Billion Deficit

The budget agreement calls for enough savings to slash $57 billion--originally estimated at $55 billion--from a fiscal 1986 deficit otherwise projected at almost $230 billion.

These savings have been widely criticized as inadequate to cope with a deficit that is growing as the economy slows. Moreover, many have contended that the deficit reduction claims have been inflated, in part by the unrealistically rosy economic assumptions on which the budget was based. The nonpartisan Congressional Budget Office estimates the deficit reduction figure at closer to $39 billion.

Pressure will mount when Congress returns next month from its August recess and both houses begin trying to agree on 13 regular appropriations bills before fiscal 1986 begins on Oct. 1.

House Budget Committee Chairman William H. Gray III (D-Pa.) predicted Friday that Congress will exceed the savings mandated by the resolution by the time it passes all the spending bills.

‘Got to Cut Spending’

“I think it’s going to be significantly greater,” he said. House members--Democrats and Republicans, liberals and conservatives--are convinced that “we have got to cut spending. They are really going after appropriations bills.”

But Senate Majority Leader Bob Dole (R-Kan.) said he fears that lawmakers will be inclined to do the opposite.

“I think we have to be very careful when we look at numbers, because I doubt Congress will do all the things we’ve been asked to do, and the deficit will really be much larger than anticipated in the debate on the budget resolution,” Dole said in an interview on NBC’s “Today” show.

House Democratic leaders point proudly to the fact that, although House and Senate negotiators were deadlocked over the budget for the last few months, the House went ahead and passed eight of its appropriations bills. It is claimed that the bills include $8 billion in savings from the House’s initial budget plan and fall well within the guidelines of the final compromise resolution adopted late Thursday.

Synfuels Funding Deleted

Just this week, for example, the House refused to pass the Interior Department’s appropriations bill until it had stripped $6.6 billion from the U.S. Synthetic Fuels Corp. budget. The 312-111 vote left the agency, created in response to the 1979 oil crisis, with no money to fund new projects and may be a prelude to a vote this fall to abolish it altogether.

But, in other areas, critics say, some of the savings claimed for the appropriations bills passed by the House probably never will materialize. House Budget Committee member Jim Slattery (D-Kan.) noted, for example, that several bills have registered savings by assuming a 5% cut in federal employee pay, rather than the freeze called for in the budget resolution.

“I don’t believe that a majority of the House will support a 5% pay cut,” Slattery said, stressing that Congress is likely to have to make up the difference at the end of the year in a catch-all spending bill known as a supplemental appropriations bill.

Defense Savings

However, one area in which the House is likely to call for greater savings is defense. Liberal Democrats see votes on coming defense bills as an opportunity to slash the amount of new defense spending commitments in fiscal 1986 from the $302.5 billion in the budget resolution to a figure closer to the $292.6 billion that the House approved in its initial budget plan.

“We’ll clearly come in under (the budget resolution) on defense. The only question is how much,” said Rep. Vic Fazio (D-Sacramento), a member of the House Appropriations and Budget committees.

Even as they struggle to live within the outlines of next year’s budget resolution, lawmakers already are looking forward to the battles they will face over the fiscal 1987 budget--struggles that will be complicated by election-year politics.

“We’ve got to begin to build a consensus now for 1986, when it will be much more difficult,” Gray said. “Next year, we’re going to have to come back and do something.”