GOP Balanced Budget Plan Hit as Unbalanced

The Republican balanced-budget proposal, which continued Tuesday to confound Senate efforts to raise the national debt ceiling, is being attacked as an unbalanced proposal that would give defense spending a break, land heavily on the poor and leave President Reagan with too much discretion to cut programs of his choice.

The Senate, confronted by the need to raise the debt ceiling above $2 trillion to enable the government to borrow the money it needs to keep operating for another year, failed Tuesday to pass a proposal to give the government even another 10 days of borrowing authority. And the Treasury Department warned that it would have to cancel a $5-billion sale of Treasury bills that had been scheduled for today to prevent its cash accounts from dipping into deficit.

The balanced-budget debate was still going into the early hours of today as senators considered a series of miscellaneous amendments. Some expressed hope the stalemate would be broken by Thursday.

Republicans continued to demand a vote on their balanced-budget proposal before they would permit a vote on raising the debt ceiling. Backers of the plan argue that--if carried out--it would impose relatively equal across-the-board cuts in federal spending, with only Social Security exempted.

But in practice, the proposal would strike at a limited number of domestic programs while avoiding severe cutbacks on weapons spending, farm programs and tax benefits, critics point out.

Popular Subject

Apparently, none of this has been lost on Senate Majority Leader Bob Dole (R-Kan.), who presided over the regular private lunch of Senate Republicans on Tuesday. Everyone wanted to talk about the proposal, sponsored by Sens. Phil Gramm of Texas and Warren B. Rudman of New Hampshire, which is designed to reduce the deficit gradually to zero by 1991, one senator who was there said.

But Dole turned to Gramm and warned against going into too much detail because it might undercut the feverish support that the plan has generated.

“Don’t get up and explain this again,” Dole chided Gramm. “Some of us are for it.”

The critics have no hesitation to talk about the proposal’s details. They say it would transfer major new powers to the White House while requiring massive reductions in federal outlays at the worst times, when the economy is weak and budget cuts potentially could send the economy into a tailspin.

Presidential Power

“If adopted in its present form, Gramm-Rudman would complete the effort to cut the role of government in domestic affairs and give the President nearly unilateral power to make the decisions,” said California Rep. Leon E. Panetta (D-Monterey).

But Gramm answered that “if we do our job, it would be highly unlikely” that the President would be called on to make any spending cuts.

On its face, the proposal is fairly straightforward. If Congress and the White House failed to reduce the deficit by $36 billion a year, the President would be required every October to order spending cuts throughout the government to meet the target.

But in practice, it would not be so simple. Because of the interlocking nature of federal benefit programs, for example, proponents and critics agree that the Gramm-Rudman amendment would protect annual cost-of-living increases for Social Security beneficiaries but could cut Supplemental Security Income benefits for the elderly poor.

Congress generally has exempted low-income families, which were hardest hit by the 1981 spending cuts, from more recent budget cutbacks. But the Gramm-Rudman proposal, according to Washington’s Center on Budget and Policy Priorities, a liberal advocacy group, would require programs for the poor to bear twice the burden of other government spending programs.

Other Cuts Seen

Programs other than Social Security with automatic annual benefit increases could lose no more than those increases, according to the Gramm-Rudman plan. But other programs, such as food stamps and low-income housing, could be slashed even below the previous year’s level.

On the other hand, many other government programs would be spared any cutbacks.

Nearly all weapons purchased from defense contractors could not be trimmed because Congress does not have the authority to void existing contracts without paying penalties. That would exempt as much as 40% of the Pentagon budget, Senate Republican budget aides said. As a result, the Pentagon cutbacks would be concentrated in pay, operations and maintenance--potentially leaving the armed forces more vulnerable in an actual conflict.

Similarly, about 85% of all farm spending would remain inviolate because Congress sets farm price supports for the next three years.

Tax Breaks Unaffected

Meanwhile, the proposal would not touch interest on the national debt, which must be paid by law, and tax breaks would fall outside the reach of the plan. “Under Gramm-Rudman, tax expenditures and tax shelters for the wealthy would be allowed to boom,” said the Center for Budget and Policy Priorities.

At the same time, even its sponsors are not sure whether it would affect such costly health-care programs as Medicare and Medicaid.

To break the impasse over the balanced-budget proposal, Minority Leader Robert C. Byrd (D-W.Va.) offered Tuesday to cut short Democratic stalling tactics if Republicans would first agree to approve a temporary increase in the debt ceiling. But Gramm, Rudman and others insisted that their plan be taken up first to prevent Democrats from reneging on the deal once they got the temporary debt boost.

Under Byrd’s offer, the GOP proposal likely would be attached to a permanent debt ceiling bill, which the Senate would take up before week’s end and the House would consider next week.

Tougher Steps

House Democrats acknowledged that the Gramm-Rudman proposal would force Congress, which in July adopted a budget that made only modest inroads into the deficit, to take tougher steps. “The momentum for it is so strong that we in the House have no choice except to try to modify it,” Panetta said. “We can’t stop it entirely.”

At the same time, enthusiasm for the details of the Gramm-Rudman plan appeared to be waning in the House. Speaker Thomas P. (Tip) O’Neill Jr. (D-Mass.), who only last week conceded that the House might approve something like the Gramm-Rudman concept, ridiculed it Tuesday as a “fraud” that would abdicate congressional budget oversight to Reagan.

“At first blush the flower seems always to be beautiful,” O’Neill said in explaining his earlier assessment. “And then it fades so quickly sometimes when you take a second look at it.”