Uneasiness Growing Over Budget-Balancing Proposal : Reagan May Veto Measure if It Includes House Democrats’ Deeper, Faster Deficit Cuts

Congressional and White House officials expressed increasing unease Tuesday about a Republican-inspired budget-balancing plan that has tied Congress in partisan knots for a month and could bring the government to the brink of a shutdown by next week.

Senate Majority Leader Bob Dole of Kansas, insisting that he would like to see passage of the so-called Gramm-Rudman plan, cited concern at the White House “about the President going to Geneva (for the U.S.-Soviet summit meeting) with any thought there might be some defense cuts” mandated by the plan.

Protecting Poverty Funds

And a high-level White House official warned that President Reagan, while backing the concept, would veto a balanced-budget bill if it contained key elements of a plan passed last week by the Democratic-controlled House. That bill would protect poverty programs from potential budget cuts while slashing deficits deeper and faster than Republicans contend is feasible.

“We’re backing away if it (the legislation) becomes a piece of sausage,” said the aide, who spoke on condition that he would not be identified.

The Republican-led Senate held firm on Tuesday to its version of the budget-slashing plan, rejecting Democratic revisions on largely party-line votes that set the stage for another eleventh-hour partisan showdown with the House on Nov. 14, when, the Administration says, the government will run out of cash if the impasse is not resolved.

The original Gramm-Rudman plan called for deficits to be slashed in annual increments until the budget was in balance by 1991. Most government programs, with a few exceptions, such as Social Security, would face mandatory cuts if projected deficits exceeded the annual targets.

The House Democratic plan theoretically would require the budget to be balanced in four, instead of five, years and would subject defense spending to larger potential cuts than the Gramm-Rudman plan.

Both plans have been tied to a bill that would raise the national debt ceiling to $2 trillion from $1.8 trillion. The Treasury Department, after two earlier deadlines passed without its receiving increased borrowing power, had to dip into the Social Security trust fund and two other pension funds to raise money to cover government checks.

More Negotiations Likely

The Senate today is expected to reject more proposed Democratic amendments, a move that will send the budget issue to a House-Senate conference. A previous negotiating panel broke up after failing to reach a compromise last week.

Fearing another partisan deadlock, the White House official said, Reagan will send a letter to congressional leaders today stressing the seriousness of the threatened Nov. 14 shutdown date. However, the official acknowledged that the warnings might meet with skepticism because the Administration has “cried wolf so often” about the possibility of government checks bouncing.

And, as the legislative tangle created by the budget-balancing fight intensified, enthusiasm about the Senate plan, proposed by Republicans Phil Gramm of Texas and Warren B. Rudman of New Hampshire, appeared to be on the wane.

“People are let down with the fact that we were led to believe we had a fair chance of winning this in the House, of catching the House Democrats off guard,” said Sen. Charles E. Grassley (R-Iowa.) “So far we haven’t.”

Backfire on GOP Feared

Some Republicans are now worried that the Gramm-Rudman plan could backfire, eventually subjecting government programs to deep, politically unpopular cuts for which GOP candidates may be blamed at the polls next year.

“There are people (in the Reagan Administration and in Congress) wondering how the hell we got into this mess,” said a source close to Republicans on the Senate Budget Committee.

Democrats charge that the Republican plan was drafted to delay serious budget cutting until after the 1986 elections, giving Republican lawmakers a chance to take credit for the plan but enabling them to escape taking the heat for the cuts. Republicans, on the other hand, contend that the Democratic plan is unconstitutional and drafted to embarrass the Administration by forcing on it first-year cuts so deep as to be virtually impossible to implement.

Staff writer Eleanor Clift also contributed to this story.