Budget Bill Now Law; Intensified Debate Seen

President Reagan on Thursday signed the budget-balancing bill passed by Congress the previous night, but enactment of the measure, rather than putting to rest months of congressional wrangling over the deficit, seemed likely instead to kick the budget debate into high gear.

Senate Budget Committee Chairman Pete V. Domenici (R-N.M.) predicted that chaos could be the initial outcome of the pressure created by the bill’s deficit targets and rigid deadlines for meeting them.

“There will be a very substantial chance of a lot of disorder (and) confusion,” he warned. He said Congress might not be able to pass spending legislation, and pressure would mount for a tax increase as a solution to the deficit dilemma.

‘A Lot of Fun and Games’

Congressional scholar Norman Ornstein pointed out that Congress will have only a few weeks next year to chop $11.7 billion from current spending programs or permit automatic across-the-board spending cuts to take effect instead.

“There’s going to be a lot of fun and games in January and February,” Ornstein predicted.

And the fight over fiscal 1986 spending will be only the beginning. In early February, the legislation requires President Reagan to propose a budget for fiscal 1987 that must slice more than $50 billion from the deficit projected for that year.

The Gramm-Rudman law, named for its chief sponsors, Sens. Phil Gramm (R-Tex.) and Warren B. Rudman (R-N.H.), establishes a series of declining deficit targets, starting at $171.9 billion this year and reaching zero by fiscal 1991. If Congress fails to enact spending and tax laws to meet the ceilings, across-the-board spending cuts--falling equally on defense and the rest of the budget but exempting Social Security and benefit programs for the poor--take effect automatically.

Tax Increase Rejected

Reagan, in signing the bill into law, again insisted on continued defense spending growth and flatly rejected a tax increase as a way to bring the deficit down.

“Whether increased government spending is financed through taxes or borrowing, it imposes a heavy burden on the private economy--the source of our prosperity and the foundation of our hopes for the future,” he declared. “That is why increasing taxes is not an option; deficit reduction must mean spending reductions.”

Hours after Reagan signed the bill, Rep. Mike Synar (D-Okla.) filed suit in federal district court here in an effort to have a key section of the law--which would trigger automatic, across-the-board spending cuts if federal deficits exceeded the law’s deficit targets--voided as unconstitutional.

Synar argued that, with the automatic spending cuts, Congress was unlawfully abdicating its constitutional responsibility to approve all spending laws. “We’re trying to get off the automatic pilot and get Congress back in the network,” he said.

Challenge Anticipated

Congressional negotiators, anticipating such a challenge, included language in the legislation calling on the courts to expedite any legal review. If the courts strike down the automatic cuts, the Gramm-Rudman law gives Congress a chance to put the cuts into effect through the traditional and constitutional manner--a House and Senate vote.

James C. Miller III, Reagan’s budget director, presented the outline of his proposed fiscal 1987 budget to a Cabinet meeting Thursday. An Administration official who was present said Miller warned that “drastic steps” would have to be taken to meet that year’s Gramm-Rudman deficit target of $144 billion, $50 billion below the current estimate. But he hewed to Reagan’s insistence that there be no tax increase.

Many budget experts warn that his goal will only aggravate the deficit dilemma.

“If you want to reach the Gramm-Rudman targets, you can’t do that without a tax increase or without being forced into (spending) cuts for which there is no majority in Congress or in the White House,” said Alice M. Rivlin, former director of the Congressional Budget Office.