Congress Goes Home; Deficit Cuts Put Aside

A dazed, mulish Congress finally headed home for the holidays Friday, after voting another stopgap extension of the 16-cent-a-pack cigarette tax but failing to agree on a plan to shave deficits by $74 billion over three years.

Caught in the impasse were controversial proposals to impose a new toxic waste cleanup tax on most manufacturers and to unfreeze $6 billion in disputed offshore oil-drilling revenues, a move that would have immediately put up to $400 million in California state coffers.

The Democratic-controlled House and the Republican-controlled Senate spent the last two days batting deficit-reduction plans back and forth. Each side blamed the other for the standoff, and deal-making was complicated by a White House veto threat and a dwindling number of lawmakers to conduct business.

Quorum Not Available

Even if negotiators could have resolved differences over the budget-reduction plan, so many of the 435 House members had left town by Friday that it would have been impossible to muster a quorum to ratify any agreement. House Speaker Thomas P. (Tip) O’Neill Jr. (D-Mass.) was among the missing.

“It’s not my problem,” Senate Majority Leader Bob Dole (R-Kan.) snapped when asked how Congress could clear up differences over the deficit package with so many House members gone. “I’d like them to pass it; but, if they don’t have enough bodies around, that’s their problem.”

In the end, lawmakers voted to send the deficit plan, designed to implement the budget blueprint adopted by Congress in August, to a House-Senate conference committee.

Senate Republicans argued that the conference committee could continue work on the plan when lawmakers returned to Washington in late January, but Democrats had their doubts. “What we are trying to do is a rather cynical move to send it over there and let it die,” Sen. Lloyd Bentsen (D-Tex.) complained.

The measure included a series of politically unpopular spending cuts and tax and fee increases.

New Deficit Targets

Failure to enact trims now will make it more difficult to meet new deficit targets mandated by another major cost-cutting plan signed into law by President Reagan last week. The so-called Gramm-Rudman law requires mandatory spending cuts in most government programs, including defense, if Congress cannot hold the deficit, about $212 billion last year, to a series of annually declining ceilings, falling to zero in 1991.

Buried in the deficit-reduction package was a provision mandating the permanent retention of the 16-cent cigarette levy. The tax technically reverted to 8 cents a pack at midnight Thursday, but the temporary extension, approved by voice votes in nearly empty House and Senate chambers late Friday, kept the higher assessment alive through March 15. The same vote extended a freeze on Medicare payments to doctors and hospitals through mid-March.

At least 13 states have enacted standby laws that would raise local cigarette taxes in the event that the federal assessment was halved. But congressional leaders said they did not think the hours-long interruption of the 16-levy would trigger those clauses.

Apart from the tobacco tax, the Senate refused to go along with the House and give a temporary lease on life to a series of other taxes and tax credits due to expire at the end of the month, including a measure designed to provide financial assistance for workers and firms in industries hit especially hard by foreign competition.

Veto Threatened

The White House reiterated its opposition to the full deficit-reducing package as late as Friday morning, when Administration spokesman Larry Speakes said that Reagan would veto the package unless several parts were removed.

Among other things, Reagan objected to the tax on manufacturers, which other critics charged was akin to a national sales tax. It would have raised $5.7 billion for the Superfund toxic waste cleanup program over the next five years by tacking a $1 tax on every $1,000 worth of goods that large manufacturers shipped from factories.

Speakes said that the President also disliked the plan for distributing oil revenues, which would have settled a long-standing dispute between the federal government and seven coastal states over how to split money derived from the sale and development of leases on offshore drilling tracts hugging the coastline.

Frozen Royalties

A $6-billion pool of frozen royalties and lease sale revenues would have been doled out under the congressional plan, with California taking $375 million to $400 million of the $1.5-billion share earmarked for the states. In addition, the states would have retained 27% of all future revenues from the tracts, a split that California officials have estimated would earn the state an additional $1 billion over the next few decades.

Reagan insisted that the states were not entitled to such a generous share of the oil money.