White House Warns of 4.3% Domestic, 4.9% Pentagon Cuts

An automatic $11.7-billion reduction in the federal deficit under the budget-balancing Gramm-Rudman law would force a 4.3% cut in domestic programs and a 4.9% cut for the military on March 1, a White House spokesman said today.

Presidential spokesman Larry Speakes said the Office of Management and Budget sent orders out to all affected federal agencies on Friday informing them of the estimated cuts necessary to implement the new law.

Reagan will send agencies a list of detailed cuts next month.

The cuts are to be triggered if the estimated deficit for 1986--based on projections by the White House and congressional budget offices--top this year’s Gramm-Rudman target of $172 billion by $20 billion or more.

A congressional budget official who spoke on condition of anonymity said that the CBO forecast of the deficit likely will top $220 billion, far above the record $212 billion set last year.

Two Projections

The OMB projection, to be based on slightly more optimistic economic assumptions, is expected to forecast a somewhat lower deficit figure than the congressional one.

But an Administration official who also demanded anonymity said the OMB forecast would be only slightly lower than the CBO one and would still come in at “about $220 billion.”

Both the CBO and OMB assembled their deficit data based on economic conditions that prevailed in the nation Friday.

Under the Gramm-Rudman law, both budget offices will submit their findings to the General Accounting Office, a congressional auditing and watchdog agency, which will come up with a final list of specific cuts later this month.

Changes Unlikely

The GAO could change the cut percentages, although congressional and Administration officials say they do not expect that will happen this year.

The actual cuts will then be passed along to President Reagan, who is required to issue an order on Feb. 1 detailing them.

In later years, the magnitude of the automatic cuts triggered under Gramm-Rudman will be equal to the difference between the law’s deficit-reduction target and the deficit projection.

This year, that would have implied cuts of nearly $50 billion. However, for 1986 alone, Congress voted to limit the cuts to a total $11.7 billion--to be shared equally by domestic and defense programs.

Service Personnel Untouched

Defense programs will take a slightly higher percentage in the March 1 cuts because of a decision by Reagan to shield all military personnel from any of the cutbacks.

Gramm-Rudman exempts Social Security and certain benefit programs for low-income residents, such as food stamps. Special treatment is allowed for other programs such as Medicare.

Reagan has called for discontinuing a number of subsidies in the 1986 budget year, such as the federal payment to Amtrak, and the elimination of 25 programs. But Congress voted to continue appropriations for many of them.

The Small Business Administration and the Interstate Commerce Commission have been cited by officials as likely to be abolished.

The Gramm-Rudman law requires large reductions in the deficit for each of the next five years. The aim of the measure, which is facing a federal court challenge, is a balanced budget by 1991.