Miller Lists Spending Cuts Required Under Deficit Act

White House Budget Director James C. Miller III on Wednesday announced $11.7 billion in spending cuts triggered by the Gramm-Rudman budget-balancing law and claimed that they can be carried out “with a minimum of disruption,” but agency officials said the rigid retrenchment would impose serious hardships on some important government activities.

The federal deficit would hit a record $220.5 billion this year without spending cuts, Administration and congressional budget officials concluded. Their estimate set into motion the Gramm-Rudman Act’s process of automatically trimming thousands of government operations as of March 1.

Unless Congress intervenes, the cuts will reduce defense spending by about $5.4 billion and domestic programs by $5.3 billion. An additional $1 billion already has been saved by eliminating cost-of-living increases in pensions for federal civilian and military retirees.

Miller, dismissing bureaucratic fears of crucial disruptions in government activities as nothing more than perennial threats “like closing the Washington Monument or draining the Tidal Basin,” said that the first round of spending cuts should not require much more than a hiring freeze in most government departments and limits on travel and other such activities.

But Administration officials acknowledged that even the relatively modest cuts could mean shorter hours at some national parks, higher fees for student loans, fewer meat inspectors, possible early release of federal prisoners and smaller crop support payments for farmers.

Congress exempted some domestic programs from the Gramm-Rudman cuts and the Reagan Administration shielded some military accounts. More than $200 billion in Social Security payments will not be affected, and Medicare and other health-care benefit programs may not be reduced by more than 1%. In addition, Congress protected several welfare and veterans’ programs from cuts, but few other government operations are to be spared the budget knife.

Near-Record Deficit

This first modest step toward the Gramm-Rudman Act’s ultimate goal--a balanced budget by 1991--will reduce all unprotected domestic programs by 4.3% and all unshielded defense programs by 4.9%. The cuts leave the estimated 1986 deficit near $210 billion, barely below last year’s record of $212 billion.

The reductions, detailed in a 416-page document prepared by the President’s Office of Management and Budget and the Congressional Budget Office, cover a huge array of government activities. They range in size from a $2.6-billion reduction in new commitments for federally guaranteed housing loans to a $1,000 reduction for an ammunition-loading yard at the Army’s Red River Depot in Texas.

The first round of cuts provides only a modest hint of what is to come later this year unless Congress and the White House can agree on a budget that would slash the deficit for the fiscal year beginning Oct. 1 close to the $144-billion target mandated by Gramm-Rudman.

Administration officials said that the White House is preparing a budget plan for fiscal 1987, scheduled to be released early next month, that will propose deep spending cuts and other savings totaling about $54 billion to meet the $144-billion target.

Law Being Challenged

The new law, sponsored by Sens. Phil Gramm (R-Tex.) and Warren B. Rudman (R-N.H.), sets a series of descending deficit targets designed to yield a balanced budget in six years. It is being challenged in federal court on constitutional grounds, but no final ruling is expected until later this year.

Secret Service spokesman Robert R. Snow, calling the cuts “a tough bite,” said that they would not mean reduced protection for the President and visiting heads of state but could significantly restrict field investigations and special training. “We’re looking at a hiring freeze . . . “ he said. “Furloughs would be a last resort.”

At the Justice Department, officials are weighing proposals to release some federal prisoners early and to limit paid workdays for some employees at the Bureau of Prisons. Also under consideration, according to a department official who insisted on anonymity, is a proposal that lawyers in the Criminal Division take two weeks off without pay.

However, Atty. Gen. Edwin Meese III said that the department would continue to “handle priority criminal matters so as to not in any way vitiate the protection of the public.”

Metro Rail Funds

The impact on federal funds for the long-planned Los Angeles Metro Rail system remained unclear, officials said. The Los Angeles proposal is one of a group of mass transit projects that will be cut by 4.3% overall, according to Bonnie Whyte of the Urban Mass Transit Administration, but the cuts probably will fall unevenly among the projects. And Miller warned that the White House might withhold some funds for new mass transit projects unless Congress has specifically ordered the Administration to spend the money.

At the National Institutes of Health, one official suggested that, although the cuts “will be fairly straight across-the-board things,” he had been told that research on a cure for AIDS “is going to be spared, because it has that priority.”

Rep. Henry A. Waxman (D-Los Angeles), chairman of the House Energy and Commerce subcommittee on health and the environment, argued that “in the health care field, the cuts will cause serious problems now, and the next round of cuts will be devastating.” Although Medicare cuts will be held to 1% this year, “I think we’ll see more hospitals pushing Medicare patients out too soon,” Waxman warned.

Even though the cuts outlined Wednesday may cause some political discomfort in this election year, lawmakers seemed clearly more worried about the indiscriminate budget slashing they expect the law to require for fiscal 1987, which begins Oct. 1.

“All of the chickens will come home to roost on Oct. 1,” said Rep. Leon E. Panetta (D-Monterey).

‘Chopping Hand Off’

And Rep. Charles E. Schumer (D-N.Y.) said that the March cuts would be like “trimming your nails; 1987 is like chopping your hand off.”

Panetta, one of the key Democrats who negotiated the final version of the balanced-budget measure, predicted that the threat just before the 1986 elections of widespread budget cuts would force Congress and the White House to do anything to avoid automatic reductions. That means they would have to agree on an alternative way to live within the $144-billion deficit ceiling or amend the Gramm-Rudman law at least to postpone the day of reckoning.

“This thing’s going to go right to the wall,” he suggested. “In an election year, there’ll be a lot of blamesmanship about who’s responsible for the deficit.”

Staff Writers Marlene Cimons, Paul Houston, Ronald J. Ostrow, Bob Secter and Karen Tumulty contributed to this story.