Key Gramm-Rudman Provision Struck Down : Panel Lets Law Remain in Effect Until Ruling by Supreme Court; Deficit Cuts Still Possible

A special federal judicial panel, citing a violation of the constitutional principle of separation of powers, Friday struck down a key provision of the Gramm-Rudman budget-balancing law that requires automatic, across-the-board spending cuts when Congress fails to meet deficit reduction targets.

But, in a unanimous decision, the three-member panel delayed implementation of its ruling, allowing the law to remain in effect until an appeal to the Supreme Court. The high court could make the final decision by this summer--or sooner, if it agrees to expedite the appeal.

The ruling left intact the law’s “fallback” provision, which allows Congress to make a package of across-the-board spending cuts effective simply by voting for it. And the law’s deficit reduction timetable, which calls for a balanced budget by 1991, also remains in force.

The contested provision of the Gramm-Rudman law gives the comptroller general, an official under Congress’ control, the power to determine the size of across-the-board spending cuts necessary to reduce the deficit to targets spelled out in the law. The panel declared that this provision improperly gives to the comptroller general enforcement functions that the Constitution reserves to the executive branch.

The panel’s 50-page opinion was issued by Circuit Judge Antonin Scalia of the Court of Appeals for the District of Columbia and District Judges Norma Holloway Johnson and Oliver Gasch of the District of Columbia.

The panel based its decision on the basic constitutional principle that separates the executive, legislative and judicial branches as a way of maintaining checks and balances on government authority.

The three judges conceded that they were invoking a “relative technicality” to overturn the main enforcement mechanism of “an important and hard-fought legislative program.”

‘Important to Liberty’

“But the balance of separated powers established by the Constitution consists precisely of a series of technical provisions that are more important to liberty than superficially appears, and whose observance cannot be approved or rejected by the courts as the times seem to require,” the judges said.

The panel declared that the first $11.7-billion round of spending cuts under the law, to take effect March 1, is “without legal force and effect.” But, under the panel’s order staying the ruling, those cuts will go into effect anyway while the case is taken to the Supreme Court. If the Supreme Court affirms the panel’s ruling, the $11.7-billion in cuts would be void unless Congress voted to enforce them.

The Gramm-Rudman law could force a second round of across-the-board cuts as of Oct. 1, the first day of fiscal 1987. Under the law, Congress and President Reagan could forestall those cuts by agreeing to reduce the deficit, now estimated at $203 billion in the current fiscal year, to $144 billion next year.

Reaction to the ruling was swift and widespread.

Reagan to Meet Targets

Reagan pledged to continue to submit budgets that meet the deficit-reducing targets of Gramm-Rudman. The ruling, the President said, “is no excuse for walking away from our responsibility to bring federal spending under control.”

“We’ve given the American people our word,” he said in a statement issued by the White House. “We cannot let them down.”

Comptroller General Charles A. Bowsher, who is the head of the General Accounting Office, and Sen. Phil Gramm (R-Tex.), a principal sponsor of the law, filed notice of appeal to the Supreme Court. “I believe there are substantial grounds for appeal,” Bowsher said. “Under the (panel’s) order, the deficit reduction process will go forward until the Supreme Court decides the case.”

Rep. Mike Synar (D-Okla.), one of a group of 12 congressmen who challenged the law in the case before the court, praised the ruling, saying that it showed “in no uncertain terms that Congress can run but it can’t hide from its responsibilities.” Now, it is up to Congress to solve the deficit problem, he said, conceding that Congress “faces some tough choices over the next few years.”

Justice Dept. Pleased

The Justice Department expressed satisfaction that the panel, without striking down the entire law, had invalidated a provision it viewed as unconstitutional. “Gramm-Rudman is alive and well,” a spokesman said. “This is what we had argued all along, and we are pleased.”

The law, enacted by Congress and signed by Reagan in December, drew its name from two of its sponsors, Gramm and Sen. Warren B. Rudman (R-N.H.). It sets annual deficit ceilings that decline gradually to zero in fiscal 1991.

If Congress is unable to meet those targets on its own, the law establishes a complicated mechanism for putting across-the-board spending cuts into effect. The comptroller general, on the advice of the President’s Office of Management and Budget and the Congressional Budget Office, specifies the depth of the cuts necessary to achieve the targets, and the President then orders the cuts put into effect.

The law was challenged by the 12 congressmen and the National Treasury Employees Union, primarily on the grounds that Congress had improperly delegated its authority over the budget to a group of non-elected officials.

The Administration, represented by the Justice Department, contended that the automatic cutback provision is invalid because it allows the comptroller general to usurp the authority of the President, violating the principle of separation of powers.

Congress Defended Law

The law’s validity was defended by attorneys representing Congress and the comptroller general.

In its decision, the special panel noted that Congress in the past frequently has delegated a wide assortment of authority to the executive branch and that the general delegation of budget-cutting power by Congress “passes constitutional muster.” But the specific delegation of such authority to the comptroller general, it said, “violates the constitutionally requisite separation of powers.”

The comptroller general is appointed to a 15-year term by the President but must be confirmed by the Senate and may be removed from office by Congress. The panel concluded that the comptroller general essentially works for Congress but that, in his role under the Gramm-Rudman law, he would be asserting powers “normally conferred upon the executive.” The panel held that the law gives authority to the comptroller general “which cannot constitutionally be exercised by an officer removable by Congress.” If Congress wants to delegate such authority, the panel said, it must be to an officer “within the control of the executive branch.”