Revamped Defense Budget Demanded by Panel Chief

The chairman of the House Budget Committee on Friday demanded that President Reagan resubmit his fiscal 1987 Pentagon budget on the grounds that it underestimated spending by nearly $15 billion to achieve compliance with Gramm-Rudman deficit-reduction limits.

Rep. William H. Gray III (D-Pa.) made the urgent request in a letter to the President, which he read into the record as Defense Secretary Caspar W. Weinberger defended the budget’s $282.2-billion military spending estimate at a committee hearing.

Gray, who questioned the Pentagon’s estimate when it became public Wednesday, disclosed his letter shortly before a federal district court panel found unconstitutional a key provision of the Gramm-Rudman law, which provides for automatic spending cuts if Congress and the President fail to hold deficits within prescribed ceilings.

‘Serious Consequences’

It was concern about the workings of the challenged Gramm-Rudman provision, Gray said in his letter, which prompted his warning to Reagan that “serious consequences” could result from inaccurate spending estimates in fiscal 1987, the first year in which the Gramm-Rudman formula would take full effect.

Gray warned that if outlay estimates are too low, revised deficit projections that will be required next August could exceed the $144-billion limit that the law imposes. In that case, half the additional cuts would fall on the defense establishment, Gray noted, “in spite of the best efforts of Congress, acting in good faith, to reach the $144-billion deficit target.”

“Clearly, it is essential this year that we use realistic and even conservative estimates in our budget planning,” Gray wrote Reagan. “I do not feel that we can proceed effectively to do this, given the unrealistic defense outlay estimates in your budget proposal. I therefore respectfully request that you resubmit a budget proposal to the Congress which contains realistic defense spending estimates and genuinely meets the $144-billion deficit target.”

Higher Estimates Cited

The chairman bolstered his argument with a letter from Rudolph G. Penner, director of the Congressional Budget Office, reporting that the CBO estimated military spending at $269.4 billion for the current fiscal year, $3.6 billion above the Administration’s figure, and estimated 1987 spending at $296.9 billion, which is $14.7 billion above the total indicated by Reagan’s budget proposals.

Weinberger’s firm response was that “we don’t believe the estimates are wrong.” Observing that budgets never “come out precisely,” he said the Pentagon’s estimate of spending in fiscal 1987 is “the best that can be done 27 months ahead of time.”

Making the case for approval of the Pentagon budget as submitted to an apparently unconvinced committee, Weinberger maintained that spending plans for the armed services were “reduced substantially” before the budget went to Capitol Hill. He argued, moreover, that the Defense Department had made a disproportionate contribution to deficit reduction.

Although Gray maintained that Reagan’s budget proposes 12% growth in Pentagon spending in fiscal 1987, Weinberger argued that it actually provides for only 3% real growth over “what would have been zero” growth for 1986.

8.2% Real Growth Seen

In the view of the Center on Budget and Policy Priorities, a nonpartisan privately funded group, Reagan’s fiscal 1987 request amounts to a $34.2-billion increase over the $320.3 billion authorization for 1986, with 8.2% real growth after Gramm-Rudman cuts are subtracted.

Gordon Adams, director of the project, said that the Administration’s finding that real growth amounts to only 3% can be justified only if it is measured against the budget resolution enacted last August, which proposed $302.5 billion in defense spending but was never backed up with an appropriation.