Congress Angry as Reagan Defers Unwanted Spending

President Reagan, up against strong congressional resistance to his proposed budget cuts, has turned to a potent but controversial means of transforming his spending priorities into reality: He is simply refusing to spend billions of dollars that Congress has appropriated.

Although little notice was taken of his action at the time, Reagan informed Congress early last month that he would defer almost $23 billion in spending on programs that range from providing housing for the poor to filling the Strategic Petroleum Reserve. Spending of some of the funds would be postponed for only a few months, but other deferrals would be indefinite.

The Administration action has met with increasing outrage in Congress, with some members Monday predicting a repetition of the bloody battles of the early 1970s over President Richard M. Nixon’s effort to enforce his will by impounding funds voted by Congress.

“The President is trying to thwart the law,” Sen. J. Bennett Johnston (D-La.) charged, “and I don’t think he’ll get away with it.”

Senate Budget Committee Chairman Pete V. Domenici (R-N.M.) said: “I don’t believe Congress had in mind at all that the deferral would be used that way. . . . You can rest assured that it will be a paramount issue for the next couple of months in Congress.”

But Edwin L. Dale Jr., spokesman for the President’s Office of Management and Budget, insisted that most of the deferrals are “perfectly routine” and are necessary to preserve Congress’ opportunity to cut certain programs before the money is already spent.

Reagan’s hand has become stronger because a 1983 Supreme Court decision striking down the “one-house veto” dramatically curtailed Congress’ ability to block a presidential spending deferral. No longer may either the House or the Senate, acting alone, reverse the President. Now, to do so, both houses must pass a bill--and they are likely to face a veto from the same President who ordered the deferral in the first place.

In the most recent batch of deferrals, which Reagan announced on Feb. 5, the hardest-hit programs are housing and community development. By deferring into 1987 about $3 billion that had been intended for such programs this year, the Administration figures it can dramatically reduce the amount of new funds that will be budgeted next year.

‘Unfair to Cities’

“Although I firmly believe that we need to take bold steps to bring federal spending under control, the Administration’s decision is simply unfair to cities and counties that have already planned community development projects for 1986,” Sen. Slade Gorton (R-Wash.) said.

Gorton has introduced a bill seeking to overturn an Administration-ordered deferral of $500 million in community development grants and allow them to be used this year, as Congress originally intended. The figure amounts to 16% of the total funds available for the program this year.

A group of Democratic House members, joined by such organizations as the National League of Cities and the U.S. Conference of Mayors, is challenging the housing and urban development cutbacks on another front--in a lawsuit contending that the Supreme Court case overturning the one-house veto made the President’s deferral power unconstitutional as well.

Attorney David C. Vladeck, who is representing the plaintiffs, said that, in previous years, “the White House has been very selective in (ordering) deferrals.” But, with the latest round, he said, “they’ve basically thrown down the gauntlet.”

Prison Spending Deferred

Congress granted the President his deferral power in 1974, chiefly to allow him some flexibility to respond to unexpected events. For example, Reagan deferred $30.7 million in spending for new prisons this year because funds for part of the long construction process will not be needed until next year.

When the President wants to permanently undo spending that Congress has approved, the law requires him to ask Congress to pass a bill rescinding the appropriation. But, although a rescission cannot go into effect unless Congress approves it, a deferral occurs immediately, unless Congress reverses it.

The General Accounting Office, empowered by Congress to determine when the Administration has improperly tried to use deferrals to make permanent cuts, last week ruled as “not permissible” at least three-quarters of Reagan’s deferral of the $198 million appropriated by Congress to build storage facilities for the Strategic Petroleum Reserve. It based its judgment on the fact that Reagan has ordered cuts that Congress specifically considered--and rejected--as recently as last August.

Refusing to Buy Oil

Reagan has also deferred the $578 million appropriated to buy oil for the reserve, and Sen. Johnston warned that Reagan’s actions might poison his future efforts to persuade Congress to quit filling the reserve.

“To fly in the face not only of congressional will, but of the law of the land, makes it very difficult to get an atmosphere of compromise,” Johnston said.

Dale admitted that the Administration’s case for the deferral of the $198 million had been made on “weak grounds.” But he said the Administration, rather than releasing the funds, would “probably resubmit” the deferral with a new set of justifications.

“If it’s right,” he said, “we try, try again.”

Congressional critics say that Reagan is using deferrals aggressively as a means of making sure that his spending policies, rather than those set by Congress, are carried out.

On a variety of renewable energy, solar energy and energy storage programs, for example, the President deferred almost exactly the amounts that Congress had added to his original spending requests.

“They take (only the amount) they wanted,” said Rep. Vic Fazio (D-Sacramento), a member of the House Appropriations and Budget committees. “They’re just basically saying: ‘Stick it.’ ”

Deferrals Grow Fivefold

The GAO is continuing its study of last month’s list of $23 billion in deferrals, which compares to $16 billion in 1985 and is about five times as big as the $4.6 billion ordered in 1984.

In the past, a key aide to the Senate Appropriations Committee said, the Administration “rarely deferred and, when it did, it was for sensible program reasons, not for policy reasons.”

The aide added that, after the Supreme Court decision banning the one-house veto, congressional leaders struck a “gentleman’s agreement” with former Budget Director David A. Stockman, who resigned last year, to the effect that deferrals would not be used to carry out Administration policy against the will of Congress.

In practice, many believe, Reagan’s broad use of deferrals essentially gives him his long-sought power to veto spending items for individual programs rather than being forced to take or leave entire appropriations bills.

“It’s essentially a grab for a line-item veto,” a congressional aide said.