‘87 Reagan Budget Rejected by Panel : Senators’ Action Seen as Symbolic as Committee Starts Work on Own Plan

The Republican-controlled Senate Budget Committee, settling in for what promises to be a long and painful debate over national spending priorities, overwhelmingly rejected President Reagan’s proposed fiscal 1987 budget Thursday.

In what was seen as a symbolic move at the start of the committee’s effort to draft its own budget, half of the panel’s dozen Republicans joined all of its Democrats in a 16-6 vote to reject the budget.

“This is an exercise in President-bashing,” Sen. William L. Armstrong (R-Colo.) complained. The Reagan budget, “though not perfect, is a reasonable proposal,” he added.

‘Not a Repudiation’

However, Sen. John C. Danforth (R-Mo.) insisted that the vote was not “in any sense a repudiation” and called the White House spending blueprint “the starting point.”

The vote was no surprise. Afterward, White House Budget Director James C. Miller III said in a statement: “I’m grateful that some senators voted for the President’s budget and that others expressed support for many of its features.”

Some senators criticized the Reagan budget for relying too heavily on domestic spending cuts rather than new taxes or reductions in defense spending. Sen. J. Bennett Johnston (D-La.) described it as “unworkable, mean-spirited and wrong-headed.”

Budget Committee Chairman Pete V. Domenici (R-N.M.) voted for the President’s budget, although he has said repeatedly that it stands little chance of coNgressionaL approval. Domenici, who has not yet offered his own plan, told reporters that he intends to meet with the committee’s top-ranking Democrat, Lawton Chiles of Florida, to work out a bipartisan proposal.

“I’m hopeful,” Domenici said, but he added: “We’re not there yet.”

As the Senate committee took its first series of votes on the 1987 budget, the House was still working to complete a deficit-reduction effort started last year. It approved a package of spending cuts and revenue increases that would reduce the deficit by $6.8 billion for the remainder of the 1986 fiscal year, which ends Sept. 30.

More than two-thirds of the revenue would come from settling a long-standing disagreement over how much of the federal government’s revenue from offshore oil leasing should be shared with coastal states. Under the House bill, California would receive $413 million of the revenues, which have been accumulating since 1978 and are held in escrow.

Threat of Veto

However, this provision, along with many others in the deficit-reduction package, faces strong opposition in the Senate and the threat of a veto by President Reagan.

Congress failed last year to approve a version of the same bill that would have cut spending even more, with savings estimates ranging up to $80 billion. But, as Congress and the White House have bickered over the bill, its three-year savings have dwindled to about $18 billion, thanks in part to the deletion of a value-added tax on manufacturers to pay for the Superfund toxic waste cleanup program.

Remaining in the bill, in addition to the offshore oil revenue solution, is an extension of the 16-cent-a-pack cigarette tax and the abolition of the Synthetic Fuels Corp.

However, the bill would also expand a variety of federal programs. As of 1988, for example, two-parent families with unemployed principal wage earners could collect Aid to Families with Dependent Children in all states.

Separately, the Senate began debate Thursday on a compromise version of a proposed constitutional amendment that would require a balanced budget.

Similar Amendment Died

A similar Senate-passed amendment died in the House three years ago, but Senate sponsors expressed confidence that the amendment would fare better this time around.

The latest version includes several new features, including language that would loosen restraints On Congress’ ability to raise taxes to maintain a balanced budget.

This will be the amendment’s first test since enactment of the Gramm-Rudman law, which requires a balanced budget by fiscal 1991.

Deficit Targets

If Congress does not enact budgets that meet a declining series of deficit targets, the law would force automatic spending cuts in a wide range of federal programs.

The presidential budget rejected by the Budget Committee claims to meet the fiscal 1987 deficit target of $144 billion, but the Congressional Budget Office estimates that it would exceed the target by almost $16 billion.

“They’re playing games,” Sen. Ernest F. Hollings (D-S.C.) said of the Administration budget. “This is monkeyshines.”