‘86 Deficit Bill Stalled After Senate OKs It

The Senate on Friday approved with little fanfare a wide-ranging deficit-reduction bill left over from last year’s budget deliberations, but the bill remains in limbo as the House and Senate show no signs of resolving basic differences over the legislation.

The Senate faced conflicting pressures: The bill it passed on a voice vote Friday is sure to run into major opposition from the House, but modifying the legislation to meet House requirements seems just as certain to subject it to a veto by President Reagan.

$7 Billion in Cuts

But, if Congress takes no action on the legislation, it loses the opportunity to cut the deficit by almost $7 billion and to achieve many other high-priority goals.

A major issue under dispute is how to distribute more than $6 billion that has accumulated in escrow since 1978, awaiting settlement of a disagreement between coastal states and the federal government over how to share revenues from offshore oil leasing on certain tracts. Without a congressional settlement, those funds will remain in escrow.

In both the House and Senate versions of the bill, California initially would receive more than $400 million of the funds.

However, the two bills differ in the conditions that they would impose on future leasing. The House bill would give states far greater leverage in determining where federal leasing may occur off their shores.

Both California senators, Democrat Alan Cranston and Republican Pete Wilson, made an unsuccessful effort to add a similar provision to the Senate bill.

Cranston said that such a provision would “bring some fairness and common sense” to existing law, which he said is “disastrous for our state of California.”

Wilson said that current law has allowed federal officials “to unjustly override the stated concerns of the affected governors in a number of different lease sales.”

But James A. McClure (R-Ida.), chairman of the Senate Energy and Natural Resources Committee, said the conditions of the Senate bill had been carefully drawn to avoid a threatened presidential veto.

‘Parochial’ State Interests

“The Administration stalwartly resists the notion that the taxpayers of this country should be hostage to the parochial interests of an individual state,” McClure said.

The bill contains $6.9 billion in spending cuts and revenue increases called for in the fiscal 1986 budget resolution that Congress adopted last year. It would cut the deficit by $26 billion over three years.

One of its chief components, raising $6 billion over three years, is an extension of the 16-cent-a-pack cigarette tax, which was scheduled to revert to 8 cents at midnight Friday.

Although the tax technically expired then, Senate Majority Leader Bob Dole (R-Kan.) said its collection probably would not be interrupted. It was allowed to expire briefly last year, but Congress prevented an interruption by passing a retroactive extension.

The two houses had tried to pass the deficit-reduction legislation in the closing hours of the session that ended in December but failed to agree on provisions to finance the Superfund toxic waste cleanup program. Even after they decided to drop the Superfund segment of the legislation, they were hampered by differences over other issues.

In an effort to force the Senate’s hand, the House passed its own version of the bill on March 6 and sent it to the Senate.

Aid Provision Rejected

The Senate rejected several provisions of the House bill, among them a requirement that states provide payments to two-parent families under the Aid to Families with Dependent Children program. Currently, states may opt to do so but are required to include only one-parent families in the program.

Further, the Senate bill would provide smaller increases in Medicare payments to hospitals and would delete expansion of Medicare’s home health, medical education and vision care services.