Budget Panel OKs Plan Calling for Tax Hikes

The Republican-led Senate Budget Committee approved a bipartisan compromise budget today that rejects President Reagan’s large military buildup and calls for $18.5 billion in increased taxes.

The committee voted 13-8 for the package, with six Democrats joining seven Republicans in approving the spending plan that bucks the President’s wishes on both the Pentagon and taxes.

The budget allocates $295 billion for the military in fiscal 1987--$25 billion less than Reagan wanted and not enough to compensate for the projected rise in costs due to inflation. It reduces the current $182-billion deficit to $144 billion, as required by the Gramm-Rudman balanced budget law passed late last year.

Budget Committee Chairman Pete Domenici (R-N.M.) and leading committee Democrat Lawton Chiles of Florida built their coalition one senator at a time this week, apparently sensing that if they were going to fight Reagan on two issues he has so far refused to negotiate on they would be better off to do it together.

Art of Compromise

Opponents on the committee complained the plan raised too much in taxes and cut too much from defense, but Domenici said the plan reflected the art of compromise.

“I predict before we are finished on the floor, we will pass this or something very much like it,” Domenici said.

The Domenici-Chiles budget allocates $295 billion for the military in fiscal 1987--an increase of 2.8%. Inflation for the fiscal year beginning Oct. 1 is expected to exceed 3%. Reagan wanted $320 billion for the military.

On taxes, the budget proposal includes President Reagan’s recommendation for $6 billion in increased revenue from higher user fees for government services, stepped up enforcement of tax laws and a continuation of the 16-cent-a-pack cigarette tax. But it calls for another $12.5 billion in additional unspecifed revenues that Domenici said could come from almost anywhere except an increase in individual tax rates. Those decisions would have to be made later.

No Social Security Cuts

The budget does not cut Social Security spending, and allows a cost-of-living raise for Social Security recipients and military and civilian retirees.

Chiles called for the White House to negotiate with Congress.

“It’s not just a compromise budget it’s a lenten budget,” Chiles said. “We should ask the White House to join with us in a lenten spirit and give up a little something too.”

But the White House has been adamant that Reagan will not agree to higher taxes or a reduction in defense.

Even if the package passes the committee, it could be changed on the Senate floor. Senate Republican leader Bob Dole of Kansas told reporters he would like to put more money into defense and raise less in taxes.

Several senators on the committee said they weren’t pleased with all aspects of the compromise budget, but Sen. Donald Riegle (D-Mich.) pointed out that “we have to think in terms of something that can carry” both Democrats and Republicans.