New Gramm-Rudman Plan Drafted : Executive Budget Office Designated to Make Spending Cuts

The authors of the Gramm-Rudman law announced a proposal Friday that would restore the legislation’s threat of automatic spending cuts by transferring to the White House Office of Management and Budget the authority to order the reductions.

Such a change, they said, would address the objections cited by the Supreme Court, which ruled last week that its mechanism for making the reductions automatically was unconstitutional.

“We got a flat tire on the way to the Supreme Court. We’re trying to fix the tire; we’re not trying to overhaul the car,” said Sen. Ernest F. Hollings (D-S.C.), one of those who helped draft the original law and the new proposal, dubbed “Gramm-Rudman II.”

Critics Fear Substitutions

However, critics fear that such a move would give the President, through the budget office, too much power to substitute his own spending priorities for the law’s mathematical formula.

Hollings and the measure’s Republican co-sponsors, Phil Gramm of Texas and Warren B. Rudman of New Hampshire, said that they plan to attach the bill to a measure raising the federal debt ceiling. It was similar legislation, which must pass if the government is to continue borrowing the money it needs to operate, that carried the original Gramm-Rudman bill on a fast track to passage last year.

As the law was originally written, the cuts--about half from defense and half from domestic programs--would be ordered automatically if lawmakers failed to bring the deficit to within $10 billion of the law’s annual targets.

But the Supreme Court ruled that this “automatic trigger” was unconstitutional because it violated the separation of powers doctrine by giving the comptroller general, an unelected officer of Congress, the power to order the executive branch to make the reductions.

Expect Reagan to Sign Bill

The ruling meant that Congress itself must vote on the cuts, which then would be sent to President Reagan to be signed into law. On Thursday, both houses reaffirmed $11.7 billion in cuts for fiscal 1986, which ends Sept. 30. The cuts were made automatically in March but were rendered unconstitutional by the high court ruling. Reagan is expected to sign the bill affirming the cuts into law.

However, the prospects are less certain for meeting Gramm-Rudman’s $144-billion deficit goal for fiscal 1987, which begins Oct. 1. The law aims to balance the federal budget by meeting annual reductions in the deficit by fiscal 1991.

Unless painful reductions are feared as the certain price for failing to meet the law’s deficit reduction targets, some on Capitol Hill say, Congress may be unwilling to make the difficult decisions required to eliminate the deficit.

‘Shooting Real Bullets’

By restoring the threat that the cuts will occur automatically, “we want the Congress to know with certainty that we are shooting real bullets,” Gramm said. “It will force the President and the Congress to act.”

Although the three senators expressed optimism that their plan would pass the Senate, they acknowledged that it faces an uncertain fate in the House.

For their part, House Democrats are saying that they would prefer a fallback mechanism already contained in the law, which would require a congressional vote. “There’s a deep suspicion of OMB, and a lot of antagonism toward OMB,” said one aide to the House Democratic leadership.

House Democrats are considering a number of other options, including one that would still charge the comptroller general with making the cuts, but then order that they be sent to the President for signature or veto. That proposal would seek to keep political pressure on President Reagan by limiting his ability to alter the comptroller general’s recommendations.

Gramm Denies Power Shift

Gramm denied suggestions that his proposal would hand over too much power to the White House. He and Rudman noted that the law, as they would modify it, would still require that the cuts be distributed according to Gramm-Rudman’s original formula.

The authors added that their plan would stipulate that the President’s budget director consider the recommendations and forecasts of Congress’ budget office, as well as his own, before he ordered the cuts.

However, the White House budget director would not be forced to make those congressional recommendations part of his own calculations in distributing the cuts or even in his determination of whether they were necessary at all.

Hollings acknowledged in an interview that the bill leaves open the possibility of “shenanigans by the director of the Office of Management and Budget” but said: “We’ve got to trust someone.”

He added that the present OMB director, James C. Miller III, is generally regarded as more “honest and . . . sincere” than his predecessor, the controversial David A. Stockman. Lawmakers “figure he’s more the technician . . . than the schemer that Stockman was,” Hollings said.