Panel Sends $9.4-Billion Budget Cut to Congress

A joint House-Senate committee Thursday set in motion the sweeping budget-cutting process specified in the Gramm-Rudman deficit reduction act, recommending that Congress cut $9.4 billion from the 1987 budget this fall.

If it does not, greater across-the-board cuts affecting virtually all programs would automatically go before Congress for a vote under the law.

The joint committee’s action, on a voice vote with no dissent, officially recommends that Congress cut the $9.4 billion.

The committee recommended the plan with a resounding lack of enthusiasm, even though it would satisfy the deficit target set for 1987 under Gramm-Rudman. Several members expressed loud skepticism that Congress in future years would be able to make the deep cuts necessary to bring the deficit down to the progressively lower ceilings set in Gramm-Rudman’s five-year schedule.

Tax Revenue to Shrink

“We are living in a dream world around this place,” declared Sen. John C. Danforth (R-Mo.), who said he doubts that there will be enough economic growth or sufficient revenue from the tax overhaul Congress is expected to pass within a few weeks to make the future deficit targets attainable.

The tax bill, which Danforth vehemently opposes as a disproportionate burden on industry, “renders Gramm-Rudman a dead duck after 1987,” he said. Although the reform measure provides more revenue in 1987 than the current tax law, it provides less in 1988 and 1989.

At one point, Sen. Pete V. Domenici (R-N.M.), committee chairman for Thursday’s meeting, asked James C. Miller III, director of the White House Office of Management and Budget: “How in the world do you intend to hit the 1988 target?”

Miller replied, as the huge Senate Caucus Room erupted in laughter: “With difficulty.”

$108-Billion Target

The deficit, now estimated at $163.4 billion for the fiscal year beginning Oct. 1, 1987, would have to be down to $108 billion.

The report approved Thursday was presented to the committee on Aug. 20 as a joint research effort by the Congressional Budget Office and Miller’s office. Congress now must approve or reject its projection that the 1987 deficit will be $19.4 billion more than the Gramm-Rudman target figure of $144 billion.

Under the complex Gramm-Rudman plan, Congress would then have the options of getting within $10 billion of that figure by making $9.4 billion in specific cuts or accepting across-the-board cuts amounting to the full $19.4 billion.

Miller and CBO Director Rudolph G. Penner stressed that their report was intended to encourage Congress to make the specific cuts, which Miller termed “eminently feasible.”

If the greater across-the-board cuts occur, defense programs would be trimmed 5.6% and domestic programs 7.6%. Penner explained that defense’s percentage reduction would be less because fewer defense programs have been made immune to Gramm-Rudman than domestic programs.

As originally passed, the Gramm-Rudman act’s across-the-board spending cuts would have been automatic if Congress failed to meet annual deficit targets. But the Supreme Court ruled in July that the act conferred unconstitutionally broad powers on the congressional General Accounting Office, which would have implemented the cuts, and it held that Congress itself would have to enact any such cuts.