Congress Stymied on Reducing Deficit

Times Staff Writer

With time running out, both the House and Senate appeared paralyzed Wednesday in their efforts to come up with deficit-reduction measures that would avoid the automatic spending cuts scheduled to occur early next month under the Gramm-Rudman law.

House Democratic leaders huddled behind closed doors, but "everybody is letting everybody else go first," said California Rep. Vic Fazio (D-Sacramento), a member of the House Appropriations and Budget committees.

He warned that there is a growing danger that "we are going to careen into (widespread spending cuts) that no one wants, but no one seems to know how to avoid."

Similarly, the Senate showed no progress in its efforts to shape its own deficit-reduction package.

$154-Billion Maximum

Unless the House and Senate can approve enough savings to bring the 1987 fiscal year's projected deficit to a maximum $154 billion--cutting it by more than $14 billion, according to some estimates--they must face the prospect of the law's automatically hacking it down even further, to $144 billion.

According to the law's formula, the automatic cuts would be equally divided between defense spending and domestic programs. Thus, the next few weeks before adjournment offer members their only chance to shape the deficit reduction package according to their own priorities.

The lawmakers' only alternative would be to discard the Gramm-Rudman law, but to do so would risk making them appear cavalier about a record federal deficit only weeks before this fall's congressional elections.

Taxes Proposed

Key committee chairmen of both houses have proposed a variety of new taxes, including a plan in the House to more than double the gasoline tax and one in the Senate to impose an oil import fee. However, these ideas have quickly sputtered in the face of a presidential veto threat and wide opposition on Capitol Hill.

Thus, the only remaining options--all of which are unpopular--appear to be further sale of government assets, further cuts in domestic programs and additional user fees for government services. About $11 billion in revenue would be available if tax-overhaul legislation is enacted, as is expected in the next few weeks, but congressional leaders say using that money to reduce the deficit this year would only make their problems worse next year. Although the tax reform package provides more revenue in 1987 than the current tax system, it provides less in the next two years.

Reagan Opposition

Congress this year has boldly rejected President Reagan's spending demands--for increases in the military budget and for reductions in domestic programs--but it has shied away from challenging Reagan on his opposition to new taxes.

Meanwhile, instead of reducing the deficit, the House Appropriations Committee has actually added about $5 billion to it in a catch-all spending bill that must be passed by the beginning of the new fiscal year on Oct. 1.

The extra spending would fund a comprehensive anti-drug package passed by the House last week and an extension of revenue sharing, a politically popular program that offers no-strings-attached federal grants to local governments.

The Senate is expected to vote as early as Friday on whether to live under the Gramm-Rudman law's restraints, and a House vote could occur Monday.

In the meantime, California Rep. Leon E. Panetta (D-Monterey), who has been involved in the House negotiations, said congressional indecision on budget cuts "is pretty much reflective of the American people. They don't want taxes; they don't want (spending) cuts--and they don't want a deficit."

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