Lawmakers Attack Budget but Could Adopt Key Parts

Congressional leaders wasted little time Tuesday in burying President Reagan’s $1-trillion budget for fiscal 1988, but it may come back to haunt them later this year.

“I don’t think the budget itself has a prayer,” Senate Republican leader Bob Dole of Kansas said in a television interview. “I think it’s a starting point; that’s about all that can be said for it.”

And Sen. Lawton Chiles (D-Fla.), chairman of the Senate Budget Committee, said: “It looks to me like the budget does not really have a future.”

But, despite the inevitable attacks, many officials consider it likely that lawmakers will end up embracing a major part of the Administration’s budget--various revenue-raising proposals totaling $22 billion--before their own spending blueprint finally is drafted this fall.

Moreover, although rejecting Reagan’s domestic program cutbacks, Democrats are not likely to press for any substantial domestic spending increases, either.

“I think what we’re looking at is a replay of last year,” said Rep. Leon E. Panetta (D-Monterey). “That means we won’t see any dramatic new spending initiatives and the Democrats won’t be able to come together on a major (tax) increase. As a result, we will probably end up following the White House in accepting a lot of ‘smoke and mirrors’ revenue gimmicks so that Congress can say it, too, met the Gramm-Rudman target” for reduction of the deficit.

There is little doubt that Congress will turn Reagan’s budget priorities upside down--preventing defense spending from rising faster than inflation instead of letting it rise by about $25 billion, as Reagan has proposed, and using the money saved from that action to protect important domestic programs he has targeted for cuts.

But lawmakers face the same inevitable constraints that boxed in Reagan’s budget writers--a reluctance to impose new taxes or rein in Social Security costs. That leaves them little choice but to follow the White House lead in juggling forecasts of economic growth while proposing various user fees, assorted hidden tax hikes and fire sales of federal loans to help declare victory in reaching the $108-billion deficit goal called for by Gramm-Rudman.

“Congress and the Administration are no longer committed to deficit reduction simply for the sake of deficit reduction,” said John Makin, chief economist at the American Enterprise Institute, a conservative think tank in Washington. “But that won’t stop Congress, like the Administration, from coming out with a budget on paper that meets the targets.”

Deficit Projection

The Congressional Budget Office has projected that, without spending cuts or revenue increases, the fiscal 1988 deficit would be $169 billion.

Much of the spending debate will center on the Pentagon budget request, which calls for an inflation-adjusted 3% increase to $312 billion.

The Pentagon is actively portraying its request as a slimmed-down plan that takes into account the political realities of a Congress likely to take aim at defense spending. The Administration proposal is $8 billion less than requested in this fiscal year’s budget.

“What we’re trying to do is come in with a budget that, while there is some risk, tries to recognize the desire of Congress to deal with the deficit,” Defense Secretary Caspar W. Weinberger said in an interview.

‘Real Erosion’

If the Pentagon has to take a cut below this year’s budget, or “we . . . get banged down to zero, then we have a real erosion of defense capabilities,” he said.

Administration officials keep insisting that they want to work with Congress to help pare the deficit. But, with the White House committed to opposing a tax hike and lawmakers just as adamant about avoiding further cuts in key domestic programs, there is little room for give and take.

And, as long as the deficits finally seem to be shrinking slowly because of previous measures, there is little incentive to tackle spending curbs in new areas, such as massive programs of payments to individuals like Social Security and Medicare.

That leaves budgetary gimmicks as the inevitable focus of attention.

Selling Off Loans

Budget Director James C. Miller III, for instance, frequently reminds reporters that lawmakers hotly attacked his proposals early last year to sell government loans as nothing more than meaningless bookkeeping gimmicks.

“Then, at the end of the year, when they were looking for ways to reduce the deficit,” Miller recalls with an ironic grin, “they called me up and asked: ‘Hey, Jim, what else have you got?’ ”

And, indeed, when the smoke finally cleared last October, Congress approved even more in loan sales than the White House had proposed.

Staff writer James Gerstenzang contributed to this story.