Panel Votes $18-Billion Tax Hike : Democrats’ Plan Also Would Cut Pentagon Budget Sharply

The House Budget Committee, splitting along partisan lines, Wednesday approved a Democratic spending blueprint that calls for $18 billion in unspecified higher taxes and a sharp cut in the Pentagon budget as the chief means of narrowing the federal deficit by an estimated $38.2 billion next year.

The measure, which is expected to go to the House floor next week, was approved on a 21-14 vote after bitter wrangling between Democrats and Republicans.

The parliamentary maneuvering was so intense that, at one point, Republicans forced Democrats to begin reading aloud the entire document, line by line. They later relented.

Meanwhile, the Senate budget panel was deadlocked late Wednesday after voting 12 to 12 on a roughly similar Democratic package calling for balance between tax hikes and spending cuts.

Gray Defends Plan

House Budget Committee Chairman William H. Gray III (D-Pa.), accusing Republicans of refusing to cooperate in preparing the $1-trillion budget, defended the plan developed by the Democrats in private meetings for producing “real, permanent, substantial deficit reduction.”

In contrast to President Reagan’s budget, which would increase defense allocations while reducing domestic programs, the House Democratic package would cut $8.75 billion each from defense and non-defense spending below current levels.

The heavily outnumbered Republicans attacked the Democrats for refusing to disclose details of the spending cuts and charged them with “railroading” the plan through the committee without explaining what the impact of the Pentagon cutback would be for national security.

“This is a real April Fools’ document,” said Rep. Delbert L. Latta of Ohio, the committee’s ranking Republican. “You promise everything to everybody and say you’re going to reduce the deficit. I don’t think that’s going to work.”

Short of Gramm-Rudman

The House package, like Reagan’s spending plan, falls short of the $108-billion deficit goal set by the Gramm-Rudman deficit-reduction law. By relying on the relatively optimistic economic projections used by the White House, however, both budget proposals can at least claim to meet the law’s ambitious goals.

More realistically, the Democratic plan conforms with the original Gramm-Rudman intent to achieve an annual deficit reduction of at least $36 billion in a long-term effort to narrow the budget gap to zero.

Using more conservative economic projections, House Democrats contended that their budget proposal would lower the deficit to $132.5 billion in fiscal 1988, which begins Oct. 1.

In contrast to the White House plan, which relied on an assortment of revenue increases achieved through higher user fees, hidden taxes and asset sales, the House Democratic package explicitly calls for an additional $18 billion in taxes. But the task of actually determining which taxes to raise was left to other congressional committees.

Threat of Reagan Veto

Reagan has threatened to veto any legislation containing a tax increase.

As in the past, the other key difference between the White House and congressional Democrats was centered on defense spending.

Reagan’s plan called for $312 billion to go to national defense, which would allow the Pentagon to increase its allocation by about 3% above the inflation rate. The House Democratic package, cutting about $2 billion more from defense than the Senate panel, would limit the defense budget to $288.7 billion and would hold actual spending $8.75 billion below the level required to keep pace with inflation.

In contrast to Reagan’s budget, the House package would provide $4.6 billion more for education and training, about $5.6 billion more in health spending and $2.3 billion more for farm programs.

In addition, the plan rejects White House proposals to eliminate aid to poor families to insulate their homes and to slash assistance to pay home heating bills. Democrats also vowed to protect grants to college students, to salvage child nutrition programs and to prevent Medicare premiums from rising.

Beyond the $18 billion in higher taxes, the House plan would boost revenues by another $3.85 billion by beefing up enforcement of existing tax laws and by increasing an assortment of fees for using government property.

The Senate vote was an indication of the difficulty the Democratic leaders will have selling a budget plan to both Democrats and Republicans who worry about major defense cuts and yet cringe at the thought of raising taxes to pay for the spiraling deficit.

After a day-long session, Sen. Lawton Chiles (D-Fla.) could not get a majority vote on his deeply divided panel. Chiles’ plan called for an $18.5-billion increase in revenues, including more taxes, as well as cuts in defense that posed a “very serious, significant problem,” Sen. Don Nickles (R-Okla.) said.