House Approves $1-Trillion Budget Setting a Tax Hike

The Democratic-controlled House, taking a major step in an intense and extended political battle with President Reagan, Tuesday approved a $1-trillion federal budget resolution that includes $19 billion in tax increases next year.

The vote was 215 to 201, a surprisingly narrow margin for the victorious Democrats that included the negative votes of 34 members of the party. Final enactment by the Senate was expected today despite opposition by the GOP minority there as well.

The legislation, worked out by Democratic conferees from both chambers, presents Reagan with a choice that he has indicated is unpalatable, offering increases in defense funds that he has requested only if he accepts higher taxes. The President, who has vowed to veto any legislation containing a tax hike, plans to travel the country to mobilize public opinion against Congress on the issue.

‘A Phony Fight’

The tone of the budget debate is becoming increasingly bitter, with both sides using scornful denunciations normally reserved for an election year. The leader of the House Democrats, Speaker Jim Wright (D-Tex.), Tuesday accused Reagan of “trying to stage a phony fight with Congress.”

“At a time when we need serious and constructive attention to budget deficits, the President subjects himself to ridicule by shouting old slogans and preposterous claims that sound more like a sideshow barker than a President,” Wright said.

On the other side of the aisle, Rep. Bill Frenzel (R-Minn.) said that the House “is obviously ruled by the dead hand of Walter Mondale,” the 1984 Democratic presidential nominee, who promised to raise taxes and carried just a single state in the election.

The resolution sets broad general outlines for federal spending, leaving specific funding and tax levels to individual bills, but limiting total expenditures to $1 trillion. But, because Reagan can veto these individual spending and tax bills, confrontations seem inevitable in the current heated political climate.

The budget resolution combines tax increases and spending cuts in a package that would produce a deficit of $134 billion for fiscal 1988, which begins Oct. 1. Taxes would be boosted $19 billion the first year and $64 billion over a three-year period.

Congressional Democrats are considering boosts in various federal energy taxes and in the federal excise taxes on gasoline, cigarettes, wine, beer and liquor. The income tax would not be raised. Assembling a legislative majority for higher taxes may prove a difficult political task for the Democrats as Reagan continues to assail them on the issue while stumping the country.

Under the budget resolution, spending authority for the Department of Defense would be $296 billion in fiscal 1988, if the President accepts the higher taxes; if he rejects them, spending would be frozen at the current year’s level of $289 billion. The White House has said that it will not pay the price of $19 billion in higher taxes to get $7 billion for defense.

On the domestic side, the budget resolution offers additional funding for AIDS research and expands federal aid to poor elderly persons and children. Education and job training programs would be given additional funding in the budget, which also provides increases beyond the level of inflation for science, space and technology programs.

Contains 3% Pay Increases

Pay increases of 3% a year for civilian employes of federal agencies are included in the budget calculations for the next three years.

Medicare spending would be reduced, with the savings coming from reduced payments to hospitals and physicians. The nation’s 30 million Medicare beneficiaries--27 million citizens over 65 and 3 million disabled persons--would not be required to pay any additional amounts for medical care.

The White House is in no mood for compromise because Administration officials are convinced that a nationwide campaign on the tax and budget issues can restore some of the President’s authority that has been damaged by the Iran- contra scandal. The Democrats, on the other hand, believe that they can win public support by portraying the President as irresponsible.

Some Liberals Defect

The budget resolution approved Tuesday was a compromise package that included higher levels of defense spending at the insistence of Senate Democrats. At the final vote, some House liberal Democrats defected in protest against the defense portion of the budget. Some conservative Democrats were displeased with the amount of proposed tax hikes.

In the final vote, 212 Democrats and three Republicans favored the budget resolution, while 167 Republicans and 34 Democrats opposed it. The 215-201 vote was far less authoritative than the adoption of the original House budget resolution in April, accepted by a 230-192 margin.