Senate Votes for Automatic Spending Cuts

The Senate, attempting to put teeth back into the Gramm-Rudman budget-balancing law, Friday approved new provisions that would force automatic spending cuts if Congress does not meet deficit targets.

The 71-21 vote on the measure demonstrated that “there is a strong basis of support in the Congress and the country to mandate a balanced budget,” said Sen. Phil Gramm (R-Tex.), one of the authors of the original legislation.

If the plan becomes law, financial markets will “raise the flag of victory,” convinced Congress is finally serious about cutting the deficit, said Sen. Pete V. Domenici (R-N.M.), who was involved in negotiating the plan.

Faces Uncertain Reception

However, the measure--attached to a bill that would raise the federal government’s debt limit--faces an uncertain reception next week in a conference with the House, where some members charge that the Senate’s deficit targets are too high and others insist on discretion for the President in making cuts.

Full Bill Approved

Later Friday, the Senate voted 54 to 31 to approve the full bill to increase the national debt. The Senate also stretched the bill’s borrowing limit to $2.8 trillion so Congress would not deal again with that sensitive issue until well past next year’s elections.

Congress has been struggling with ways to restore an enforcement provision to the Gramm-Rudman law since last year, when the Supreme Court threw out the previous provision for automatic spending cuts.

Senators are convinced that the version approved Friday is constitutional because the cuts would be supervised by the Office of Management and Budget--an executive branch agency--rather than by an agency overseen by Congress. The Supreme Court had ruled that Congress could not delegate that enforcement process to the General Accounting Office, the investigative arm of Congress.

The plan was developed after intensive negotiations involving Gramm, Domenici and Sen. Lawton Chiles (D-Fla.), chairman of the Budget Committee.

It establishes deficit targets of $150 billion for the 1988 fiscal year, $130 billion for fiscal 1989, $90 billion for 1990, $45 billion for 1991, and a balanced budget in 1992. The previous Gramm-Rudman law had lower deficit targets and would have balanced the budget a year earlier.

Could Avoid Sharper Cuts

With the new plan, the Senate could avoid sharper cuts in 1988 in the middle of the election year.

If Congress failed to reach those goals, there would be automatic reductions to hit the targets, with half the spending cuts to come from military programs and half from domestic programs. Social Security would be exempt from cuts, along with salaries for military personnel.

Complicating the issue is the fact that the deficit-reduction legislation is combined with an essential increase in the federal debt ceiling. The debt ceiling has top priority because unless it is extended, the federal government will run out of money to pay its bills Thursday.

“If Social Security checks stop, if veterans’ checks stop, that will be the shot heard around the world,” said Majority Leader Robert C. Byrd (D-W.Va.). “If this measure is not on the President’s desk by midnight Thursday, then we’re in trouble.”

It will be difficult for House and Senate conferees to agree on the complexities of a new Gramm-Rudman balanced-budget law, couple it with a debt ceiling extension and pass the entire package in only a few days.

Skeptical of Proposal

House Democrats are skeptical about the highly detailed proposal they will receive from the Senate.

“The Senate proposal represents Christmas-tree legislation in that it contains many complex provisions unrelated to our primary objective of deficit reduction,” said Rep. William H. Gray III (D-Pa.), chairman of the House Budget Committee.

“At the heart of the plan, which is supposed to be deficit reduction, there isn’t much blood,” said Gray, who favors lower deficit targets. “It now will be up to the conferees to achieve what the Senate was unable to do.”

The House-Senate negotiations will begin Tuesday. The House has already approved legislation raising the debt limit to $2.5 trillion through September, 1988. The measure does not contain a Gramm-Rudman amendment.

House Democrats are discussing at least two versions of enforcement provisions for the balanced-budget law and this is certain to complicate their discussions with the Senate.

But Democrats in both chambers want to see new teeth in the budget law, to force President Reagan to accept higher taxes.

They believe that he might agree to tax increases, rather than face big cuts in the military budget that would occur if a deficit target were exceeded.