Conferees Agree on Putting Teeth Back in Gramm-Rudman : Deal Reached on Balanced-Budget Plan

A majority of House and Senate negotiators agreed Thursday on legislation that would restore the threat of automatic spending cuts under the Gramm-Rudman law and draw a new, less ambitious blueprint for meeting the law’s goal of a balanced budget.

After separate private meetings of each side, Senate Finance Committee Chairman Lloyd Bentsen (D-Tex.) and House Ways and Means Committee Chairman Dan Rostenkowski (D-Ill.) announced that they had the votes to move the agreement out of the House-Senate conference committee and send it to each house for a final vote.

Sen. Pete V. Domenici of New Mexico, a key Republican on the Senate side, expressed concerns that the plan might force serious cuts in defense spending and said the agreement provides “ample opportunity for serious disagreement” when it reaches the Senate floor.

But Sen. Phil Gramm (R-Tex.), one of the original law’s authors, endorsed the agreement enthusiastically and pledged: “I will fight for its passage in the Senate and the House, and I will urge the President to sign it.” An Administration spokesman said President Reagan will not take a position on the deal until he sees its details.

The Supreme Court last year had declared unconstitutional the law’s central feature, the mechanism that would force painful automatic spending cuts if Congress and the President could not agree on spending plans that would reduce the deficit enough to meet a series of annual targets.

Differences between the two houses over how--and even whether--to amend the law have stood in the way of a crucial spending bill that should be enacted before the new fiscal year begins Oct. 1.

Spending Bill Drafted

Because the delay over the Gramm-Rudman issue has made it impossible for Congress to meet that deadline, the House Appropriations Committee drafted stopgap legislation Thursday that would make it possible for the government to continue operating at current levels through Nov. 10.

Where the original Gramm-Rudman law promised a balanced budget by fiscal 1991, the revised law would extend that goal until 1993.

For fiscal 1988, conferees agreed to cut the deficit by $23 billion, a plan that would require an expected $12 billion in new taxes. Without any changes in the law, the deficit is officially projected at $155 billion, although other estimates are significantly higher, surpassing $180 billion.

The taxes expected under the plan are $6 billion higher than the maximum President Reagan has indicated he will accept but are $7.3 billion lower than the figure called for in the budget resolution adopted earlier this year by Congress.

If Congress and the President could not agree on spending and tax legislation reaching the $23-billion deficit-reduction target, Gramm-Rudman would require that spending cuts be made automatically--half from defense, half from domestic programs.

The legislation would mend the original law’s constitutional flaw by giving the White House’s Office of Management and Budget the power to order the automatic cuts, rather than allowing the General Accounting Office, an arm of Congress, to make them.

If approved, the agreement will be attached to legislation raising the federal debt limit to $2.8 trillion, which is enough to allow the government to continue to meet its borrowing needs through May, 1989.