Senate Returns Bite to Gramm-Rudman Act; Sent to Reagan

The Senate gave final congressional approval Wednesday to legislation that would put the bite back into the politically popular Gramm-Rudman balanced budget law.

But it also would allow lawmakers to postpone for two more years the most painful, unpopular decisions on spending and taxes that eventually will be needed to meet the law’s goal of eliminating the deficit.

The 64-34 Senate vote followed passage late Tuesday by the House. The legislation now goes to President Reagan, who may object to both the tax increases and the military spending restraint envisioned in the spending plan.

If this week’s votes are an indication, neither house can muster the two-thirds support necessary to override a presidential veto.

The new version of the law would restore Gramm-Rudman’s ominous threat of automatic spending cuts from most programs if Congress and the President cannot agree on how to reach a series of annual deficit-reduction targets.

But it would set a less ambitious series of yearly goals, yielding a balanced budget in fiscal 1993, two years later than the original law envisioned.

For fiscal 1988, which begins next month, lawmakers would be required to cut just $23 billion from the projected deficit. That is only two-thirds of what they promised three months ago, when they passed their fiscal 1988 budget.

The most optimistic projections show that the cut would leave a $144-billion deficit in fiscal 1988, well above the $108-billion maximum shortfall mandated by the original Gramm-Rudman law.

Postpones Difficult Choices

Although the fiscal 1988 deficit reductions would cause some anguish this year, they are relatively modest compared with the sacrifices that would be required to meet the goals beginning two years later. That means lawmakers would not have to face the most difficult choices until after the next round of elections.

“We’re just going to take a nibble on the bullet now and really chomp down on it in 1989,” Sen. William L. Armstrong (R-Colo.) complained, predicting that the whole process would “come down like a ton of bricks on the new President.”

Armstrong nonetheless supported the measure, a reflection of the exasperation and helplessness that many in Congress feel over their inability to come up with any other solution to the deficit problem.

Both California senators supported the measure.

“This may not be a great idea,” conceded Sen. Phil Gramm (R-Tex.), one of the original laws’ authors. “But no one has come along with a better one.” Sen. Warren B. Rudman (R-N.H.) is the other lawmaker whose name is on the bill.

Sen. Carl Levin (D-Mich.) added: “In one sense, it’s admitting failure. In another sense, a more important one, it’s recognizing reality.”

Sen. Pete V. Domenici (R-N.M.), the top-ranking Republican on the Senate Budget Committee, warned that the complex legislation will prove a “Trojan horse.” Congress almost certainly will change the new law, just as it is now amending the original Gramm-Rudman act, when it faces the next round of tough budget choices, he said.

The original version of the Gramm-Rudman law was passed with a great flourish at the end of 1985, with Congress and the President promising that its threat of automatic spending cuts--coming half from defense, half from domestic programs--would provide the discipline needed to bring the deficit under control.

Many in Congress hoped it would force Reagan to agree to higher taxes rather than sacrifice the defense budget that has been one of his top priorities.

However, the Supreme Court last year took the pressure off when it ruled that the guts of Gramm-Rudman--the mechanism for imposing automatic spending cuts--was unconstitutional because it gave the General Accounting Office, an arm of Congress, the power to order the cuts. Only the executive branch, the court held, could perform that function.

The new legislation corrects that defect by giving the authority to the White House Office of Management and Budget.

Although the House and Senate have not yet drafted their plans for meeting the $23-billion deficit reduction goal, they are likely to call for about $12 billion in new taxes. That is a sharp drop from the $19 billion included in the budget adopted by Congress in June, but double the amount Reagan has said he will accept.

Congress also may include cuts in defense spending.

White House spokesman Marlin Fitzwater said: “Any Gramm-Rudman fix which is designed for the principal purpose of cutting just defense, or raising taxes, is an ill-conceived one that we have great concern about.”

He added: “We don’t want to signal what the final judgment of the President will be.”

This year’s budget gridlock has prevented Congress from enacting any of the regular spending bills needed to fund government agencies in fiscal 1988. So the House on Wednesday also voted separately for an omnibus stopgap spending bill that continues funding for government agencies through Nov. 10 at current levels.

That bill, which was approved by a 270-138 vote and must still be voted by the Senate, includes $3.5 million in non-military aid to Nicaragua’s contras. The appropriation, which continues current levels of assistance to the contras through Nov. 7, was considered non-controversial because Democratic and Republican leaders had already agreed to it.

House Speaker Jim Wright (D-Tex.) predicted that the funds would be the last ever appropriated by Congress for the contras. U.S. aid, he said, would give way to the cease-fire and regional peace plan being negotiated by five Central American nations, including Nicaragua.

Rep. David E. Bonior (D-Mich.) added that “this (vote) is strictly limited to food and medical assistance, it is not for any military aid. Passage of this money should not be taken as a sign of support for the contras.”

But Rep. Robert H. Michel of Illinois, the Republican leader, said that continuing aid to the contras is “vital . . . not just for the contras but for the last, fragile hope of justice, freedom and peace in Nicaragua.”

TAMING THE BUDGET

The federal deficit since President Reagan took office and targets set by the Gramm-Rudman act in its original and revised versions (in billions of dollars).

Original Revised Gramm- Gramm- Actual Rudman Rudman deficit target target 1981 $74 1982 120 1983 208 1984 186 1985 222 1986 237 $180 1987 157* 144** 1988 183* 108 $144** 1989 72 136** 1990 36 100 1991 0 64 1992 0 28 1993 0 0

* Congressional Budget Office’s estimate, based on policies now in effect.

** For 1988 and 1989, the deficit could be higher than the targets shown. For these two years, the reductions are limited to $23 billion and $38 billion, respectively, even if that is insufficient to reach the targets.

In future years, the new Gramm-Rudman bill requires deficit reductions sufficient to reach the targets.