President Signs Deficit Bill--Unhappily

With his face fixed in a tight frown, President Reagan signed legislation Tuesday reinstituting the Gramm-Rudman deficit reduction plan but he said the bill could weaken his hand in dealing with the Soviet Union by forcing him to accept defense cuts.

Reagan said he had to approve the measure because it is combined with legislation that increases until May, 1989, the debt ceiling that allows the government to borrow money and avoid the risk of a default later this week. The borrowing limit will climb to $2.8 trillion from $2.1 trillion.

But the President also said he had one word for those in Congress who think they have trapped him into accepting a tax increase to avoid reducing the Pentagon budget: “Nuts.”

“To those who say we must weaken America’s defenses, they’re nuts. To those who say we must raise the tax burden on the American people, they too are nuts,” Reagan said, advocating instead cuts in the domestic budget that are opposed by Congress.

Reagan’s stinging criticism of Congress just before he signed the bill in the White House Rose Garden prompted nervous laughter from a mostly Republican group of senators gathered behind him.

After the President affixed his signature to the document and began to walk away, Sen. Bob Packwood (R-Ore.) joked: “Nobody wants to touch that bill.”

The measure restores to the Gramm-Rudman budget-balancing law an automatic trigger that requires specific steps to eliminate the federal budget deficit. The deficit for fiscal 1987, which ends today, is expected to be $158 billion, down from a record $221 billion last year.

The legislation mandates $23 billion in defict reduction in fiscal 1988, when the overall federal budget will be about $1 trillion, and a balanced budget by fiscal 1993. Democrats want to impose taxes that would account for $12 billion of the deficit reduction, a step that Reagan opposes.

If the President and Congress cannot agree on a deficit reduction package, automatic cuts in federal spending would be imposed, shared equally by the Pentagon and domestic programs.

The budget-cutting mechanism replaces a system rejected last year as unconstitutional. The Supreme Court struck down the original law, which left budget decisions up to the General Accounting Office, ruling that an arm of Congress cannot order the executive branch to make fiscal changes. The new law gives this authority to the White House Office of Management and Budget.

After the ceremony, Senate Minority Leader Bob Dole (R-Kan.) was asked where Congress and the Administration would find the $23 billion in cuts or increased revenue.

“Unh,” he said, adding a dramatic pause, “beats me.

“We’re not going to find it in more taxes. Asset sales would qualify and user fees.” He said the sale of some government property and new or higher fees for certain government services would not produce enough income to cut the deficit by $23 billion.

In the Rose Garden ceremony, Reagan said he was signing the measure “with great reluctance.”

If he is forced to accept cuts in the $303-billion Pentagon budget, Reagan said, “our nation’s security would be undermined and my hand, in dealing with the Soviets, would be weakened at a time when we are engaged with the Soviets in sensitive and significant nuclear arms reduction talks.”