Deficit-Jittery Senators Kill $30.6-Billion Housing Bill

As White House and congressional negotiators struggled to complete a deficit-reduction agreement Tuesday, only three days before automatic spending cuts are scheduled to go into effect, heightened tensions led a nervous Senate to kill a $30.6-billion housing measure whose passage had appeared to be a near certainty.

Sen. Alan Cranston (D-Calif.), the housing legislation’s floor manager, said it crashed by a three-vote margin because several Democrats felt politically vulnerable to budget-busting charges by President Reagan and conservative Republicans. The measure would have been the first housing bill to be passed in seven years.

Weary budget negotiators continued to haggle over an agreement that remained just beyond reach, working against a Friday deadline, when the Gramm-Rudman deficit-reduction law is due to force $23 billion in automatic cuts from defense and domestic programs. The issue remained--as it had all week--how to find an additional $2 billion in cuts in federal entitlement programs.

Pessimism Reversed

But, despite pessimistic assessments issued only hours earlier, Sen. J. Bennett Johnston (D-La.) said that the negotiators were “making excellent progress” Tuesday night. “I think we’re very close on the whole package.”

Although all sides said it was too soon to describe the negotiators as having reached a tentative agreement, “there was a sense of a common ground,” one Democratic aide said. He added that the negotiators have found “some new savings” and “some things have been moved around” in accounting.

A Democratic source said that Administration negotiators were pressing congressmen to consider reductions in poverty programs, such as Aid to Families with Dependent Children and food stamps--a move that the House Democrats say will never be accepted.

The source said also that the White House had backtracked on its initial indication that it would accept $5 billion in defense spending reductions, insisting now that no more than $4.7 billion be cut from the Pentagon’s budget.

Haggling on Basic Issues

And, with the Gramm-Rudman deadline looming, the two sides were back to haggling over such basic issues as how to classify various deficit-reduction measures. The congressional side wanted to count items such as Veterans Administration loan fee extensions as entitlement cuts, but the White House team was said to be insisting that they be considered new taxes.

Fearful of another steep drop on Wall Street, negotiators are hoping to make large inroads in the projected $180-billion deficit as a means of reassuring the stock market that they have the federal budget under control.

That concern took its toll on the housing bill in the Senate, where a band of conservatives--buttressed by veto threats and charges from Reagan that the bill was $9 billion over his budget--ambushed the legislation with an artful maneuver that cast the issue as a vote on the budget deficit, not on politically popular housing programs.

Sen. William L. Armstrong (R-Colo.) made a point of order that the bill exceeded a ceiling in Congress’ own budget by $47 million. Thus, proponents needed to muster a “super majority” of 60 votes to waive the limit and send the bill to the President. But they came up with only 57, as five Democrats, fearing political fallout, bolted party ranks.

Zipped Through House

The compromise bill, approved by a Senate-House conference committee, had zipped through the House with just one dissenting vote on Nov. 9. An earlier, more expensive version had attracted 71 votes in the Senate.

Reagan met earlier in the day with Senate Republican leaders, telling them that he would veto the housing measure, White House spokesman Marlin Fitzwater said.

“We are trying to reach a deficit-reduction agreement on the Hill. Now is not the time to add to the deficit. The housing bill would do just that . . . . “ Reagan told the senators, according to Fitzwater. “This is a terrible signal to send to our people and to our financial markets.”

Cranston said that he would seek Senate approval of a slightly pared-down housing bill sometime later, and Armstrong promised to offer a radically trimmed alternative.

Democratic senators who voted against waiving the budget ceiling were Timothy E. Wirth of Colorado, Jeff Bingaman of New Mexico, Kent Conrad of North Dakota, J. James Exon of Nebraska and William Proxmire of Wisconsin.

Wirth Called Vulnerable

Wirth, who barely won election to the Senate last year, “would be particularly vulnerable to people saying that Armstrong was tight-fisted trying to hold to the Budget Act and here you are trying to bust it,” Cranston said.

He added that Bingaman, who faces reelection next year, was in a similar fix because the other senator from his state, Republican Pete Domenici, made a strong speech against the size of the housing bill.

Voting to waive the Budget Act “makes them seem they are spendthrifts even if they agree with the substance of the bill,” Cranston said.

Domenici, senior Republican on the Senate Budget Committee, charged in heated debate that “this bill is an absolute budget-buster in the name of housing reform in the midst of a budget crisis.”

He noted that, ironically, House and Senate budget negotiators were even then trying to work out a deficit-reduction agreement in a room only 200 feet from the Senate chamber.

Cranston blamed the setback partly on “ideologues in the Reagan Administration who want to make a last-gasp effort to follow through on their New Right agenda to eradicate a long-established national commitment of federal support for affordable housing.”

$15 Billion a Year

The legislation would have continued most housing and community development programs for two years and created several new ones. It would have authorized spending $15 billion in the fiscal year that began Oct. 1, and, for the subsequent year, $15 billion plus an adjustment for inflation, estimated at 4.2%.

Aside from spending levels, the Administration objected that the bill would continue several programs--such as Urban Development Action Grants and Housing Development Action Grants--that the Administration has tried to kill.

Also, it would provide new initiatives that would deepen federal involvement in housing problems nationwide.