Reagan, Congress End Impasse on Defense Bill : Seek to Prevent Campaign Dispute on ‘Star Wars’ From Delaying $299 Billion in Pentagon Funding

President Reagan and Democratic leaders in Congress Tuesday reached tentative agreement on a $299.6-billion defense spending bill for fiscal 1989, quietly settling a partisan dispute over funding for “Star Wars” that grew directly out of the presidential contest between George Bush and Michael S. Dukakis.

The agreement, expected to receive final approval as early as today, would open the way for Congress to finish work on the Pentagon spending measure.

Earlier Bill Vetoed

It would also end the stalemate that began Aug. 3, when the President vetoed an earlier version of the bill on grounds that it tied his hands both in arms control negotiations with the Soviet Union and in development of the nation’s nuclear arsenal.

Although Reagan won several key concessions from the Democratic-controlled Congress, according to sources familiar with the agreement, the accord would not give him any more than the $4.1 billion authorized in the original bill for “Star Wars” research. The President had asked for $4.9 billion.

Both parties are expected to portray the settlement as a political victory. But it reflects a decision on the part of the White House and Congress to prevent the highly partisan Dukakis-Bush dispute over “Star Wars” from becoming an obstacle to funding the Pentagon during the current fiscal year.

Although a quadrupling of funds for “Star Wars” research, from about $1 billion in 1983, has had bipartisan support in Congress, Dukakis has taken the position that funding should be slashed back to $1 billion. Bush’s position is more consistent with that of Congress.

When Reagan vetoed the defense bill, White House sources said that Bush had encouraged the President to reject it because he hoped it would focus more critical attention on the Dukakis position on “Star Wars.”

Democrats, angered by the veto, then threatened to use the new bill to call attention to the recent Pentagon procurement scandal.

The compromise was expected to be a disappointment to those in both parties who had advocated a confrontational strategy on the issue--including GOP vice presidential candidate Dan Quayle (R-Ind.), who is a member of the Senate Armed Services Committee and a leading proponent of early “Star Wars” deployment.

Behind-the-Scenes Talks

The agreement was the result of many hours of behind-the-scenes negotiations by Defense Secretary Frank C. Carlucci, Senate Armed Services Committee Chairman Sam Nunn (D-Ga.) and House Armed Services Committee Chairman Les Aspin (D-Wis.). Sources said that all three men wanted a compromise to hasten implementation of several key provisions of the bill that had been sought by the Pentagon, including a 4.3% military pay raise.

In many ways, the compromise is closer to the Senate-passed version of the original defense bill than it is to the legislation Reagan vetoed. Since Reagan assumed the presidency, it usually has been the House that has put provisions in defense spending bills that the Reagan Administration has disliked.

Under the compromise, according to reliable sources, the President and Carlucci will be permitted to decide how to allocate the $4.1 billion in the “Star Wars” program. Reagan said Aug. 3 that he vetoed the original bill, in part, to gain greater flexibility in allocating the money.

Emphasis on Research

In recent years, Congress increasingly has shifted “Star Wars” money into research programs and away from development of the project, which seeks to put a space-based anti-missile defense in place by the late 1990s.

According to sources, the pact would also make adjustments in the funding for two competing military modernization programs--production of the single-warhead Midgetman missile and rail-mobile deployment of the 10-warhead MX missile.

Many Democrats in Congress have favored funding the Midgetman at the expense of building mobile launchers for MX, but Bush and the Reagan Administration have taken the opposite view. Although Dukakis opposes both the rail-mobile MX and the Midgetman as too expensive, Democrats believe that he would support their view, if elected.

The bill that Reagan vetoed would have authorized $250 million each for the Midgetman and for rail-mobile deployment of MX, with an additional $250 million to be allocated by the next President to the program he favors. Democrats portrayed this as a fair compromise, but Reagan insisted that, even if MX eventually receives the full $500 million, it would be too little to proceed with building the mobile launching system next year.

$350 Million for MX

Under the compromise, sources said, Midgetman will get $250 million and the MX rail-mobile system will receive $350 million--with $250 million to be allocated by the next President. If Bush is elected, that would give the rail-mobile MX $600 million, or what the Republicans contend is needed to begin building it next year.

The compromise legislation eliminates a ban on tests of so-called depressed-trajectory--or low-flying--missiles that was contained in the bill Reagan vetoed. The Administration opposes the ban, even though the vetoed bill permitted the Pentagon to define for itself what was being banned. As of now, the Administration has no plans to test these weapons during fiscal 1989.

One key provision of the bill that Reagan opposed was not eliminated or altered, however. This provision restricts the Administration’s ability to exceed the limits of the unratified second strategic arms limitation treaty. It would require the Administration by next September to remove from service two more Poseidon submarines, the James Monroe and the Henry Clay.

Exceeding SALT II

The U.S. nuclear arsenal already exceeds SALT II limits, and Congress has consistently fought to restrain the Administration from exceeding the treaty any more than it already does.

Also under the compromise, the Administration will be forced to create a so-called “nuclear test ban readiness program” to assure that the United States would be in a position to ensure the reliability of existing nuclear stockpiles in the event that a future Administration decides to adopt a ban on testing. Reagan opposes this program.