$1.17-Trillion Budget Plan Gets Final Congressional OK

The Senate gave final congressional approval Thursday to a $1.17-trillion fiscal 1990 budget plan that claims to reduce the federal deficit by $28 billion to $99.7 billion, but even supporters admit that the measure does little to ease the government’s long-term deficit problem.

The Senate approved the spending blueprint by a vote of 63 to 37 a day after the House had approved it, 241 to 185. It was the earliest completion date for an overall spending plan in 11 years.

The huge budget--for the fiscal year that begins Oct. 1--merely fleshed out a deficit-reduction deal that President Bush and congressional leaders had reached on April 14.

That pact worked out usually prickly questions about deficit reduction and spending levels, decisions that normally lead to months of delay and maneuvering. Until now, 1978 was the last time work on the budget outline was completed this early in the year.

In both chambers, support for the spending plan was broad but unenthusiastic, as even supporters admitted that the measure does little to ease the government’s long-term deficit problem.

The budget relies on economic projections that most economists consider overly optimistic, thereby making the deficit look smaller. It achieves $850 million in savings by moving payments to farmers from next year to this year, and it includes one-time revenue gains through such tactics as asset sales.

The package would hold defense spending to $299.2 billion next year, $4.6 billion short of the amount needed to compensate for inflation.

Domestic programs, overall, would get about $4 billion more than needed to keep pace with inflation. Law enforcement, education, space and low-income assistance programs were given healthy increases, although transportation, environment and agriculture initiatives were treated more harshly.

Foreign aid programs would get $16.7 billion, enough to keep up with inflation.

Congress would still have to raise taxes by $5.3 billion and agree to limit growth in Medicare spending, sell $5.7 billion worth of assets and raise federal fees by $2.7 billion. Agreeing to specifics could be contentious.

Other savings would come from $1.1 billion worth of changes in federal pension programs. The government would raise $496 million by changing the way the Department of Veterans Affairs sells housing loan portfolios and $1.8 billion by moving the money-losing Postal Service off-budget.

Recipients of Social Security and other federal income support programs would receive their full annual cost-of-living increases. Civilian and military government employees would be entitled to a 3.6% pay increase.

About $181 billion would be spent to pay interest on the federal debt, which is expected to reach $2.8 trillion this summer.

The budget does not need the President’s signature. It is used by Congress as a blueprint for later spending and taxing bills.