Senate Panel Tops House in Defense Cuts : Budget: Both plans show sharp differences between Bush and Congress on spending priorities. Veto fights or a ‘summit’ are possibilities.

The Senate Budget Committee adopted a $1.2-trillion spending plan Wednesday that would shrink the federal deficit by at least $43 billion and cut President Bush’s 1991 defense budget even deeper than a House measure approved a day earlier.

The back-to-back actions provided the strongest evidence yet of the sharp differences between Bush and the Democratic-controlled Congress on spending priorities. It was not clear, though, whether the differences would be resolved in veto fights, in a deadlock that would trigger automatic spending cuts, or in “summit” talks between Administration and congressional bargainers.

“This is a clear and clarion call to the White House to get behind some real and genuine deficit reduction,” Senate Budget Committee Chairman Jim Sasser (D-Tenn.) declared after his panel, with the support of only one Republican, approved his spending proposal, 14 to 9.

Sasser urged that Congress forge ahead in its budget process and not rely on talks with the Administration--talks that, in the last two years, have produced relatively small budget savings.

But Sen. Pete V. Domenici of New Mexico, the committee’s top Republican, charged that the Democratic plan was unworkable because it provided too little for defense and too much in taxes. He called for immediate high-level negotiations.

“There is no way to get from where we are (on deficits) to where we need to be without a summit,” he said.

The Senate blueprint calls for chopping $9.4 billion from Bush’s proposed defense outlays for the fiscal year beginning Oct. 1. Just as significantly, it would slash $21.3 billion from the President’s requested multiyear contract-funding authorization--a cut that could kill or cripple the B-2 Stealth bomber and other new weapons programs.

Compared with the House budget resolution approved Tuesday, the Senate plan would reduce 1991 defense outlays slightly more and long-term spending authority slightly less.

The Senate panel recommended much bigger overall deficit cuts than the Bush or House proposals, including $21 billion in spending reductions, $20 billion in revenue increases and $2 billion in lower interest payments. In addition, the Senate committee suggested an $11-billion scheme to collect delinquent income taxes by waiving penalties.

Sasser said that Senate Armed Services Committee Chairman Sam Nunn (D-Ga.), a powerful voice on defense, “already has expressed his displeasure” with the Budget Committee’s defense figures. Nunn recently proposed cuts that were about $3 billion smaller.

Despite Nunn’s misgivings, other Democratic moderates who have supported high defense spending in the past voted for the Sasser plan: Sens. J. James Exon (D-Neb.), J. Bennett Johnston (D-La.) and Charles S. Robb (D-Va.).

Moreover, Sasser said that the full Senate might vote to cut defense even deeper, in response to the dramatic changes in Eastern Europe and the Soviet Union.

But Domenici said there is no chance of that. He argued that cutting more than $9 billion from Bush’s $303.3-billion defense outlay request would “do violence” to the orderly drawdown of troops--and Congress would find it impossible to live with such a result.

“You can’t fire people all over the place and maintain a volunteer Army,” the senator said.

Sen. Charles E. Grassley of Iowa was the only Republican to vote for the Senate plan. He said that he was “sending a message” to the Pentagon, protesting the slow pace of management reforms he has been seeking.

Sen. Warren B. Rudman (R-N.H.) said he might vote for a similar plan on the Senate floor. He indicated support for the defense cuts but objected to cutting Medicare and other benefit programs less than Bush wants.

The Senate committee proposed much smaller reductions than did Bush for housing, health, education, energy and farm programs.