Bid to Cut Sugar Subsidy Defeated : Agriculture: The move is a setback to the Administration, which says the price support costs Americans $1.5 billion a year more for sugar.

Congress on Tuesday defeated efforts to cut sugar price supports from 18 cents to 16 cents a pound, dashing hopes of urban lawmakers who wanted to make major changes in the nation’s farm program that they said would lower consumers’ food bills.

The Senate, acting first, killed a proposal to revise the much-criticized sugar program by a vote of 54 to 44. In the House, legislation to make an identical two-cent cut in the sugar loan rate was crushed, 271 to 150.

In a minor victory for advocates of change, however, the Senate agreed to phase out a honey price support program over the next four years after its supporters lost a test vote by a 52 to 46 margin.

Sen. John H. Chafee (R-R.I.), who led the fight to terminate honey subsidies, estimated that it would save up to $100 million a year that has gone to fewer than 2,000 beekeepers and produced surplus stocks.

In the major battle, defenders of the existing system to prop up American sugar prices by strict quotas on imports contended that it has preserved jobs of producers and refiners without costing the government anything.

They also claimed that any benefits from lowering the sugar support price to 16 cents a pound-- about double the world price--would go mainly to giant soft-drink manufacturers and candy makers without helping the consumer.

The Bush Administration, however, said the sugar program alone has required American consumers to pay $1.5 billion a year more for sugar.

The outcome was a setback for the Administration and a loose-knit bipartisan coalition in the House that also wants to reduce government payments for farmers and cut back sharply on subsidies in peanut, wool and mohair programs.

“I was disappointed,” said Rep. Richard K. Armey (R-Tex.), a coalition leader. “But I’m not throwing in the towel by any means.”

Both the Senate and House are considering a five-year extension of the nation’s basic farm law. The extension is expected to continue or slightly expand price-support and subsidy provisions of the current system, which was put into effect in 1985.

With spending cuts likely to emerge from White House-congressional budget talks, Congress is under pressure from the Administration to hold down outlays for payments to farmers who grow corn, wheat, rice, cotton and other major crops.

Meantime, the Office of Management and Budget said President Bush’s senior advisers would recommend a veto of the farm bill if it does not achieve greater savings and if it is not made more market-oriented than the version approved by the House Agriculture Committee.

The sugar program, described by its critics as the most protectionist of any U.S. farm program, was regarded as the most vulnerable this year because it allegedly raised prices and alienated sugar-exporting nations in the Caribbean and Central America.

The proposed two-cent cut in the support price was presented as a modest but long overdue step to bring the sugar program into line with other commodities that have endured subsidy reductions under the 1985 law.

But advocates for sugar contended that even a small cut in the per-pound floor price would be “devastating” to three sugar cane states--Hawaii, Florida and Louisiana--and to many Midwestern and Western states that produce sugar beets.

The pro-sugar block argued that a chief beneficiary of cuts would be the European Community, whose heavy sugar subsidies have changed it from an importer to an exporter in recent years.

“Jobs U.S.A.,” shouted Rep. E. (Kika) de la Garza, chairman of the House Agriculture Committee, in closing debate for supporters of the sugar bloc. His side prevailed despite arguments by Rep. Tom Downey (D-N.Y.) that the sugar program is a “food tax on American consumers.” Other Downey allies said the higher American price of sugar also was driving sugar-using industries out of the country into Canada or Mexico to take advantage of the lower world price.