Pentagon Budget May Spark Battle : Defense: Clinton’s rejection of more funds threatens his uneasy truce with conservatives, analysts say. Domestic programs could be at risk.

President Clinton’s decision to reject the Pentagon’s request for more spending authority is likely to intensify his battle with conservatives in Congress and could make it more difficult to win support for his domestic proposals, analysts said Thursday.

Although the Defense Department will be able to live with the new budget in the short run, the move is likely to anger military leaders and their powerful supporters in Congress, who complain that the continuing budgetary squeeze is already eroding military readiness.

Sen. Sam Nunn (D-Ga.), chairman of the Senate Armed Services Committee, warned Clinton last summer that the cuts in defense spending had gone far enough, and he seems certain to charge that the President has reneged on a pledge made last summer to protect the defense budget against inflation.

If Nunn and his fellow conservatives press their fight, it could put Clinton in a box in fiscal 1996, when the budget squeeze is expected to worsen and the White House is going to need an infusion of money for its domestic programs, such as health care reform and welfare revision.

“This goes back to the question of whether Clinton is a new Democrat or really an old one,” said Don Snider, a military affairs expert at the Center for Strategic and International Studies. “A lot of people will use this to try to paint him into a corner.”

William Schneider, a political analyst for the American Enterprise Institute, said the budget squeeze may also embroil Clinton in an early test of will with his newly nominated defense secretary, retired Navy Adm. Bobby Ray Inman.

If Inman, who has long ties to the military and solid contacts on Capitol Hill, decides to reopen the Pentagon’s budget battle, Clinton would be hard-pressed to refuse him, given the President’s already tenuous relations with the Pentagon, Schneider said.

“He is in a position where he could embarrass the President,” he said.

The battle between pro-military forces in Congress and the President has been simmering most of the year. Clinton pledged during the 1992 presidential campaign to cut $60 billion from the Pentagon budget over five years. But once he got in office, he increased the proposed five-year reduction to $104 billion.

Meanwhile, outgoing Defense Secretary Les Aspin had completed a “bottom-up review” of the nation’s defense programs, calling for essentially the same size military as envisioned by the George Bush Administration.

Steve Koziak, an analyst for the Defense Budget Project, a nonpartisan group that monitors defense spending, said that Clinton’s new military budget will not provide enough money to operate a force of that size. “They’re going to have to make some adjustments,” he said.

Nunn and other congressional conservatives are already angry with the Administration--and suspicious. During the debate over last summer’s defense bill, the Senate Armed Services Committee warned that Congress would make no further cuts beyond those then being proposed.

Nunn also won a promise from the White House to make sure the Pentagon budget was protected from the impact of inflation if Clinton’s proposed cuts were approved by Congress, which is largely what occurred.

As it turns out, inflation has been higher than expected, and Clinton’s budget would force the Pentagon to absorb most of the increase. In dollar terms, that means the Defense Department must cut $20 billion from other programs over five years--about $5 billion of it now.

Military experts and conservatives contend that is difficult to do because the defense budget has already been trimmed so much over the past few years that there is little fat left.

Members of the Joint Chiefs of Staff warned lawmakers last summer that any further cuts were likely to hurt military preparedness. Gen. Carl E. Mundy Jr., commandant of the Marine Corps, said the services were living “at the razor’s edge.”

Army officials have begun staging a counterattack against Aspin’s bottom-up review, trying to persuade Congress that Clinton’s plan is leaving them unable to keep up with plans to modernize the active-duty Army.

Pentagon officials say they still have not decided precisely where the new cuts are going to come, but speculation is that they will seek to make up the money by squeezing procurement programs--possibly by delaying construction of a new submarine or an aircraft carrier.

The search is already under way. At Aspin’s direction, the services are scrambling to come up with proposals for trimming spending on some programs to stay within the White House guidelines. A final decision is expected within a few weeks.

Administration officials concede that the biggest squeeze won’t come this year, but in fiscal 1996 and beyond, when the higher-than-expected inflation begins to compound.

Clinton has left himself a little wiggle room on the dispute by agreeing to monitor the impact of inflation on the defense budget--and possibly revisit the issue later in his term. The law permits him to exceed designated budget ceilings if the situation worsens.

But analysts caution that the increasing strains with congressional conservatives may well wreak havoc with the President’s hopes of winning over conservatives and moderates for his key domestic proposals, such as reform of the health care and welfare systems.

“He might have to do some hard bargaining,” Schneider said.