Worn by seven months of controversy and seven weeks of haggling over how to reduce the federal deficit, Congress Thursday night passed a budget that reduces projected deficits by $55.5 billion in fiscal year 1986 and by $277.4 billion over three years.
The $967.6 billion plan was approved by the Democrat-controlled House 309-119 and by the Republican-controlled Senate 67-32.
Passage came after Senate and House negotiators cranked out a compromise package during two days of closed-door talks. The new plan then was rushed to the floor of both chambers so members could approve it before going home for their August recess.
”Tonight, after having lost the war, we are going to declare victory and go home,” said Rep. John Porter (R., Ill.).
House Budget Committee Chairman William Gray (D., Pa.) called the budget a ”major deposit on a sea of red ink.”
Though the budget package met Congress` goal of slicing more than $50 billion from the 1986 deficit, it still left the government $171.9 billion in the hole for the next fiscal year and estimated a deficit of $112.1 billion in fiscal 1988.
”It`s certainly better than no budget at all,” said Sen. Pete Domenici
(R., N.M.), chairman of the Senate Budget Committee. ”But no one should be deceived. The deficits will remain too high for substantial economic growth.” Domenici predicted that deficits for fiscal 1987 and 1988 could be ”$25
(billion) to $40 billion higher than we`re estimating.”
”Sooner rather than later we have to address the two big issues unless the United States is prepared to live with deficits of $130 (billion) to $140 billion forever,” Domenici said.
The ”two big issues” are entitlement programs, such as Social Security, and taxes. Both of them, along with the issues of defense and domestic spending, played major roles in the excruciating process that led to adoption of the budget.
At the insistence of President Reagan and House Speaker Thomas O`Neill
(D., Mass.), it does not touch Social Security or the other entitlement programs, nor does it contain any tax increase.
Senate Republicans and some Democrats had sought to cut the deficit by $338 billion over three years by including provisions dealing with
entitlements and taxes, but Reagan rejected that plan.
Senate and House negotiators then had to work out a compromise based on cutting defense and domestic spending.
”Considering what we had on the table, I think we did a good job,”
Domenici said.
”It`s better than I thought it would be, given the fact two legs were cut off of it,” said Sen. Lawton Chiles (D., Fla.), the ranking member of the Senate Budget Committee.
One indication of the difficulties faced by the negotiators was the different set of numbers released by the Senate and the House after the compromise was reached.
The House contended the plan cut the deficit by $57.45 billion, $2 billion more than the numbers the Senate had just officially adopted.
The plan cuts defense spending by $27.5 billion in 1986 and $137.3 billion over three years and trims domestic programs by $22.3 billion in 1986 and $94.1 billion through fiscal 1988, according to Senate figures.
Defense spending is allowed to grow at the rate of inflation in 1986 and by 3 percent above inflation in 1987 and 1988.
That represents a significant reduction from Reagan`s original request for a 6 percent increase in military funds for 1986 and indicates the era of almost unfettered Pentagon funding may be over.
But the budget still authorizes a record $302.5 billion in defense spending for 1986 and sets the level of money to actually be spent at $267 billion.
The agreement on defense spending gave the Senate and the administration the authorization level they wanted and allowed the House and the Senate to claim greater savings in the acutal money to be spent.
Some House Democrats wanted to hold out for further reductions in the growth of defense spending, but Senate negotiators, embittered because they felt Reagan and O`Neill had taken away almost all their bargaining chips, insisted that there would be no budget at all if they could not get their defense figure.
The reductions in domestic spending were described as a ”half-full, half-empty” glass by a Senate Budget Committee source, who said the House and the Senate gave about 50 percent from their original positions.
A big point for the Senate was how many of the domestic savings were mandated, an issue that raises hackles in the House, where committee chairmen feel they should make those decisions. The Senate contends that if reductions are not mandated in the budget, they won`t be made.
The source said that about $68 billion in domestic savings was mandated as part of the compromise.
Though the Senate contended the House did not trim enough from domestic programs, the savings achieved were agonizing for many Democrats who found themselves reluctantly following Reagan`s agenda to cut spending.
But the President`s desire to terminate many domestic programs was thwarted. Of the programs targeted for elimination, revenue sharing was the only major one to be killed.
