Poor, pensioner, saver all would be thumped by Carter budget cuts
President Carter's plan to balance the 1981 budget, now unveiled in detail, almost certainly will be challenged by political forces on the left and right. Liberals, dismayed by proposed cuts in social spending, already are demanding higher taxes on the rich to provide more government help for the poor.Skip to next paragraph
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Republicans in Congress are expected to offer just the opposite -- tax cuts, to relieve a growing financial burden on middle-
Hoping to steer a safe course between these contending forces, Mr. Carter claims his budget is "fair, not balanced on the backs of the poor."
For example, says budget director James T. McIntyre Jr., payments for social security, medicare, medicaid, and aid to families with dependent children will not be reduced.
As for tax cuts, there will be none, says Treasury Secretary G. William Miller, "until the priority of balancing the budget is met."
"A budget balanced by tax increases," said Mr. McIntyre, "would not be credible. The real problem is the rate of growth of overall [government] spending."
This being the White House view, the task was to chop enough spending out of the fiscal 1981 budget to balance it by cuts alone.
To this end the President proposes $15 billion worth of program cuts, designed to push the budget into a modest $500 million surplus.
Mr. Carter then offers two tax increases, which -- if approved by Congress -- together would provide an extra $16 billion in revenues, enough to "post a [ budget] surplus of $16.5 billion, the largest in US history."
These extra receipts, says the President, will not be used to balance the budget, or to substitute for spending cuts. Rather they will be held apart, as "a margin of safety, [to] ensure that the budget will remain in balance if estimates change in a way that cannot be predicted now."
One tax would be on gasoline, amounting to 10 cents a gallon, to replace the equivalent fee Mr. Carter has imposed on imported oil.
Even if Congress balks at passing this gasoline tax, the import fee will remain in place, yielding $12.6 billion in revenue in fiscal 1981.
Another $3.4 billion would come from requiring banks and other institutions to withhold taxes due on interest and dividends, much as income taxes now are withheld by employers.
Federal spending would be trimmed by $1.4 billion, if Congress approves the President's proposal to grant cost-of-living increases in some payment programs only once a year, instead of twice.
This would mean smaller increases in federal civilian pensions, military pensions, food stamps, and some nutrition programs, said Mr. McIntyre.
Among major programs Mr. Carter would trim:
* A $1.1 billion decrease in energy spending, including a later effective date for the solar and conservation bank, and smaller increases in low-income assistance payments.
* Elimination of the state share of general revenue sharing, with the "most distressed" cities to receive compensatory help.
* Delays in the purchase of oil for the nation's strategic petroleum reserve.
* Reductions in a variety of health and human services programs, plus cuts in some education outlays.
* Trims in "defense efficiencies," designed to save some money without cutting into "military readiness."
* Hiring curbs to "ensure that there will be at least 20,000 fewer federal employees by Sept. 30, 1980, than there are now."
In addition to balancing the 1981 budget, Mr. Carter wants to slice $2.4 billion from the current 1980 budget, with the hope of holding its deficit below