Only sliver of budget left between guns, pensions

By , Staff correspondent of The Christian Science Monitor

The new fiscal year for Uncle Sam is just two weeks away, but in some ways the battle of the budget for 1982 -- the one many people thought was already settled -- is just beginning.

President Reagan and Congress find they will have to cut much deeper into domestic spending if the federal deficit is to be reduced. There are suggestions that gaps in the "social safety net" will have to be widened, and that the President should be givent the power to impound funds already approved or otherwise circumvent the normal legislative process.

Mr. Reagan has told federal departments to prepare for another 10 percent in budget trims for 1982 in order to save some $17 billion. When defense and "locked-in" spending (interest on the national debt, plus such entitlement programs as social security and military pensions) are subtraacted, that leaves less than one-fourth of the budget to further manipulate. Many programs in this category already have been cut to the bone.

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The President this week sought to assure conservative Democrats that such cuts "can be done without damage to vital services." Others are not so sure.

Even many of those who supported the President on the first budget go-round, including key Republicans, say the military will have to absorb greater cuts than the very modest $2 billion sought by the administration for 1982.

Rep. Phil Gramm (D) of Texas, leader of the conservative "boll weevils" who joined Republicans to give Reagan his first budget victory, says $3 billion to $ 5 billion would be a more reasonable figure. Senate Budget Committee chairman Pete Domenici (R) o New Mexico would more than double planned Reagan cutbacks in defense spending through 1984 to $30 billion.

Behind this disagreement between the White House and key congressional supporters is the concern on Capitol Hill that further cuts in nonmilitary spending will be much harder to obtain. Such "sacred cows" as tobacco subsidies are being eyed with increased seriousness by many law-makers, and other programs of far broader interest -- such as social security -- also are being conidered for possible reductions.

Senator Domenici suggests that $22.4 billion could be saved in the next three years if the government limits cost-of-living increases for recipients of social security and other federal retirement pro grams to 3 percentage points below the consumer price index. The White House now acknowledges that it will seek such adjustments for 1983 and beyond, but (at least publicly) still holds that federal pensions ought not to be cut in 1982.

House Republican leader Robert Michel of Illinois has suggested that the President be given the power to "impound" money that already has been appropriated, subject to a two-thirds congressional veto. Another possibility also guaranteed to arouse congressional ire could be to have the White House push for an omnibus appropriations bill that would force Congress to vote for a single item rather than separate bills. This would allow Mr. Reagan to concentrate his considerable powers of public and political persuasion as he did on earlier budget and tax votes, some White House strategists feel.

If the problem of engineering further budget cuts puts Mr. Reagan next to a political "rock," then the "hard place" on his other flank is Wall Street. Investors and analysts there will have to change their perception of "Reaganomics" if the administration's program is to succeed. This could prove increasingly difficult if, as is now hinted, the White House concedes that a higher deficit will occur next year.

Nervousness generated by the budget battle is not limited to Wall Street. Even some Republicans lawmakers are talking about credit controls or deregulating the price of natural gas and taxing any "windfall profits" that might result.

Under the established congressional timetable, the House and Senate were supposed to complete action Sept. 15 on their "second concurrent budget resolution" --setting binding spending ceilings for the coming year. Congress is just beginning this final budgetary weeks late. Lawmakers have yet to complete any of the 13 appropriations bills for 1982.

Reagan meets tomorrow with his Cabinet to discuss further necessary spending cuts. He already has told department heads they will have to reduce planned spending for 1983 and 1984 by up to $74 billion. Each department has been given a target of $500 million to $4 billion for each of those years to meet its share. But the immediate problem is 1982, for which cuts of $10 billion to $15 billion have to be made if the federal deficit is to be held to $42.5 billion, as Reagan hopes. If one accepts Congressional Budget Office forecasts (as Wall Street apparently does), then additional spending cuts to meet this goal in fact must total more than $30 billion.

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