Carter, Kennedy spar over 'tightwad' budget

President Carter and Congress face a new and complicating factor in their uphill struggle to balance the fiscal 1981 budget. That factor is the political resurgence of Sen. Edward M. Kennedy (D) of Massachusetts, who attacks Mr. Carter's budget as a "harsh and insensitive document," promising "only more hardship for the poor, the sick, the cities, and , above all, the unemployed."

To what degree Senator Kennedy's economic views contributed to his New York and Connecticut primary victories in unclear.

But the positions he stakes out run contrary to the proposals advanced by Mr. Carter and by congressional Democratic leaders to trim anywhere from $13 billion to $16.5 billion from the 1981 budget.

Those trims, by consensus, would come largely from a list of social programs and would leave defense spending unscathed.

Senator KEnnedy, by contrast, advocates cuts in defense outlays and increased government spending for jobs, housing, child nutrition, and other programs aimed at helping the poor.

The President's intraparty challenger would close what he calls tax loopholes benefiting oil companies and rich Americans, thereby boosting federal revenues with which to finance social programs.

All this may make it harder for budget- cutters in Congress and the White House, especially if Senator Kennedy continues to gain ground on the President in future primaries.

"No complication is foreseen," said a senior White House official, "because Senator Kennedy runs up against a strong consensus of views in Congress and the [Carter] administration."

The premise of that consensus is that balancing the budget will require cutting into programs cherished by liberals.

Secretary of Commerce Philip M. Klutznick, among others, concedes that President Carter's loss of support in the New York primary stemmed partly from concern over the budget-cutting process.

Aware of this, the President indicates he will seek special help -- after the budget is balance -- for New York and other financially strapped US cities.

Mr. Carter also says he intends to make no cuts in a number of programs important to elderly Americans, including social security, medicare, "meals on wheels," and federally assisted housing.

Clearly the President, by design or conviction, is moving to shore up his support among groups of voters to whom Senator Kennedy's views might appeal.

Pressure to save social programs from the ax seems certain to mount, if Senator Kennedy's views win broad voter support as the primaries roll on.

Meanwhile, the budget-cutting process stands like this:

* President Carter is about to unveil specific measures to cut the fiscal 1981 budget by $15 billion or more.

He also will suggest about $2.5 billion worth of cuts in the current 1980 budget, for which a deficit in the $40 billion range is expected.

* These moves roughly parallel, in amount if not in detail, proposals by the House Budget Committee to cut about $16.5 billion from the 1981 budget.

* Similar action now is under way within the Senate Budget Committee, chaired by Sen. Edmund S. Muskie (D) of Maine.

Both Senator Muskie and House Budget Committee chairman Robert N. Giaimo (D) of Connecticut are determined to bring a balanced budget before the full Congress.

Congress sets provisional spending and revenue figures by May 15 of each year and revises them into binding ceilings by Sept. 15.

Leaders of both chambers and both political parties agree with President Carter that the 1981 budget should be balanced, partly to set an example of prudence for Americans in general to follow.

Few, if any, experts pretend that balancing the budget by itself will do much to reduce inflation.

"The budget cuts," economist Arthur M. Okun said in a recent interview here just a few days before he passed on, "are too small to do any harm, too small to do any good."

A commitment to balance the budget, Dr. Okun warned, "might paralyze us, if the economy goes into recession. You could not possibly balance the budget then."

Recession, by shrinking federal tax revenues and ballooning unemployment and welfare payments, would plunge the budget into deficit, regardless of what resolutions had been passed.

The Senate, meanwhile, defeated an effort by 46 senators to limit fiscial 1981 spending to 21 percent of the gross national product.

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