Domenici's budget compromise: only a prelude to tougher stand

After fruitless tries to bring his own party members into line, Senate budget chairman Pete V. Domenici announced solemnly last week, ''I remain convinced that we must have a (budget) resolution, and I will do everything in my power to get one.''

By week's end, the New Mexico Republican had done just about everything.

The budget chairman, who helped install the Reagan economic program in 1981, voted last Thursday to send to the Senate floor a 1984 budget that could hardly be farther from Mr. Reagan's wishes. It calls for $30 billion in new taxes that the White House opposes, while proposing $11 billion more in domestic spending and half as much defense growth as Mr. Reagan requested.

''It'll get fixed up'' on the floor of the Senate, said Mr. Domenici in an interview late last week. He made it plain he will fight to reduce the tax number and add more for defense when the full Senate takes up the budget, probably next Monday.

The budget chairman rejected the notion that his committee's action is a rebuke to the President. ''I don't see it as a finished product. So rather than talk about how the President came out, I think we ought to wait about two weeks, '' he said.

The two-term senator has lived up to his reputation as a pragmatic conservative in this latest budget round. When he saw that some of his doctrinaire Republican colleagues would not vote for any budget with tax increases, he turned to the Democrats to try to strike a deal, but ''they never reached the numbers that I thought a broad spectrum of my party could support,'' Domenici said.

So he came up with a plan to break the deadlock. Domenici had lunch with Sen. Lawton Chiles of Florida, the ranking Democrat on the Budget Committee, and informed a surprised Senator Chiles that he and three fellow GOP moderates would vote for the Democrat's $30 billion tax number.

Explaining his strategy later, Domenici said he ''would feel much more comfortable having permitted the Democrats to win with a very high tax number, than to have negotiated a middle ground and been compelled to support the budget resolution that we negotiated.''

Now, with a clear conscience, he can fight for his own tax numbers, which are close to those in the White House proposal. That plan would delay any significant new taxes until 1986. ''One of the worst things we could do would be to vote heavy taxes in 1984 and '85 - politically and economically,'' said Domenici. ''And I'm not going to be any part of that.''

What Domenici did accomplish was to push the budget debate onto the Senate floor. According to Domenici, the budget process itself would have been in jeopardy unless the committee acted.

''I have a responsibility to produce a budget that the Senate can vote on,'' he said. ''It feels much better to take one to the floor that has . . . the President's support and that you have all the Republicans on. But I don't think that was possible this year.''

The hard-working Domenici, now in his third year as budget chairman, has had at least his share of problems in trying to draw up a budget this year. Not only has the economy been rocky, but the two parties are already posturing for the ' 84 elections. And the biggest challenge for Domenici comes from members of his own party.

When Domenici took over the budget post, it was in the flush of the Reagan victory, when the GOP marched in unison. Even in 1982, when the Senate rejected the President's first budget request, Senate Republicans joined forces to write something they found more acceptable.

But this year, Domenici found himself squeezed between divided GOP colleagues and an uncompromising White House. The Reagan administration, usually adept at dealing with Capitol Hill, proved heavy-handed as it lobbied for a 10 percent real growth in defense. Even when Domenici delayed the budget markup by White House request, the administration refused to meet the Budget Committee senators part way on defense.

Meanwhile, Domenici's GOP committee members, such as Sens. William L. Armstrong of Colorado and Orrin G. Hatch of Utah, left him without a working majority by refusing to give an inch on raising taxes.

Summing up the three Reagan budget years, Sen. Slade Gorton of Washington, a moderate Republican, told Domenici that 1981 ''was the year of the President; 1982 was the year of the Senate Republicans with you as chairman; and 1983 is 'The Year of Living Dangerously' (the title of a newly released movie).''

The budget has been ''very political the last two years,'' said Domenici in the interview. But he added that the confrontation and inharmony are ''not all that bad when you look at the fiscal facts, the nature of the deficits, the transitional nature of the American economy and the free world's economy. That's precisely what one ought to expect.''

Asked to look back on the first year of the Reagan budget, when Domenici led his committee in making the biggest federal spending cutbacks in history, the sandy-haired New Mexico senator, son of Italian immigrants, said, ''I think, under the circumstances, we did the absolute best we could.''

But he says he still regrets that the 1981 budget failed to curtail entitlement programs such as pensions, medicare, and agricultural support programs.

''On hindsight, the biggest mistake made was that the entitlements were not corralled and controlled in the very first budget,'' he said, noting that the President didn't propose those reforms.

Domenici, who is up for reelection in '84, has clearly lost his taste for cutting social programs since his first year as budget chairman. Domestic ''discretionary'' programs have already been cut by 24 percent, he said, although they make up only a small part of the $800 billion federal budget.

The jury is still out on the first two Reagan budgets, Domenici said. Calling the recession painful but inevitable, he said he is optimistic about the future. ''If the economy is on a strong upbeat and inflation is under control, as it seems it might very well be for the first time in many years, I think we'll come out of it all right, and the President will come out of it all right.''

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