Congress resorts to `Plan B' to rein in federal spending. FACING a budget stalemate, congressional leaders now pledge to keep tabs on individual spending bills. But this may only delay the inevitable: grappling with social security and the defense budget.
Washington — Collapse of House and Senate talks over the federal budget slows but does not halt the effort to reduce federal deficits. In the face of a dramatic blowup in the budget conference committee over social security cuts, congressional leaders began pointing to other means for spending restraints. Both houses have already passed budgets, each aimed at more than $50 billion in cuts that can be applied to individual spending bills.
``The budget resolution is not necessarily the maximum effort that can be made,'' says Rep. Thomas S. Foley of Washington, the Democratic House whip. A House-Senate compromise on the budget would be ``useful,'' he told a breakfast meeting of reporters Wednesday, but ``the House is going to show restraint on every authorizing and appropriating bill.''
A GOP budget aide confirms that the Senate leadership would also watch each piece of legislation. ``We'll monitor all of these bills pretty closely,'' he says, adding that if the House spending levels are too high then the Republicans could resort to a veto strategy.
Leaders in both houses and the President have signaled low-key hopes that the budget talks will resume following the July 4 break. However, hopes have dimmed for resolving the main sticking point, a Senate-proposed one-year freeze on cost-of-living adjustments (COLAs) for federal pensions.
The positions of the two houses on COLAs appear to be cast in concrete.
``It is our intention to have the President keep his word,'' House Speaker Thomas P. O'Neill Jr. (D) of Massachusetts said Wednesday. In an unusual display, he replayed a videotape of President Reagan from the 1984 campaign promising not to cut social security benefits.
Protecting social security has long been the Democrats' most durable political issue, and the party has been reluctant to drop it. Party campaign officials have already had printed a bumper sticker that says ``Save social security again -- Vote Democratic.''
House Republican leaders have been almost as adamant as Democrats about protecting full COLAs.
Speaker O'Neill said the only change he would accept would be requiring wealthier social security recipients to pay taxes on 85 percent of their benefits. Taxpayers with incomes of $25,000 or more now pay taxes on half their benefits.
Senate Budget Committee chairman Pete V. Domenici (R) of New Mexico has taken an equally strong stand -- for reducing COLAs. Without the change, there is no ``shared sacrifice,'' he told House-Senate conferees Tuesday as he announced that his side was leaving.
The breakup is one more sign that the early and much publicized promises of a dramatic deficit reduction have run into high obstacles in Washington.
The capital is preoccupied with an international hostage crisis. The President is making forays into the countryside to talk about tax reform, promising the reward of tax cuts instead of the pains of budget cuts.
Even economic forecasts seem to conspire to discourage the budget cutters. As soon as Congress developed plans to reduce red ink, a group of economists predicted that slower economic growth would push deficits even higher over three years.
Lawmakers trying to reduce deficits have been like a football player running toward the goal, only to find the goal moving further away. 2 For example, the consensus of 40 top economists, published in the newsletter Blue Chip Economic Indicators, has projected the deficit at nearly $200 billion by 1988, even with congressional savings.
Independent studies have found that neither the House nor Senate budget versions would save the $50 billion-plus promised. Actual savings would be closer to $38 billion, says the Congressional Budget Office.
However, many economists have only modest expectations for deficit cutting. They are asking only that Congress make a beginning to show a willingness to slow the growth of deficits.
Both houses may yet be willing to make that start even without a budget resolution.
``I think it's a loss for the American public,'' Rep. William H. Gray III (D), chairman of the House Budget Committee, said as the budget talks broke off. Joining other Democrats, the Pennsylvania representative put much of the blame on the the Reagan administration's ``lack of involvement.''
Senator Domenici has also complained pointedly that the budget has not been first priority. He has said Congress needs a budget to enact actual reforms that go beyond merely shrinking the budget.
While the House version would make cuts in programs, the Senate budget seeks to eliminate about a dozen programs altogether. The Senate reform would build more savings in the future. Without a budget agreement, such changes would be unlikely.
Congress now breaks for a week, during which members will find out where the constituent pressures are strongest. Some Republicans say the public will press for budget cuts, even painful ones. Democrats are relying on polls that say Americans are willing to cut defense spending, but not pensions.