Budget bill moves; tax reform falters

Nearly a year of struggle over deficits has finally produced a sweeping bill to balance the federal budget. Supporters hail it as a new tool for enforcing fiscal austerity. The question now, even among backers, is whether it will reduce deficits.

``This bill is a historical watershed,'' says Bob Packwood (R) of Oregon, chairman of the Senate Finance Committee. ``It's worthy of a try.''

He spoke as the Senate moved yesterday toward final passage of the measure, which would give the president authority to make automatic spending cuts if Congress failed to reduce the deficit. President Reagan has backed the legislation.

In other action yesterday, Congress dealt a surprise blow to Mr. Reagan's other major legislative interest, tax revision. The House rejected a procedural rule needed to bring up the tax bill.

This setback for passage of a tax overhaul came at the hands of House Republicans, who voted overwhelmingly against bringing the bill to the floor. Only 14 members of the President's party voted for the rule.

``My view is maybe we ought to step back a little bit,'' said GOP House leader Robert H. Michel after the vote. The Illinois lawmaker said the move does not kill the tax revision but merely delays it. House leaders had hoped to complete action on the bill this week.

Republicans said they voted to slow the tax bill because they objected to the House Ways and Means Committee version and wanted a new version of tax overhaul. ``We're all sympathic of his goals,'' said Rep. Jack F. Kemp (R) of New York of President Reagan's campaign for tax reform. But he charged that the House bill fell too short of the mark.

House Speaker Thomas P. O'Neill Jr. (D) of Massachusetts lambasted the GOP, saying the Republicans had ``showed their contempt for the White House by voting overwhelmingly against the tax reform process.''

The Speaker also said that if the tax bill is to pass then the President will have to deliver more votes. ``Otherwise, Dec. 11 will be remembered as the date that Ronald Reagan became a `lame duck' on the floor of the House.''

On the balanced-budget plan, lawmakers voiced both hopes and doubts; predictions of possible disastrous consequences were balanced against concerns about whether it is constitutional.

``If this bill does not work,'' says Senator Packwood, ``we will lose our last significant opportunity to deal with the deficit.''

Sen. Phil Gramm (R) of Texas, one of the original authors of the proposal, argues, ``This bill is the most thoroughly analyzed and thought-out piece of legislation that I have observed in my time in Congress.''

He contends that it ``completes'' the Reagan economic program, which aimed at lower inflation and taxes and boosting economic growth. The Reagan years have also brought the biggest deficit increases in history, with the current year's red ink estimated at about $200 billion.

Senator Gramm cosponsored the deficit-cutting bill with Sens. Warren B. Rudman (R) of New Hampshire and Ernest F. Hollings (D) of South Carolina.

But others, including some who are going along with the plan, worry about unexpected results. ``Who knows what evil lurks in the heart of Gramm-Rudman,'' says Sen. J. Bennett Johnston (D) of Louisiana, paraphasing an introduction to ``The Shadow,'' an old radio show. ``Nobody does. But I fear it's there.''

Sen. Daniel Patrick Moynihan (D) of New York proclaimed the Gramm-Rudman-Hollings plan a ``suicide pact.'' He told colleagues, ``We are entering an agreement to dismantle the defenses of the United States.''

Skeptics divide between those who argue that the plan will make too many cuts and those who say it will be ineffective.

As written, the plan promises to slash the federal deficits between now and fiscal 1991.

Some programs, including social security, would be protected, but others, including defense, would take severe across-the-board cuts if the plan is enforced.

Probably the most stringent critic is Rep. Henry A. Waxman (D) of California, a liberal who charges that ``it's a mindless idea'' that will result in making cuts automatically in spending programs, instead of setting logical priorities for cutting.

Packwood concedes the new process is not ideal but calls the measure necessary because of congressional failure to control spending. ``I pray that what we are about to undertake will work.''

Even as the balanced-budget measure passes Congress, opponents are preparing to overturn it in court. Alan Morrison, a lawyer who successfully challenged the practice of a legislative veto, is already preparing a case.

Legal authorities agree that the bill could be vulnerable to a charge that it transfers congressional power over government spending to the executive department.

At issue is the procedure by which the president would be empowered to make automatic spending cuts. Major provisions of budget-balancing bill

Under Gramm-Rudman, deficits must shrink by $36 billion a year, reaching zero in fiscal 1991. Failure to hit the deficit targets would trigger automatic spending cuts in federal programs as follows:

Exempt. No automatic cuts would be permitted in social security, interest on the national debt, or eight low-income programs including medicaid, Aid to Families with Dependent Children, veterans compensation, and veterans pensions.

Limited protection. Programs that would be subject to some cuts include foster care and adoption assistance, unemployment, child support enforcement, student loans, and crop supports.

Health programs. Automatic cuts would be limited to 1 percent in 1986 and 2 percent thereafter in medicare, community health, and health programs for veterans, Indians, and migrants.

Other nondefense programs would be cut across the board. Defense programs would be cut an equal amount, but President Reagan would have limited flexibility in choosing where to make defense cuts in 1986. He could also transfer defense funds to preserve the full strength and pay for uniformed military personnel.

The timetable for the cuts would be:

Automatic cuts would probably start March 1 of next year; cuts of $11.7 billion are predicted. Estimates of the current budget deficit show it well above the $171.9 billion target set for 1986.

Automatic cuts for 1987 would come, if triggered, on Oct. 1, 1986. Those cuts could be extensive, since the Gramm-Rudman bill calls for a deficit of $144 billion in 1987, estimates already exceed that target by a wide margin. (Cuts would not be required if the deficit is within $10 billion of the target.)

Congress could suspend the balanced-budget requirements if the economy dips into recession.