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Senate budgeteers bog down in debate over defense funds. Domenici's plan includes new taxes and Pentagon cuts

Attempts by the Senate Budget Committee to forge next year's federal spending plan have stalled in a partisan dispute over defense spending. Still, it has become clear that the budget eventually emerging from the Republican-dominated panel will not make the President very happy. Releasing his own budget plan last week, Budget Committee chairman Pete V. Domenici (R) of New Mexico said: ``I think it goes without saying a lot of people at the White House won't like it.''

The committee's deliberations were upstaged late Thursday when the House voted, 312 to 12, to shelve Reagan's proposed budget for fiscal 1987. The vote echoed a similarly symbolic 16 to 6 tally the previous week by the Senate Budget Committee to dispense with the White House version of the budget.

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Senate Budget committee staff aides worked through the weekend to iron out differences between Republican and Democratic members of the committee on defense spending. Domenici says he still expects the committee to agree on a budget in time for the week-long Easter recess beginning March 27.

Meanwhile, the clock of the Gramm-Rudman budget-balancing law ticks on. According to the timetable set out by the act, Congress is to have settled on its version of the fiscal 1987 budget by April 15.

While the Senate committee has not announced agreement on figures for any portion of the fiscal 1987 budget, the course of the debate shows how far panel members have deviated from the President's budget proposals in major areas:

Democrats and key Republicans are split over the issue of whether defense spending should be cut or merely frozen after allowing for inflation. Apparently, there is little serious discussion of the White House proposal of a $320 billion military budget for fiscal 1987 -- an 8 percent increase, after inflation, over the current fiscal year's allotment.

In a plan introduced last week to help break the Budget Committee stalemate over defense funds, Senator Domenici proposed to hold defense spending to the inflation rate in fiscal 1987, for a budget total of about $299 billion, and to allow for 1 percent growth for each of the following two years. Until last week, Domenici had been one of the few senators pushing for growth in the defense budget in the next year.

In the Domenici package, a virtual freeze is imposed on most domestic spending. The plan would, however, leave intact cost-of-living increases for social security, as well as civilian and military pension programs.

It is almost certain that the Senate Budget Committee will propose a tax increase to help plug the federal deficit hole, although President Reagan has vowed to veto any tax increase presented to him by Congress.

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In order to hold the deficit to $144 billion as required by the Gramm-Rudman budget-balancing law, the Domenici package projects a $16.2 billion increase in revenues for fiscal 1987. Increased revenue from existing taxes would provide about $6.2 billion, but some $10 billion would be raised by new or increased levies.

President Reagan's proposed budget includes the $6.2 billion increase from existing sources, but no new or increased taxes.

Some Democrats have pushed for more taxes to help cushion the impact of funding cutbacks on domestic programs, while at least three Republicans on the 22-member Senate committee remain opposed to any tax increase. Nevertheless, observers expect a tax increase proposal along the lines of Domenici's to emerge in the panel's ultimate budget plan.

Yet to be determined is how the new tax money will be raised.

In the House, Democratic leaders continue to insist they will not support any proposal to raise taxes without the President's support.

House Budget Committee chairman William H. Gray III said any congressional plan to raise new taxes would be, without the President's support, a ``futile exercise.'' After hearing of the Domenici plan, he said ``the key question'' was ``will the President support those kind of revenue figures.''

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