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Reagan's '88 budget makes cuts in sensitive areas. Goes after farm aid, medicare, veterans' benefits

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The US budget has moved another yard closer to the status of political football. President Reagan on Tuesday signed off on a fiscal 1988 budget which attacked the deficit in areas which are politically sensitive, such as farm supports, the Veterans Administration, and medicare. The Reagan proposal for the fiscal 1988 budget will chop a total of $52 billion from the deficit, theoretically allowing it to meet the Gramm-Rudman deficit target of $108 billion.

To meet this goal, President Reagan is proposing $30 billion in new cuts, including $12 billion off entitlement programs. Through user fees, asset sales, privatization, and other revenue-raising plans, the White House hopes to raise $22 billion. There will be no new taxes, however.

In a breakfast meeting with reporters, James Miller, director of the Office of Management and Budget (OMB), admitted that congressional ``screaming and hollering is going to be terrible.''

Among the cuts, Mr. Miller said the President will propose to the new Democratically-controlled Congress:

Cuts in veterans benefits totalling about $500 million. To save money, the government will include an income-level test for vets receiving medical care. Those earning more than $15,000 who have non-service related illnesses will be asked to contribute toward their medical costs.

A change in farm-subsidy programs. Currently, the government limits subsidies to a total of $50,000 per farm. However, some farmers get around that limit by registering part of their farms in a relative's name. The new budget will ask for legislation closing the loopholes. At the same time, the Reagan budget will try to unlink subsidies to such crops as rice, feed grains, and cotton that are currently based on the size of production. To get a larger subsidy, a farmer has to produce more. Instead, the new budget will ask for legislation which will give subsidies based on the historical size of production.

Miller believes Congress will approve these changes because the cost of the farm programs over the past three years is $76 billion, or $25 billion higher than anticipated. However, he admits the changes would not result in large savings in fiscal year 1988.

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