House and Senate conferees agreed yesterday to a $498.8 billion target federal budget for fiscal 1979, but the conference report may face tough sledding in the House, because some liberal Democrats are upset by cuts the conference made in social programs.
The House version of the budget squeaked through on a 201-197 vote last Wednesday, with all but three Republicans solidly aligned against it.
House Budget Committee Chairman Robert Giaimo (D-Conn.) is unlikely to pick up any Republican support tomorrow when the conference report goes to the House floor, even though the deficit, at $50.9 billion, is nearly $7 billion smaller than the deficit approved by the House last week.
Most of that deficit reduction occurred because the Democratic leadership in the House and Senate reached a compromise with President Carter over tax cuts. The conference report calls for a $5 billion smaller tax cut than either the House or Senate approved in their respective versions of the 1979 target budget, which will be used as a guide to spending and taxing legislation over the summer.
"It's the worst of all possible worlds," one top House Republican aide said yesterday. "They (the conferees) kept an 11 percent spending increase and, in effect, increased the tax load. If there is one thing the Republicans are united on, it's the need for bigger tax cuts."
The tax cut assumed in the conference report is $15 billion in fiscal 1979 (which starts Oct. 1). That is $10 billion less than the package the president proposed in January. Last Friday Carter agreed that a smaller tax cut is in order because inflation is becoming a bigger problem and the economy is progressing more rapidly than forecast.
"With 7 percent inflation, a tax cut of $16 billion to $18 billion is needed just to keep the tax burden steady," the Republican aide noted.
But if the House conference report will fail to gain any more Republican support, it could lose many liberals. Although the budget keeps actual spending on social programs constant, it trims about $3 bilion in spending authority for education and other so-called human resource programs, reducing the amount that can be spent in future years.
The conferees also tacked $1.3 billion onto the $128.4 bilion the House approved for defense spending, which will also make the conference report less attractive to many House liberals.
But the Senate had called for spending $129.8 billion on the military. Giaimo and Senate Budget Committee Chairman Edmund S. Muskie (D-Me.) hammered out a conference agreement under which the Senate agreed to a reduction in defense spending while the House lopped funds out of its version of the education and community development budget.
"It's fair to say the conference report is in trouble" on the House floor, one Democratic aide said. "That four-vote margin looks pretty small."
Rep. Parren Mitchell (D-Md.), head of the House Black Caucus and a conferee, declined to sign the conference report, although he voted for the budget on the House floor last week.
Rep. Elizabeth Holtzman (D-N.Y.) signed the report "relunctantly," sources said, but has not yet made up her mind whether she will vote for the conference report on the floor.
The House has had consistent trouble passing a budget resolution, a Republicans almost unanimously vote against it, forcing the Democratic leaders and Giaimo to try to weave a majority from liberal and moderate Democrats.
The Senate has developed a more bi-partisan approach to the budget, although the Senate Budget Committee and the full Senate have pressed for higher defense spending and lower sending on social programs than have their House counterparts.
The conferees agreed to a compromise on the tuition tax credit - which both budget resolutions called for, but which President Carter is fighting. The conference report makes room for a $300 million cut in revenues, about half what would occur if a tuition credit were passed.