Congress got a preview yesterday of how it can reduce the fiscal 1982 deficit by about $40 billion if it is willing to cut popular programs such as Social Security, food stamps and student loans and close some tax loopholes that largely benefit middle-income Americans.
At the request of the House Budget Committee, Congressional Budget Office Director Alice M. Rivlin submitted a shopping list of 105 "examples" of how Congress could pare its projected 1982 deficit of $55 billion to $60 billion both by cutting expenditures and raising revenues through selective tax increases.
"There are no easy targets on the list," Rivlin told the committee. "There are none that would not result in some people or institutions being worse off than they would otherwise be."
Budget Committee Chairman, James R. Jones (D-Okla.) described the list as the start of "what may well turn out to be the most painful political process through which any of us will ever go." It could lead eventually to a "political revolution," Jones added.
The list prepared by the Congressional Budget Office, which serves the Democratic-controlled Senate, was compiled independently of budget cuts that President Reagan is expected to submit to Congress later this month as part of an overall economic package. Moreover, more than half of the CBO's deficit reductions come from tax increases, while Reagan has promised tax cuts. But the options could be important in shaping congressional priorities when Congress gets down to acting on Reagan's proposals.
Jones said after Rivlin's testimony that, despite the political problems posed by many of the CBO options, it will be possible to compile enough of them to cut the projected deficit to about $25 billion. But the list "points out how difficult it will be . . .," Jones said. He added that he thinks some of the tax proposals might win congressional approval, including reducing or elminating the tax deduction for interest paid on credit purchases ofconsumer goods, which costs the Treasury $6 billion a year.
This was recommended as an option by Rivlin, along with putting a $120 monthly limit on deductions for employer-paid health insurance benefits ($2.6 billion in savings) and a $5,000 cap on the deduction for mortgage interest ($6 billion in savings). Jones said he thought a change in the mortgage deduction was highly unlikely, but urged that the health insurance proposal as well as the consumer credit idea be "taken seriously."
In her testimony, Rivlin also noted that benefits to individuals constituted 49 percent of all federal spending last year and warned that "there is no other way" to reduce the cost of these programs than to cut benefits or eligibility lists.
As options, she cited raising the retirement age for Social Security to 68, restoring the $40,000 family income ceiling for eligibility for guaranteed student loans, raising income limits for food stamps and modifying cost-of-living increases for Social Security. CAPTION: Picture, CBO Director Alice Rivlin: lists 105 ways Congress could cut its projected fiscal 1982 budget deficit of between $55 billion and $60 billion. By James K. Atherton -- The Washington Post