The House Budget Committee is preparing to hand President Carter a political hot potato-a congressional budget that would slash Carter's proposed $29 billion deficit for fiscal 1980 by $1.4 billion, largely at the expense of defense spending.
Rep. Robert N. Giaimo (D-Conn.), committee chairman, is expected to unveil recommendations tomorrow that would aim at a deficit of $27.6 billion, but would pare $1.2 billion dollars in military spending.
Giaimo's proposal also will call for eliminating grants to states from the federal revenue sharing program and for cutting back spending on water projects to 1979 levels. At the same time, it will deny Carter's request to end some minor Social Security benefits.
Although the panel many end up altering Giaimo's proposals, souces said the thrust of the Giaimo recommendations had been agreed to informally in a caucus of committee Democrats. The panel must complete work on the budget resolution by April 15. Meanwhile, the Senate budget committee is beginning work on a similar resolution that would call for a defecit of just under $30 billion, and that would eliminate Carter's proposed "real wage insurance" tax credit plan needed for the administration's new wage-price program.
Even if the Senate does not vote to cut military spending as much as the House, the magnitude of the House cuts means the Pentagon almost certainly would suffer in any House-Senate compromise. The major uncertainty over Giaimo's proposal is whether the cuts would survive floor action.
Giaimo's recommendations came as a surprise to most observers. The chairman had indicated earlier Congress would have to cut Carter's budget further because of changing economic conditions. But he hinted strongly then that defense outlays would not be cut.
Giaimo also is expected to announce that, because of changes in fiscal 1979 spending estimates, Congress will have to revise the budget ceilings it set last autumn, to allow a slightly higher deficit.
Under the new congressional budget process, Congress approves a set of tentative targets for spending and tax receipts each May, then revises them in September. The September figures become binding ceilings.
Most observers believe the budget process will become a major battle ground this year for clashes over individual spending programs as well as the issue of whether Congress should balance the budget. The budget committees are expected to provide estimates this year of precisely what would happen if the budget were balanced in fiscal 1980.
The house committee is expected to face two major attempts at amending Giaimo's proposal during a drafting session this week and next:
Rep. David Obey (D-Wis.) reportedly is planning to propose cutting spending enough to balance the budget-in par as a move to jolt liberals in hopes of restoring full financing for traditional Democratic social programs when the budget resolution goes to the floor.
Rep. Jim Mattox (D-Tex.), in a more serious note, is expected to propose a series of additional cutbacks in key social and civil works programs - including public service jobs and anti-recession aid to cities.
Under Giaimo's recommendations, the defense cuts would come in three parts:
First, in fiscal 1980 defense authority for new commitments would be cut by $4 billion - an amount said to translate to $1.2 billion in actual spending, though all these figures could be changes slightly by tomorrow.
Second, on a motion by Obey last week, the caucus agreed to slash an other$1 billion in new budget authority, or $500 million in outlays, from defense spending and to transfer the money to various social programs.
Finally, Giaimo is expected to deny the Pentagon a supplementary budget request for fiscal 1979 - a move analysts say would trim $2.3 billion in new authority, or $2 billion in actual outlays. The total cuts in new authority for both years would be $6.3 billion.
The defense cuts would pare the growth in the military budget after inflation to 2.2 percent, down from the three percent or so that Carter proposes. The major cuts in social and other nondefense programs under Giaimo's recommendations include $70 million in outlays for water projects and $150 million in outlays for mass transportation grants.