President Carter finally sent Congress yesterday his long-delayed national development program designed to stimulate distressed communities, only to have the plan immediately rejected by the House Budget Committee.
The proposal was to have been the centerpiece of a $6 billion program of grants, loan guarantees and interest subsidies, Carter announced plans for such a program a year ago but had run into snags with earlier versions.
The Budget Committee action effectively knocks out of Congress' fiscal 1980 spending plan authority to use $1.5 billion out of an expanded $3 billion budget for the Commerce Department's Economic Development Administration.
Congress still could approve a $275 million grants program to be run by the Department of Housing and Urban Development, but this would be only a small portion of the total effort.
A cut in the urban grants proposal enabled the Budget Committee to agree tentatively on a $532.8 billion congressional spending target for fiscal 1980 that contains a deficit of $24.9 billion - $4.1 billion below what Carter proposed in January.
The House panel is expected to give final approval to the budget resolution today, with plans to send it to the floor in mid-April. The Senate Budget Committee, still laboring through a similar measure, is expected to propose a significantly higher deficit.
The House hudget panel's action, on a motion by Rep. James R. Jones (D-Okla.), came after committee members complained that the budget situation was too tight to allow spending on new initiatives. Several also criticized Carter's proposals as "too vague."
While there still is a possibility the panel may reverse itself, sources said it was unlikely. The Senate Budget Committee may vote to keep the plan intact, an action anticipated by EDA officials last night.
The House panel's action effectively eliminates Carter's new program and leaves about $1 billion already designated for EDA.
If the House action is left intact, "there would be no new program," Beverly Milkman, an EDA official, said last night. "It's too bad it happened today. The timing wasn't very good."
Milkman said EDA will "have to do some homework" to explain Carter's proposal to the House committee by tomorrow, when it plans to complete deliberations, or hope the Senate will include it.
The president's plan was intended to highlight a program to provide more than $3 billion in direct and tax expenditures and almost $3 billion in loan guarantees to stimulate privatesector jobs and investment in economically "distressed" communities.
The plan would have provided $575 million in budget authority for an expanded public works and economic development grant programs. The grants would be for construction and rehabilitation of public facilities and the funding of some state and local economic development projects and jobs for the unemployed.
Carter's plan also would have provided for $570 million in budget authority and $1.8 billion in loan guarantee authority for financial incentives to encourage businesses to remain or locate in economically distressed areas.
Carter said in his economic message yesterday that that part of his plan would "be the foundation for the consolidated economic development loan and loan guarantee program that I have proposed as part of my reorganization effort."
As part of his economic development effort, Carter also announced yesterday that he will submit later this year a reorganization plan to consolidate some Farmers' Home Administration and Small Business Administration economic functions within EDA.
The third key part of his legislation would be the addition of $90 million for economic development planning assistance to urban and rural areas and technical assistance to the public and private sectors.
Last year, Carter's plan for a new independent National Development Bank to spur industrial growth in distressed areas was scrapped because it encountered strong resistance from Congress. Its projected functions were to be incorporated into the program that was cut by the House committee yesterday.
The action came as the Senate Budget Committee, continuing work on Congress' fiscal 1980 spending targets, approved Carter's defense budget intact-rejecting liberal efforts to cut it further and conservative attempts to increase military out lays.
Meanwhile, the House Budget Committee, besides rebuffing Carter's new urban initiative, restored some monies for water projects and highway grants that the Democratic Caucus had urged be cut. It also approved Carter's plans to cut the public service jobs program.
The proposal approved by the Senate panel would set military outlays at $124.9 billion and authority to commit future spending at $138.4 billion. By contrast, the House Budget Committee cut Carter's proposal by almost $3 billion. The dispute will be decided in floor action or conference.
The House committee's restorations included $300 million in new spending authority for highway grants and $275 million for water projects, both favorites of the Hosue leadership. The water projects amendment was sponsored by House Majority Leader Jim Wrigth (D-Tex.).