The House Budget Committee, facing a mounting fiscal 1980 budget deficit as a result of inflation and higher energy costs, yesterday rejected both a major antirecession tax cut and a large increase in defense spending.
The actions came as the panel began work on a revised congressional budget resolution that would add $10.8 billion to the deficit Congress approved last spring, bringing the total red ink to $33.8 billion, from $23 billion before.
Yesterday's decisions, which both came on voice votes, left the House panel's recommendations essentially in line with those of the Senate Budget Committee, which also rejected both a tax cut and a defense spending increase.
However, proponents of the two amendments are planning to revive them when the budget resolution reaches the House and Senate floors -- with a good chance in the Senate at least that the higher defense spending figure will prevail.
Senate conservatives, led by Sen. Sam Nunn (D-Ga.), want a large defense spending increase as the price for approving the strategic arms limitation treaty. And both liberals and Republicans are pushing for a tax cut.
Rep. Robert N. Giaimo (D-Conn.), chairman of the House budget panel, warned members if they did not reject both proposals yesterday they would have "a hard time holding the line" when the budget measure reaches the floor.
Under the five-year-old congressional budget process, the two houses set tenative spending and tax-receipt targets each May and then revise them in September after Congress has passed all its appropriation bills.
The September limits then become binding ceilings, both on overall spending levels and on totals for individual categories or functions, such as defense or foreign aid.
The floor vote in the House is expected to be a close one anyway, if only because of the proposed $10.8 billion rise in the deficit. Although $7.3 billion of that stems from changed economic conditions, the increase is unpopular.
The panel's action on the defense budget would leave overall defense spending in fiscal 1980 about 1.5 percent above current-year levels -- far below the 3 percent rise Carter has requested as part of a pledge to Western Europe.
The figures the panel approved yesterday include an extra $4.3 billion in defense spending to cover increases in military fuel costs and Carter's recent decision to grant government employees a 7 percent pay raise.
However, the panel rejected a proposal by Rep. Eldon Rudd (R-Ariz.) that would have increased defense spending for fiscal 1980 by $2.6 billion and added $7.5 billion in authority to commit funds for future years.
The Rudd proposal, aimed primarily at increasing the Pentagon's budget for missiles and new weapons systems, was similar to the concessions sought by Nunn and other Senate conservatives, who were beaten in the Senate Budget panel.
Yesterday, Carter met with his budget and defense chiefs and reportedly confirmed his earlier plans to ask Congress to approve the full 3 percent rise in defense spending but to go no further to meet Nunn's demands.
Carter's decision set the stage for a major floor fight when the Senate considers the budget resolution later this week. The Senate was scheduled to start work yesterday, but postponed the measure until tomorrow.
The defeated motion to allow room in the budget for a tax cut was proposed by Rep. David R. Obey (D-Wis.), a leader in the panel's liberal bloc. Obey argued the panel should act now to head off bigger demands when the recession worsens.
However, Giaimo and other key Democrats argued that in view of the continuing high inflation rate a tax cut now would be "irresponsible" and would "accelerate" the wage-price surge.
The committee approved instead a proposal by Giaimo for an extra $496 million for job-training under the Comprehensive Employment and Training Act program and a tripling of the $150 million antirecession aid to states.
Obey had sought authority for a tax cut of $24 billion, including a $15 billion rollback in Social Security payroll taxes, $5 billion in faster depreciation writeoffs for business, and $4 billion for Carter's "real wage insurance" plan. insurance" plan.
Republicans, who opposed Obey's recommendation in yesterday's vote, are seeking a similar-sized tax cut primarily involving a reduction in income taxes. Most said they did not want to be boxed in by Obey's plan.
In addition to the extra monies for defense and jobs programs, the major change in yesterday's proposal was for an added $2.6 billion in spending for new energy initiatives -- the result of President Carter's new energy program.
However, the committee still has not formally approved the energy portion of the package. The $2.6 billion figure was merely recommended by Giaimo as a starting point for deliberations. A vote is expected today.
One sticking point on the energy issue may be the fact that the Giaimo recommendation provides for only one year's worth of the president's $88 billion synthetic fuels program, thereby mandating a full congressional review next year.
Carter has vigorously objected to congressional demands for frequent review of the program, contending it would hamper the overall operation. The Senate Budget Committee provided for full review every two years.
If the resolution as it now stands is approved intact, it would provide for overall spending of $549.8 billion in fiscal 1980, which begins Oct. 1, up from $532 billion in the spending target passed last spring.
Carter originally requested a spending total of $531.6 billion, but raised that last July to $543 billion. The president's budget now calls for a $29.1 billion deficit. The Senate's measure recommends $28 billion.
Another issue the House panel must address is whether to go along with a move by the Senate Budget Committee to force congressional committees to cut back their appropriations bill by $4.3 billion.
The Senate panel acted because congressional committees so far either have overspent the targets voted last spring or else have declined to approve cost-saving measures included in the earlier version of the budget.
However, the procedure, known formally as "reconciliation" of the budget, is considered certain to set off a fight. Giaimo said yesterday he plans to sidestep the entire question until he can see if the move would draw support.