President Reagan yesterday called for $41.4 billion in spending reductions in the 1982 fiscal year.
About $16 billion of this would come from programs that primarily aid the poor, but would be taken, the administration maintained, in ways that would not hurt the truly needy. Medicaid, food stamps, housing aid to the poor and unemployment compensation all would be affected. Tenants in subsidized housing, the fastest growing of all federal welfare programs, would be required to pay 30 percent of income in rent, up from 25 percent now, and fewer new units would be added to the program.
Grants to state and local governments would also be much reduced, and the U.S. Conference of Mayors quickly said through its president, Richard G. Hatcher of Gary, that Reagan's proposals "are not fair" to the cities.
About $6.7 billion in further cuts could come in spending and loan programs that subsidize specific sectors of the economy. Among victims of these would be railroad, the Postal Service, dairy farmers, the Corporation for Public. Broadcasting, companies that sell airliners and nuclear power plants abroad, would-be synfuel producers, and some beneficiaries of federal water projects. Reagan is seeking to cut these projects somewhat as Jimmy Carter did four years ago.
The $41.4 billion is a first installment in a program Reagan hopes will limit future growth in federal spending to 6 percent a year, starting with the 1982 fiscal year that begins Oct. 1.
Yesterday, Reagan proposed 83 major budget changes that would reduce spending an estimated $34.8 billion in fiscal 1982. A second list of smaller spending changes will be proposed before March 10 to reach the $41.4 billion target.
In his budget plan, Reagan drew a sharp distinction between the "deserving needy" and those just above the federal poverty line. Eligibility rules in more than a dozen of the largest assistance programs would be tightened to eliminate millions of recipients whom the government can no longer afford to support, in the Reagan administration's view.
Some 400,000 households would be removed from the food stamp program rolls, Medicaid spending would be reduced $100 million this year and allowed to increase only at the inflation rate after fiscal 1982.
The nation's basic income maintenance and entitlement programs, totaling about $350 billion, would be cut only about $9 billion, Reagan said.
But in different parts of the budget he also proposed cutting out $3.6 billion in public service jobs, most of which go to people of small means, plus about $2.6 billion in 1982 (and more later) in education, health and social services grants to the states, largely for programs helping the educationally, physically or financially disadvantaged.
If these cuts are added to those he listed under income maintenance programs, then the program cuts affecting primarily poor or near-poor people would come to $16 billion.
Reagan also proposed a 13 percent reduction in the public housing and rent subsidy programs for the poor and an increase in the rental payments by occupants of subsidized housing, saying these programs benefit a small percentage of eligible beneficiaries.
Emphasizing its determination to restrict federal aid to the neediest, the administration proposed a surprise change in unemployment assistance, to deny benefits to jobless workers who decline to take new jobs at pay substantially below what they had earned.
Reagan's budget would also shift responsibility for a range of federal programs from the federal government to states and localities.
More than 45 elementary and secondary education grant programs totaling $6 billion in projected budget authority would be consolidated into two block grant programs with a $1.5 billion cut in budget authority; similar consolidation of 40 social services, health and welfare programs would cut 1982 outlays from $9.3 billion to $6.8 billion.
In addition, impact-area aid would be sharply cut, from $888 million to $438 million. Finally, grants to localities for sewage treatment construction would be reduced.
Other notable cuts include:
Limiting cost-of-living pension raises for federal employes to once a year instead of twice.
Elimination of over half in the school impact-aid program, a traditional target of budget-cutters.
Reducing food stamps by $1.8 billion, about one-sixth, by cutting stamps if a child gets free school lunches, excluding families with gross income over 130 percent of the poverty line and other changes. At the same time, the school lunch and related child feeding programs would be cut from $3.9 billion to $2.3 billion by eliminating lunch subsidies for students with family income, based on a family of four, over $15,630.
Asking Congress to cancel the next increase in subsidies for the diary industry, scheduled April 1, a savings of nearly $1.1 billion.
Sharply reducing the fiscal 1982 Carter budget proposal for foreign development aid, as well as support for the Peace Corps, food aid shipments, the World Bank, the United Nations and other international organizations by $402 million.
Cutting 11 percent from federal water project construction funds affecting about 70 of the more than 300 flood control and irrigation projects new under construction.
Reducing the Export-Import Bank's low-cost loans to finance sales of U.S. goods abroad by 12 percent below the Carter budget, despite pleas of large U.S. corporations who benefit from the loans.
Abruptly changing mass transit policy, cutting off federal support for new subway and rail systems in favor of support for bus transportation and modernization of existing rail systems, saying $250 million in fiscal 1982. The new budget guidelines could mean a reduction of about 20 miles in the planned 101-mile Washington Metro system.
Phasing out operating subsidies for mass transit systems by 1986, for a saving of $96 million in fiscal 1982 and $1.4 billion in fiscal 1986. This would cost Metro about $20 million in the local, state and federal subsidy of $140 million. The difference would have to be made up by additional non-federal subsidies, increased fares or reduced service.
Cutting off federal funds for modernization of the Boston-Washington rail corridor, eliminating $95 million from the fiscal 1982 budget.
Eliminating the federal subsidy to Amtrak that reduces passenger rail fares by an average of $35 per trip, which would force Amtrak to double ticket prices on short distance trains and raise them 50 percent on long-haul trains, or else get offsetting subsidies from state governments. Subsidies to Conrail, the rail system formed from seven destitute northeastern railroads would be eliminated after fiscal 1982, saving between $1.5 billion and $2 billion by 1985.
Also, the synthetic fuels program that was the centerpiece of the Carter administration's energy program would be changed completely by eliminating all synfuels grants by the Department of Energy after fiscal 1982 and leaving all responsibility for the program with the new Synthetic Fuels Corp.
Reagan appointees to the corporation would be expected to minimize costs of their program, leaving development primarily in the hands of private industry. The budget savings would total $2.7 billion by the end of fiscal 1986.
Beginning in 1982, the federal government would slash subsidized lending to electric generation and transmission cooperative and to rural telephone companies, reducing federal outlays and budget authority by $1.1 billion in fiscal 1982 and by $6.4 billion by fiscal 1986.
Subsidies for the Postal Service, which provide free postage for the blind and handicapped, and reduce mailing costs for nonprofit organizations, educational institutions and others users would be eliminated, saving $632 million in fiscal 1982.
Funding for the federal share of sewage treatment plant construction would be held up until the administration and Congress can agree on changes in the program -- presumably to seek less costly treatment methods.
The Social Security minimum benefit guarantee of $122 a month would be eliminated, saving $1 billion and affecting over 2 million people; the Social Security student benefit (received by 772,000) would be phased out at a saving of $700 million, and disability eligibility be made tougher, at a saving of $550 million.
The $8 billion federal outlay for Aid to Families with Dependent Children would be cut by $520 million by tougher income and eligibility rules. c
The Medicaid "cap" would cut federal grants in fiscal 1982 from $18 billion to $17 billion.
The planned number of added subsidized housing units for the poor would be cut from 260,000 for 1982 to 225,000 and rents would be increased from a maximum of 25 percent of income to 30 percent by 1986.
The system in which 13 extra weeks of unemployment benefits go to the jobless in every state, regardless of its local jobless rate, whenever the national unemployment rate is high, would be ended.
Instead of the "national trigger," the extra weeks would be available only in states whose rate of insured unemployment exceeded 5 percent instead of the current 4 percent. Projected savings; $1.2 billion.
Grants for needy college students would be tightened, with lower income cutoffs; a need test would be restored in the guaranteed student loan program and interest charged while the student was in school, cutting overall outlays of $5.2 billion by a sixth at first and more later.
The budget would also cut support for "worthwhile" but "low priority" programs such as the National Endowments for the Arts and Humanities, museums and the National Corporation for Public Broadcasting.
In the sciences, the National Institutes of Health would be cut by $145 million; the National Aeronautics and Space Administration would lose $241 million; the National Science Foundation, $15 million, and the Department of Energy's general science budget, $29 million.