Low-cut student loans, the long-entrenched impact aid to schools and President Reagan's proposal for no-strings block grants to the states all took a beating in Congress yesterday as committees continued slashing programs to come up with $35 billion in budget savings for next year.
Reagan was winning most of his budget cuts but had to make a face-saving retreat from his ambitious, controversial proposal to combine nearly 100 education, health and social service programs into block grants that would be administered by state and local governments.
With just two days to go before Friday's deadline for committees to meet their quotas of cuts that Congress assigned them last month in its austere budget blueprint for fiscal 1982, the action included these highlights: a
The Republican-controlled Senate Labor and Human Resources Committee adopted the block-grant approach, with some loosening of federal control, but exempted most major education programs and insisted that funds continue to be earmarked for several big health programs.
"It's categorical grants disguised as block grants," complained Sen. Dan Quayle (R-Ind.) in making an unsuccessful bid to restore Reagan's original approach. The Democratic-run House Education and Labor Committee did not even brother to talk about including the block-grant approach in its budget cuts.
Not a penny was left by House Education and Labor for impact aid, an immensely popular, Korean War-era program under which virtually all congressional districts get a least some money to serve children of federal employes. The Washington area seems destined to be a big loser. The Senate Labor and Human Resources retained $200 million of the $800 million program, only enough to help school districts with big military bases.
Both these committees agreed to increase the cost to parents of the heavily used program of guaranteed loans for college students.
A fee 3 1/2 percent would be charged by the House committee for loans, and 5 percent by the Senate committee. The House committee would limit loans to families with incomes of $25,000 or less; the Senate would cut back the amount of money available to families with more than $25,000 in come. Interest rates on the loans with be increased from 9 to 14 percent by both committees.
The House committee estimated as many as 1 million students might be disqualified from the program under the proposed changes.
The Legal Services Corporation, which Reagan wants to eliminate, won an apparent reprieve from Republicans in the Senate. Senate Labor and Human Resources agreed to continue funding the program at a level of $100 million for each of the next two years, instead of abolishing it. The House is also working toward continuation of the program.
The Senate passed a sharply reduced food-stamp program, aiming at cuts of $1.5 billion next year, while rejecting conservative efforts to cut benefits even further. The bill would cut an estimated 1 million recipients from the rolls and reduce benefits for the other 22 million beneficiaries of the largest federal welfare program. [Details on Page A3]
Republicans on the Senate Banking Committee insisted on including the entire housing authorization bill in its spending-cut proposal, just as Democrats on House Banking did. This means that Republican proposals for reducing housing subsidies and lossening federal controls over community development will get a hearing in the evenutual House-Senate budget conference, instead of falling by the wayside because of the House refusal to consider a separate housing bill.
The House Commerce Committee paved the way for eventual transfer of the Conrail freight system to the private sector while the Senate Commerce Committee added $122 million to Reagan's budget for Amtrak, the passenger system. Amtrak officials said the extra funds would allow it to keep 85 percent of its system intact. [Details on Page C1].
The House Merchant Marine Committee, seeking to avoid a Coast Guard user fee for boats and yachts, voted by a narrow margin to create a new change of $5 a ton for dumping wastes at sea.
Together, the House Education and Labor and Senate Labor and Human Resources committees account for nearly one-third of the prescribed budget cuts, which fall heavily in the areas of education, health and social services. They are among the most liberal committees of the two houses, and both had their problems.
The House committee expressed its displeasure by accompanying its proposed cuts of $12.1 billion with a message that the committee had acted under duress and disapproved what it had done.
Complaining that the committee met "with a gun pointed at our heads . . . to wipe out nearly one-third of the funds which would be spent next year . . . for the nation's poor, handicapped, elderly and students," Chairman Carl D. Perkins (D-Ky.) said he has been assured that amendments will be permitted on the House floor to restore some of the money.
The amendments, also favored by House Speaker Thomas P. (Tip) O'Neill Jr. (D-Mass.), would cover funds for student loans, job training, child nutrition, vocational education, education for the handicapped and the "Meals on Wheels" program for the elderly.
Perkins said the committee voted for the cuts only because it does not want to turn the job over to the Budget Committee and have to rely on the "hard-hearted actions of those who brought us to this situation in the first place." Perkins was referring to the fact that the Budget Committee will propose cuts if other committees refuse to meet their quotas.
In the Senate committee, which came within $500 million of its $11 billion quota for cuts, the "compromise" on block grants resulted because two moderate Northeast Republicans, Sens. Robert T. Stafford (Vt.) and Lowell P. Weicker Jr. (Conn.), can command a majority when they team up with the Democratic minority.
They did just that in demanding ear-marking or continued targeting of funds for big programs like educational aid to poor and handicapped children and funds for neightborhood health centers and community mental health centers.
As a result, $585 million worth of mainly small educational programs were included in a new educational block grant, while about $4.6 billion worth of programs were funded under a separate title or separate legislation. Health programs were combined into a block grant but with a guarantee of continued maintenance for several programs for at least two years.
Committee Chairman Orrin G. Hatch (R-Utah) said the administration went along with the compromise after a series of high-level meetings over the last several weeks and asserted: "These are major, major changes. They [the block grants] give the federal government less control over these programs and the states more control over them."