President Reagan wants to phase out 75,000 federal jobs and kill the federal revenue-sharing program in a new $75 billion, three-year budget-cutting plan that is already running into opposition on Capitol Hill, sources said yesterday.
The plan, which would reduce spending $16 billion next year, also includes a delay in cost-of-living increases in Social Security and many other basic benefit programs, plus abolition of the departments of Energy and Education. Other components include a 12 percent across-the-board cut in appropriations for domestic programs, a $2 billion cut in the large increases planned for defense, heavy cuts in loan guarantees, the eventual elimination of 30 to 40 small agencies and boards and possibly a phase-out of all remaining government job-training efforts.
The proposal, which is aimed almost as heavily at social welfare programs as the first $35 billion in cuts for next year that Congress approved less than two months ago, was outlined over the last two days to congressional leaders and is expected to be announced early next week, probably by Reagan on national television.
However, congressional resistance, especially among House Republicans, could become an obstacle to the administration's latest effort to hold down its soaring projected deficits for the next three years and thereby satisfy shaky financial markets.
A House GOP leadership aide said there was a "general consensus" at a leaders' meeting with Office of Management and Budget Director David A. Stockman that the Social Security proposal "would not sail in the House," and a leading Senate Democrat, Russell B. Long (D-La.), predicted it would have trouble in the Senate as well.
Republicans in both houses were also pushing for a larger cut in the huge spending increase previously planned for the Pentagon, with Northeast-Midwest Republicans in the House urging at least $9 billion and saying their support for the further domestic reductions is contingent on what is done with defense.
Moreover, there were warnings that any attempt to tuck the Social Security and other entitlement or benefit program changes into a debt ceiling bill--which the administration reportedly wants to do--might jeopardize passage of the debt legislation, which must be passed by Oct. 1 in order to keep the government running. House Republican leaders reportedly took a dim view of this ploy, which was broached in a meeting Wednesday beteen Stockman and Senate GOP leaders.
White House Communications Director David R. Gergen reported after a Cabinet meeting on the new three-year spending cut plan that "it was agreed by all concerned that this was a difficult undertaking."
Reagan himself acknowledged he planned to propose a delay in Social Security increases for three months, something he had proposed earlier and then appeared to shelve in the face of congressional opposition to his broader Social Security plans. "Well, this is a slippage," he said, "but we're going to cut all pensions."
Of the $16 billion in new cuts for the fiscal year starting Oct. 1, which add up to a total of $51 billion when added to the cuts already voted, savings from delays of three to seven months in cost of living payments for pensions and related programs add up to about $5 billion. Savings from Social Security alone would amout to $2.9 billion, according to sources.
Payment of increases for Social Security would be delayed from July to October, 1982. Similar payments for federal civilian amd military retirees, veterans, railroad pensioners, food stamp and black lung benefit recipients and participants in school lunch and other child nutrition programs would also be delayed until October. Some of these payments would otherwise be made as early as March. Congress already had delayed the food stamp increase date from January to April.
Savings of about $500 million would be picked up in 1982 from the politically popular program of revenue sharing with local governments, which survived after an earlier budget assault wiped out revenue sharing for states. But local revenue sharing, currently budgeted for more than $6 billion a year, would also be wiped out entirely by 1984 or 1985 at the latest, according to congressional sources.
The proposed 75,000 cut in federal jobs, aimed at saving up to $3.5 billion over three years but less than $500 million in 1982, would come mainly through attrition but with some reductions in force, a White House official said.
The official said each department could allocate its own cuts, with the extinction-targeted departments of Energy and Education bearing the biggest burdens. "This is aimed at bureaucratic overload," said the official. The 75,000 cut in job slots, if approved, would reduce the federal employment rolls by about 6.5 percent.
Shutdown of the Energy and Education departments would be largely symbolic in budget-cutting terms, fulfilling Reagan's promise to wipe them out. Their functions would be scattered among other agencies. But real cuts appear to be planned within programs under the two departments.
The proposed cuts in the Energy Department's budget hit virtually everything but nuclear programs, reflecting Secretary James B. Edwards' strong support for these. Budget authority for nuclear in fiscal 1983 would be $1.7 billion, 6 percent higher than in the first budget resolution for 1982 approved by Congress in July.
Department officials said privately they expect a 45 percent reduction for solar energy, 34 percent for coal and other fossil fuel programs and 63 percent for conservation.
But budget instructions from OMB also direct energy officials as a possible alternate to "prepare a shutdown case" for conservation, fossil and solar programs that would eliminate them in 1983.
Sen. Edward M. Kennedy (D-Mass.), after obtaining a copy of the new energy budget figures, called them "totally unacceptable. If the Reagan administration wants to turn the Department of Energy into a Department of Nuclear Energy or a recycled Atomic Energy Commission, I will not only support abolition of DOE, I will help lead the fight to abolish it," he said.
The proposed cutback in federal loan guarantees, which congressional sources said is expected to amount to 25 percent over the net three years, is reportedly aimed primarily at reassuring financial markets, which have thus far failed to respond with any enthusiasm to the administration's budget-cutting efforts.
No final decisions were reported to have been made on federal job training programs, under which $4 billion is spent a year to train 900,000 jobless workers at a time.
Public service jobs were wiped out in the first round of budget cuts, and one proposal under serious consideration by the administration would end job training efforts as well.
A well-placed congressional source said that while the proposals add up to cumulative savings of $16 billion in 1982, $63 billion in 1983 and $75 billion in 1984, many of the specific cuts for 1983 and 1984 have not yet been spelled out by the administration.
The source also said the administration is "definitely looking at" some revenue increases, probably from user fees that have been proposed before, to help reach its goal of a balanced budget by 1984.
House and Senate Republican leaders are planning to meet Monday to coordinate strategy on the administration proposals. House Minority Leader Robert H. Michel (R-Ill.) was reported yesterday to have asked the administration for an opportunity for the party leadership in both Houses to offer counterproposals before final decisions are made.
As it stands now, the administration's program could turn out to be "one of the biggest trial balloons in history," said a Republican aide, reflecting House Republican anxiety over some of the proposals.