President Reagan was scrambling yesterday to avoid politically sensitive cuts in cost-of-living increases for Social Security and still come up with $16 billion in new budget cuts for next year in time for announcement on national television tonight.
Sources within the administration and Republican leadership circles in Congress said Reagan seemed to be backing off an earlier plan to squeeze about $3 billion out of Social Security payments next year.
They also said he was determinedly resisting suggestions that he either cut defense spending more than the $2 billion he has already proposed or
President Reagan's speech will be televised live at 9 tonight. defer the tax cuts he pushed through Congress this summer. The tax-cut deferral idea was called the "height of folly" yesterday by Senate Majority Leader Howard H. Baker Jr. (R-Tenn.).
But Reagan, meanwhile, was under pressure from Baker and others, including mayors and governors, to drop his planned phase-out of general revenue sharing by 1984, and it appeared that revenue sharing might survive at a diminished level.
A White House source said revenue sharing would probably not be killed but would suffer the same 12 percent across the board cut for 1982 that has been proposed for all domestic appropriations.
As meetings on the budget cuts continued late into the day and rumors ricocheted around town with little if any authoritative confirmation, officials emphasized that few decisions were firm.
"We haven't been told," said a congressional source close to the White House. "It's pretty fuzzy."
Another said, "I really think they're still trying to work it out."
As Congress waited for the latest presidential decision on further cuts, committees took these actions:
The Senate Finance Committee failed to agree even on the language of a non-binding resolution saying it intends to draft a bipartisan Social Security bill. Republicans wanted the resolution to say more than "interfund borrowing" is needed to shore up the system. Democrats balked. Chairman Robert J. Dole (R-Kan.) put off action until today.
Acting under White House pressure, the Senate Environment Committee approved sharp cuts in the program that helps local governments build sewage treatment plants. It voted to reduce long-range federal commitments to localities from about $90 billion to $22 billion.
The House Appropriations Committee approved a bill providing $87.3 billion for the Departments of Labor, Health and Human Services and Education. Sen. Mark O. Hatfield (R-Ore.), chairman of the Senate Appropriations Committee, has held up further action on any appropriations bills pending announcement of the president's new program.
Four ranking Democrats on the House Energy and Commerce Committee wrote a letter to Energy Secretary James B. Edwards charging that plans to dismantle his department and fire more than 1,200 employes would be "a deliberate and defiant attempt to thwart the will of Congress" and might be unlawful.
The Department of Agriculture, meanwhile, reduced the maximum income for beneficiaries of a program called WIC, which supplements the diets of women, infants and children. Previously a family of four was eligible for this food aid if its income did not exceed $17,560. The new limit will be $15,630. About 2.2 million people get this form of assistance now.
The White House was described as determined to come up with $16 billion in new cuts on top of those Congress approved last summer. But from what leaked out yesterday, it wasn't clear how Reagan could get there, especially if he was forced to retreat on Social Security and possibly planned savings from other retirement programs.
When details of Reagan's proposals were disclosed last week, cost of living increases were to be deferred for eight other benefit programs besides Social Security, including federal workers' pensions, veterans' benefits, food stamps and child nutrition programs, saving a total of $5 billion or more next year.
But sources said yesterday that Reagan is considering going ahead with the cuts in other benefit programs, while bowing to heavy congressional pressure to avoid tampering with Social Security as a budget-cutting device.
So intense has been the firestorm over Social Security, in fact, that Senate Republicans are planning, with an expected nod from the White House, to push for partial restoration of the $122 a month minimum benefit under Social Security that Congress repealed at Reagan's request earlier in the year.
As for Reagan's plans for tonight's address, "The Social Security issue is going to be dodged unless something happens at the last minute," said a well-placed congressional aide.
While Reagan was described as holding firm on military cuts by Defense Secretary Caspar W. Weinberger and others, some congressional sources said they have received reports that Reagan would not fight too hard if deeper cuts are made, so long as 1982 spending under Reagan does not drop below spending proposed by President Carter before he left office. This would mean a cut of no more than $3.8 billion, according to Republican sources.
The president will be walking a fine line tonight as he outlines his plans: enough to satisfy the financial markets that he and Congress mean business in clamping down on federal deficits, while not pushing a skeptical, jittery, frustrated Congress over the brink into rebellion.
He got lots of advice yesterday from Congress, not all of it pointed in the same direction. Some Republicans were still resisting defense cuts, Sen. David F. Durenberger (R-Minn.) called for cancellation of the MX missile as a $35 billion "signal to Wall Street that is felt on Main Street," and Sen. Nancy L. Kassebaum (R-Kan.) called for defense cuts of $20 to $25 billion over the next four years.
Publicly parting company with colleagues who cautioned Reagan to avoid cuts in big, costly benefit programs, Senate Budget Committee Chairman Pete V. Domenici (R-N.M.) said they are, nonetheless, necessary.
"We are like railroad engineers watching two trains headed for collision, hesitating as we reach for the switch because we hope someone else will intervene," he told the Senate, vowing that "many of those solutions that we seem to reject out of hand this week may very well be among those solutions that my committee will recommend to our colleagues."
Meanwhile, the Senate Appropriations Committee approved a stopgap resolution to fund the government through Nov. 20 at 1981 spending levels.
This means that some domestic programs, which are supposed to shrink in fiscal 1982, will be funded a bit more generously, at least for nearly two months of the new fiscal year.
Meanwhile, the Associated Press reported that the House shaved $75.7 million from the National Science Foundation's proposed budget for fiscal 1982, but fell short of the administration's request to cut more.
The House approved, 245 to 161, an amendment by Rep. Don Fuqua (D-Fla.) to authorize $1.085 billion for the foundation's budget in fiscal 1982. Under the original authorization bill $1.160 billion would have been provided.