Senate Republican leaders yesterday moved toward a major revision of President Reagan's latest budget propoals, including heavier defense cuts and a bigger tax increase, perhaps in excise taxes, instead of cuts as deep as Reagan had proposed in social welfare programs.
"There is great consternation that the president's mix won't work," said Senate Budget Committee Chairman Pete V. Domenici (R-N.M.), after a Republican strategy session on budget cuts. "There is an evolving consensus that we need big 1982, 1983 and 1984 cuts, but made differently than the president has proposed."
So, Domenici added, "We're taking the president literally that there ought to be a dialogue" on his new recommendations.
Options under consideration include raising excise (sales) taxes on items such as liquor, beer and wine, cigarettes, gasoline and telephones, a proposal that Senate Finance Committee Chairman Robert J. Dole (R-Kan.) is exploring with his colleagues.
"It's clearly possible to raise more revenue without touching the income and business tax cut" that Congress approved last summer, said an aide to Dole, although there is also some talk among Senate Republicans for the first time of deferring the 1982 income tax cut as well.
Other options, advanced by Republicans on the Senate Appropriations Committee, include a three-month deferral of cost-of-living increases for Social Security and other big benefit programs, an approach Reagan had rejected earlier in the face of apparent congressional opposition.
The Senate Republicans' move to rewrite Reagan's budget script came as the president sent new signals that he intends to veto, as too costly, an $87.3 billion appropriations bill for social programs approved by the House Tuesday.
"In my opinion, this is one of the budget-busting bills" that Reagan vowed to veto, said deputy press secretary Larry Speakes.
House Speaker Thomas P. (Tip) O'Neill Jr. (D-Mass.) conceded that the House probably would sustain the veto. But the vote on the bill indicated that the House also is unlikely to buy Reagan's proposals to cut the bill by another $4 billion.
In the Senate, proposals under study by GOP leaders would go a long way toward relieving pressure for more cuts in social programs, which bore the brunt of the earlier round of $35 billion in spending cuts Congress approved last summer.
Senate Appropriations Chairman Mark O. Hatfield (R-Ore.) said yesterday that the committee's Republican majority will not go along with anything like the $8.4 billion in cuts in non-defense appropriations Reagan proposed last month, along with $2 billion in cuts from increased spending planned by the Pentagon.
Instead, Hatfield said, the Republicans are proposing $5 billion for both defense and domestic appropriations cuts, less than half the $10.4 billion total Reagan wants.
Moreover, he added, there is a good likelihood that the committee will cut defense by $4 billion, double what the president wants, leaving $1 billion to be shaved from domestic spending.
Hatfield said Republicans on the committee discussed deferring the 1982 tax cut from July to October, but came to no decision, with strong views expressed both pro and con.
Reagan's proposal for domestic appropriations cuts, which amounted to a 12 percent across-the-board reduction, was viewed by committee Republicans as neither "politically realistic . . . nor equitable," Hatfield said.
For instance, he said, it would cut the National Institutes of Health by $507 million to less than NIH's 1980 funding level, knock 840,000 children out of school programs for the disadvantaged and reduce Amtrak funding by 40 percent, well below the level approved by Congress last summer.
Hatfield, Domenici and Dole, along with Banking Committee Chairman Jake Garn (R-Utah) and Sen. Roger W. Jepsen (R-Iowa), ranking Republican on the Joint Economic Committee, have been deputized by Senate Majority Leader Howard H. Baker Jr. (R-Tenn.) to come up with a strategy for handling the latest White House budget proposals.
While there is no agreement yet, Domenici said there is a general consensus for at least $12 billion in new savings this year, along with savings of $25 billion to $30 billion in each of the next two years.
Reagan has proposed $16 billion ($13 billion in spending cuts and $3 billion in new revenues) for 1982, $28.3 billion for 1983 and $35.8 billion for 1984.
"The most dramatic turnaround is the consensus that we have to raise some more revenues," added Domenici, although he stressed that spending must be cut as well.
Reagan has proposed closing some tax loopholes to pick up $3 billion this year, rising to $11 billion by 1984. The Senate Republicans reportedly are talking in terms of up to $20 billion by 1984, including revenues from at least some excise tax increases.
A doubling of existing excise taxes would raise $6 billion, including $2.4 billion from tobacco and alcohol, which some senators view as the most likely targets for higher rates.
A three-month delay in cost-of-living increases for major benefit programs would pick up $5.4 billion, and a three-month deferral of the tax cut would save about $7 billion, according to Hatfield.