The Reagan administration yesterday presented a $757.6 billion budget for fiscal 1983 that calls for unprecedented shrinkage of domestic spending but still would leave a deficit of $91.5 billion.
The president said in his budget message: "The first year of the 97th Congress will be remembered for its decisive action to hold down spending and cut tax rates. Today, the question before us is whether the second year of this Congress will bring forward equal determination, courage and wisdom. Clearly there is a great deal more to be done."
If Congress were to approve the Reagan budget, government spending for all items other than defense, Social Security, Medicare, Medicaid and interest on the debt would be cut 16.5 percent next year. In "real" terms, taking inflation into account, it would decline even more.
The net effect of these cuts would be about three times greater than the Reagan spending cuts that caused so much furor last year.
Yet the budget documents bluntly reject two alternative ways of containing the deficit that many members of Congress in both parties have suggested: reducing the big defense buildup that the administration set in motion last year, or rescinding part of last year's large tax cut.
The new cuts would extend to some of last year's safety net programs. Medicare and Medicaid would be cut by making patients pay more and paying doctors and hospitals less. So would all the main programs for the poor--food stamps, housing assistance, welfare--and a long list of other programs ranging from highway grants to college student loans and mortgage assistance for the middle class.
But the large Social Security program and a few smaller symbolic ones like Head Start were left untouched. In place of the truncated existing housing program for the poor, the president proposed a new and less generous system of housing vouchers. He proposed creation of low-tax "enterprise zones" in deteriorating cities, to help them lure back businesses and jobs. And although he proposed few new taxes, he did propose again this year a series of user fees on boat owners, waterway users and others, on the theory that those who benefit from federal services should support them.
The budget was received with skepticism by key congressional Democrats, who said they would prepare an alternative aimed at lowering deficits by scaling back defense increases and delaying scheduled tax cuts.
Early Republican comment also foretold sharp controversy. Republicans were solid for Reagan last year, but "you'll see people starting to jump off the ship on Monday," predicted Sen. Dan Quayle, a conservative Indiana Republican.
Sen. Robert J. Dole (R-Kan.), chairman of the Finance Committee, said of the new budget, "I don't think it's a clear enough signal that we mean business about reducing the deficit." The assistant Republican leader in the Senate, Ted Stevens of Alaska, said, "I was just sort of in a state of shock as I listened" to the budget projections when briefed on the budget last Friday.
The new budget was presented to reporters in a briefing at the State Department yesterday. The White House decided to advance the release date of the budget by two days because so many details had leaked out.
The administration noted in the budget document and briefings yesterday that, despite the contemplated cuts, non-defense spending would decline just 6 percent under the new Reagan budget, after adjusting for the effects of inflation. But that includes Social Security, interest on the debt, and Medicare and Medicaid, both of which Reagan has agreed should remain federal programs, even as others would be dealt off to the states in the future under his "New Federalism" proposals.
Exclude these, as some charts in the budget documents do, and the Reagan proposals would reduce all the remaining non-defense programs from $232.8 billion to $194.3 billion from fiscal 1982 to fiscal 1983. This would be a cut of 16.5 percent before the inflation rate of about 5.5 percent that the administration foresees for the fiscal year. Thus, after factoring in inflation, these programs--which range from food stamps to farm subsidies to highway grants--would be cut about 22 percent.
In his outyear projections, Reagan foresees even deeper reductions. For this same group of non-defense programs, for example, the president suggests absolute reductions of 49.3 percent over the next five years.
Reacting to the president's budget yesterday, House Budget Committee Chairman James R. Jones (D-Okla.) and Sen. Ernest F. Hollings (D-S.C.) said the deficits projected by the Reagan budget would keep interest rates high and abort any hope of a sustained economic recovery.
Hollings called Reagan's proposed package of tax increases and spending cuts "a $20 billion solution to a $100 billion deficit problem," adding, "It just won't fly." Hollings said less than half the $28 billion in "management savings," user fees and tax increases outlined by the president were realistic.
Jones said the economic assumptions of the administration looked like "a replay" of 1981's overly optimistic readings, but expressed concern that even on those assumptions, "unprecedented high deficits . . . continue into the foreseeable future."
Jones and House Majority Leader James C. Wright Jr. (D-Tex.) told a meeting of the Democratic Strategy Council that the House Democrats would prepare an alternative budget, with some hope of attracting moderate Republican support. Jones, Wright and Hollings each advocated different approaches that would postpone scheduled tax cuts and change the pattern of spending cuts Reagan proposed.
The budget was not supposed to be made public until Monday, but a combination of leaks, administration oversights and a decision by The New York Times to break the traditional "embargo" persuaded White House communications director David Gergen to make yesterday the formal release date. Gergen said that congressional aides had leaked multiple copies of the key budget documents late Friday, and he acknowledged that the Government Printing Office was selling copies of the budget that carried no embargo date. He also said one unidentified news organization had notified the White House that it would publish its budget stories today.
That was The Times. Its Washington bureau chief, Bill Kovach, told the Associated Press that "the embargo was meaningless."
"Our position," Kovach added, "was that by sending hundreds of copies of the budget up to Capitol Hill, and all the reaction, and all the major stories Friday, the public debate had been embarked upon."
Here are some of the specific cuts the president proposed:
Health. Federal outlays for health would rise from $73.4 billion to $78 billion, largely through inflation. They would rise even more without the cuts Reagan proposed. Medicaid costs would be cut about $2.1 billion by requiring states to charge patients from $1 to $2 a day for services now mainly free; reducing the federal matching payments by 3 percentage points for some optional services and all services to "medically needy" patients not quite poor enough for welfare; refusing to reimburse the states for payments made in error; and allowing states to make the children of Medicaid patients in nursing homes help pay for them.
Medicare would be cut about $3 billion by making federal employes pay the Medicare portion of the Social Security tax (1.3 percent) and making them all eligible for Medicare benefits; cutting reimbursements to radiologists and pathologists and to doctors operating out of hospitals; making private employers continue private health insurance for an employe who keeps working after 65; cutting hospital reimbursements for services by 2 percentage points; and several similar proposals.
Changes in both Medicare and Medicaid would mean more out-of-pocket costs for many patients and would squeeze hospitals and doctors.
The existing maternal and child health block grants for services to low-income people would have the special women-infant-child-feeding added to it, with total funding of $1 billion, compared to $1.3 billion last year. The family planning, migrant health and black lung programs would be made part of the primary health care block grant with combined funding the same as 1982. The preventive health and alcohol-drug abuse-mental health blocks would get about the same as 1982.
Education and Training. Combined outlays for education, labor training and social services would drop from $27.8 billion in fiscal 1982 to $21.6 billion in 1983. Among the changes: guaranteed student loans would be limited to the "proven" needy, would cost the student more (the subsidized interest rate would end two years after graduation) and have the amount of the subsidy per loan reduced; there would be cuts in elementary and secondary school aid for the educationally disadvantaged (Title I), training of the handicapped, vocational education, educational research and impact aid; and the Department of Education would be demoted from Cabinet rank and made into an educational foundation.
Labor training programs would be cut drastically, with the entire Comprehensive Employment and Training Act, which is expected to cost $4.6 billion in 1982, cut to $2.4 billion. The bulk of this would be a new $1.8 billion program of training grants to the states; another $387 million would go to the Job Corps, and $200 million would be provided for Indians, the elderly and some other groups for which much more money has been provided in the past.
The existing social services block grant, cut by $500 million last year, would be chopped another $500 million to $1.9 billion; the community services block grant would be cut by two-thirds to $100 million; and the child welfare, foster care and adoption assistance programs would be melded into a new block grant with total funding cut by one-fourth to $380 million.
Support for the Poor and Elderly. The largest of these programs, Social Security, would be untouched, and outlays would rise $13 billion, to $176 billion. But outlays for other programs for support of the poor, disabled and elderly would drop from $89 billion in 1982 to $86 billion, even before inflation.
Supplemental Security Income for the aged, blind and disabled would rise somewhat, but various small changes would leave it about one-quarter billion dollars lower than it would be under current law; Aid to Families with Dependent Children, already cut over $1 billion last year, would be cut $1.1 billion more, through such changes as making workfare mandatory; federal refusal to reimburse states that make errors in payments; counting fuel-aid payments as cash income and thus reducing AFDC payments; imposing harsher job-search requirements; and reducing AFDC if the beneficiary family lives with another family.
The low-income fuel-aid program would be cut from $1.9 billion to $1.3 billion. Railroad retirement benefits would be "defederalized," with the basic part of the pension to be paid from the Social Security system and the supplemental portion becoming a privare railroad pension system. There would be no new subsidized housing units for low-income persons, except a small number for the elderly.
The food stamp program would be cut $2.3 billion by counting fuel aid as if it were cash, reducing stamp benefits by 35 cents instead of 30 cents for each dollar of other income the applicant has, penalizing the states for making erroneous payments, and several other changes. Child nutrition programs would be cut $265 million by ending the special milk and summer feeding programs and curbing breakfast subsidies as well. Refugee aid would be reduced by making certain categories of refugees eligible for special welfare for only 18 months after entry, instead of 36.
Veterans. The president asked an 8.1 percent increase in disability compensation, effective next October. But he also asked that veterans who are only 60 to 90 percent disabled not be granted compensation at the 100 percent disability rate if they receive Social Security or certain other benefits; that those with disability ratings of 30 to 40 percent not receive dependents' benefits; that in the pension program for those who don't have service-connected disabilities, adult student benefits be eliminated. He also asked elimination of correspondence training under the GI Bill, and a 0.5 percent origination fee on VA mortgage guarantees.
Energy and Environment. At the Environmental Protection Agency, hazardous waste control funding would rise 12 percent, the only increase in a $961 million budget officials called "lean." Overall spending would be down 12 percent from last year, hitting all major program areas. Enforcement spending would drop from $104 million to $88 million.
The Department of Energy demolition would send a record $5.5 billion in weapons construction programs to the Commerce Department, with $4.2 billion in other programs, down 32 percent from last year, spread over three additional departments. About 4,000 people would lose their jobs. At Interior, western water projects would be nearly half the 4 percent increase in the overall $6 billion budget. Park land buying would be halved and urban parks and historic preservation funding cut to zero.
Science. Science budgets were protected from major new budget cuts in the Reagan request. The National Science Foundation would get an 8 percent budget increase overall, while the National Institutes of Health would pick up about 3 percent to help cover the expected 6 to 8 percent loss to inflation in the coming year.
In the billion-dollar basic research budget at the National Science Foundation, the budget proposes increases of 7 to 14 percent in physics, engineering, biology, and computer sciences.
Transportation. The president would shift financial responsibility to users or local governments. Federal Aviation Administration outlays would rise 10 percent to $3.38 billion to finance the beginning of a long-term program to modernize the air traffic control system. But the program's capital costs would be covered by raising taxes on air tickets and aviation fuel.
Federal Highway Administration outlays would also rise, reaching $8.37 billion. Mass transit outlays would be slashed 16 percent to $3.15 billion.
Coast Guard outlays would rise, while outlays for railroads, shipping and traffic safety would fall. The net effect would be Transportation Department outlays of $19 billion, $1.6 billion or 8 percent less than estimated levels for fiscal 1982.