Potential budget compromises offered to congressional leaders by administration officials last week would cut $6 billion from Medicare, Medicaid, food stamp and welfare benefits in fiscal 1983, sources said yesterday.
It was a clear indication that the budget compromise administration officials are trying to hammer out with congressional leaders may well include many of the major cuts in entitlement programs the president proposed in his fiscal 1983 budget.
In that budget message two months ago, President Reagan proposed cutting $9 billion to $11 billion from medical programs, food stamps and welfare, but the cuts found little support in Congress and many believed they would be dropped.
The compromise possibilities also include a slightly more lenient version of a proposal roundly criticized by the states when it first came out: penalizing states that do not reduce error rates in welfare, Medicaid and food stamps to acceptable levels. State officials contended that the "acceptable levels" were unrealistic.
The list of possible cuts, described by GOP sources as "working options" compiled by administration officials rather than hard and fast White House proposals, was distributed by Office of Management and Budget Director David A. Stockman at negotiating sessions between White House aides and congressional leaders last weekend and again on Tuesday. No final agreement was reached, and another meeting is scheduled for Sunday.
The negotiators also are considering a plan to save $12 billion by "capping" and postponing cost-of-living increases for Social Security and other programs, a proposal that has been greeted with bipartisan skepticism. Senate Majority Leader Howard H. Baker Jr. (R-Tenn.) said Thursday that he was not persuaded that the time was right to cut cost-of-living adjustments.
The documents distributed at the negotiators' meetings postulated a $180 billion budget deficit in fiscal 1983, then outlined $87 billion in spending cuts or tax increases, reducing the deficit to $93 billion.
The tax increases, sources said, would include $2 billion in user fees and $30 billion in revenues from a $3.60-a-barrel oil excise tax (not an import fee, as previously discussed), a 4 percent income tax "surtax" and elimination of the tax deduction for interest on consumer loans (not including housing mortgages, car loans and student loans). Elimination of that deduction would raise about $6 billion annually, starting in 1984.
Among the cuts would be $5 billion in non-defense discretionary programs, $5 billion in defense and $4 billion in federal pay.
The proposal to "cap" cost-of-living adjustments (COLAs) would work as follows, sources said: all COLA increases would be postponed for three months beyond the date due, then would be limited to increases of 4 percent. Thereafter, COLAs of no more than 4 percent would be paid every 15 months, rather than annually.
Thus, Social Security beneficiaries, who can expect a 7.6 percent increase July 3 under current law, would instead get 4 percent Oct. 3, nothing more until Jan. 3, 1984, and then a maximum of 4 percent.
This proposal would apply to Social Security, food stamps, veterans' pensions, military and civil service pensions and railroad retirement. SSI (supplemental security income) would have no 4 percent cap.
According to Stockman's figures, the cap would save $12 billion in fiscal 1983, at least $18 billion in 1984 and $24 billion in 1985.
In food stamps, the possible cuts include reducing a family's basic stamp allotment by 32.5 percent of its other income in fiscal 1983 and 35 percent thereafter (the current figure is 30 percent). Savings: $700 million in fiscal 1983, $1.3 billion in 1984, $1.4 billion in 1985.
In child nutrition, the possibilities include wiping out the special school-milk and summer feeding programs and consolidating school breakfasts and day-care breakfasts into a special block grant. Savings: $312 million in fiscal 1983, $392 million in '84 and $464 million in '85.
The list includes these possibilities in other programs:
Medicaid--Requiring patient co-payments, eliminating certain special matching for administrative costs of state programs and for state Medicare "buy-ins," and giving states more power to recover long-term nursing costs from a beneficiary's estate. Savings: $879 million in 1983, $972 million, $1.075 billion.
Aid to Families with Dependent Children (welfare)--Strengthening work requirements through mandatory "workfare" and job search, merging emergency assistance into the energy aid block grant, increasing the support burden on parents of older children, and revising the enforcement system for child support ("runaway fathers" program). Savings: $810 million in 1983, $847 million, $833 million.
* SSI--Prorating the first month's benefits, rounding payments down, making disability payments depend on prognosis of at least 24 months of disability, and eliminating the $20 income disregard for new recipients. Savings: $120 million in 1983, $245 million, $365 million.
* Administrative Block Grant--Combining welfare, Medicaid and food stamp administrative grants to the states into a single block grant at 95 percent of the 1982 level. Savings: $274 million in 1983, $407 million, $580 million.
* Medicare--Reducing physician reimbursement levels, requiring increased cost-sharing by recipients, making Medicare the secondary payer to private insurance for the working aged, and making administrative savings. $1.69 billion in 1983, $2.2 billion, $2.6 billion.