Senate Budget Committee Chairman Pete V. Domenici (R-N.M.) brushed aside President Reagan's budget yesterday and proposed massive deficit reductions including a $125 billion tax increase over the next three years and the freezing of many federal programs, including Social Security and pay for government workers, for at least one year.
In the first such open break with Reagan by a Republican leader, Domenici said he would accept a delay in the 10 percent individual income tax cut scheduled for July, 1983, which Reagan has attempted to rule off-limits in the budget debate.
"If that is the price of an agreement that will lower interest rates and lead to a real recovery, then I will pay such a price," said Domenici of deferring the tax cut as he laid out his latest budget alternative as the starting point for rewriting Reagan's high-deficit budget for fiscal 1983.
At the White House, the initial reaction was chilly but low-key. Deputy presidential press secretary Larry Speakes said Reagan opposed "certain elements" of Domenici's plan, including deferral of the 1983 tax cut and any Social Security savings that do "not focus on the goal of restoring the solvency" of the system.
Domenici acknowledged that his plan, which calls for $228 billion in spending cuts as well as $125 billion in tax increases to reduce the federal deficit from a possible $233 billion to $19 billion by 1985, does not yet have the votes even to get out of his committee.
But, with amendments over the next few days, he said he expects the committee will approve something like it. Committee sources said the negotiable items are likely to include the size of the tax increase and Domenici's proposed savings from Social Security and other benefit programs.
While most Republicans at yesterday's committee session indicated they might support Domenici's proposal with some modification, no Democrats jumped to embrace his plan, thereby reinforcing existing doubts about whether Republican congressional leaders can achieve their goal of a bipartisan budget compromise.
In addition, House Speaker Thomas P. O'Neill Jr. (D-Mass.) appeared in no hurry to join Senate Majority Leader Howard H. Baker Jr. (R-Tenn.) in reopening the budget negotiations that broke down last week in an extraordinary face-to-face bargaining session between Reagan and O'Neill.
According to Baker aides, O'Neill and Baker agreed to set up staff- level contacts and compare notes after both House and Senate Budget committees have done some work on their respective versions of an alternative to Reagan's budget. But Democrats remained suspicious that the Republicans were simply looking for a way to share the budget burden--and the possible consequences of failure.
"Howard Baker keeps thinking the Democrats are the key to this, but they the Republicans control two-thirds of the government," complained O'Neill.
"It's like clockwork," said his press secretary, Christopher Matthews. "Every time the Republican Senate is about to begin markup of the budget, Sen. Baker talks of compromise with the Democrats. Republicans won't vote for the Reagan budget and he knows it."
But Baker continued to hang on, even in the face of coolness on the part of some White House officials toward more Republican dealings with O'Neill. "They run their shop and I'll run mine," said Baker.
Domenici finessed a vote on Reagan's budget yesterday with formal introduction of his own plan, which he characterized as a "bold measure to meet the challenge our economy now faces," although he conceded it entails "great political risks." But he also held out the possibility of a vote on Reagan's budget if his own alternative is voted down.
Although Reagan and most other congressional leaders want to avoid any election-year tampering with Social Security, Domenici proposed that cost-of-living adjustments (COLAs) for Social Security and most other benefit programs that are pegged to rises in the Consumer Price Index be eliminated for one year, starting this July.
Federal retirement and veterans' programs would be included in the freeze; food stamps and Supplemental Security Income (SSI) would be exempted from the benefit freeze but subjected to other unspecified cuts.
Federal workers' pay would be frozen next year and allowed to rise 4 percent annually in 1984 and 1985.
Domestic appropriations would be frozen at 1982 levels through 1985, saving $35 billion over the period. Benefit entitlement programs not covered by the COLA freeze would be cut by a total of $25 billion over the next three years, with details left up to committees with jurisdiction over the programs.
The administration's big defense buildup would be trimmed by $30 billion by 1985, starting with $5 billion next year.
The tax increases would amount to $30 billion in 1983, $45 billion in 1984 and $50 billion in 1985. The three-year tax package of $125 billion, details of which would be left to the Senate Finance Committee, goes beyond the three-year $110 billion proposal that Reagan embraced last week, but only in the context of an agreement with the Democrats.
Meanwhile, Republican members of the House Budget Committee met with Reagan and failed to reach a consensus on the budget. At the same time, Democratic committee members caucused and also failed to agree on their budget position. The House committee is scheduled to begin its budget-drafting work Thursday.