Office of Management and Budget Director David A. Stockman told Congress yesterday that further deep cuts will be required in domestic spending programs next year, even as the House was balking at one of this year's largest reduction proposals by refusing to limit federal retirees' pensions.
Appearing before the Senate Budget Committee, Stockman drew barbed comments from Republicans as well as Democrats as he defended President Reagan's refusal to be bound by the limits on future defense spending in the budget resolution Congress passed earlier this year while calling for more cuts in so-called entitlement or major benefit programs.
The largest of these is Social Security. Stockman did not mention it by name, but left little doubt that the multibillion-dollar retirement program, which escaped cuts this year, might not be so lucky next year.
"As a practical matter it would be necessary in the '84 budget . . . to substantially reduce non-defense spending beyond what we've done already . . . to close the budget deficit gap," Stockman told the committee. Asked if the administration contemplated "across-the-board" cuts in benefit programs after the November elections, Stockman said it did. Even as Stockman was urging more belt-tightening, the House voted 268 to 128 to accept only token cuts in civil service pensions over the next three years, in effect rejecting a 4 percent ceiling on annual cost-of-living adjustments (COLAs) for civilian and military pensions.
The token cuts provide savings of $113 million by 1985. The COLA cap would have saved $5 billion, about one-fifth of the savings that Congress had ordered its committees to make in the budget it passed in June.
So unpopular was the idea of pension cuts that even Republicans declined, under heavy needling from Democrats, to offer an amendment to impose them. They fell back on a strategy of trying to send the measure back to committee with instructions to make unspecified savings to meet the budget target. But even that failed, 236 to 160, with all Washington area members voting no.
In what amounted to a political free-for-all over the COLA issue, House Minority Leader Robert H. Michel (R-Ill.) accused the Democratic-controlled House Post Office and Civil Service Committee of "literally thumbing its nose collectively at the budget control process" by refusing to meet its savings target.
Democrats responded in kind, as Committee Chairman William D. Ford (D-Mich.) likened the GOP strategy to that of "sneak ing down the alley and knife ing the widows and children of federal retirees." The "good faith and credit of the United States," even among foreign countries, is at stake, Majority Leader James C. Wright Jr. (D-Tex.) said.
The Senate is expected to vote later this week on the COLA issue. Unlike the House, the Senate has committee blessing for the ceiling.
Although House committees have proposed substantial budget savings, principally from Medicare, and Senate committees have exceeded their budget savings targets, the COLA revolt in the House--along with hostile questioning for Stockman from the Senate Budget Committee--points to increasing difficulties for Reagan's budget-cutting efforts.
Meanwhile, Senate Democrats made an attempt to seize the initiative on interest rates as they rallied around legislation to require the Federal Reserve Board to keep interest rates within 4 percent of the inflation rate.
In the Budget Committee, senator after senator complained that the administration was pushing Congress to make ever deeper cuts in domestic spending while refusing to stick by mutually agreed upon limits on its big military buildup program.
"If we want the rest of the budget in control, we can't continue to fluctuate on the defense numbers," Committee Chairman Pete V. Domenici (R-N.M.) warned. Domenici also said he thought it was "important for us to be clear on the administration's position on our spending targets for defense," especially as Congress nears final votes on this year's round of domestic spending cuts.
Sen. Mark Andrews (R-N.D.) asked, "How the devil do you have it both ways without sending a totally unclear signal to the financial community of this country?" He accused the administration of pursuing a policy of "slip, slide and duck" in regard to spending plans for fiscal years after 1983.
Andrews, who is also a member of the Appropriations Committee, asserted flatly that the defense budget "can be cut and will be cut by a Republican-controlled defense appropriations subcommittee."
Reagan set off a storm of protest from Republicans in Congress last week when he said he does not feel bound by congressional limits on defense spending for fiscal 1984 and 1985, although he intends to abide by overall budget ceilings for those years.
This would put a squeeze on domestic programs that have already been heavily cut back. Some Republicans fear the new controversy could undermine efforts to wrap up this year's domestic spending cuts, including the COLA measure in the Senate.
Democrats on the Budget Committee were quick to capitalize on this issue as well as the skepticism, even within the administration, over its updated deficit projection of $115 billion for fiscal 1983.
Noting that Commerce Secretary Malcolm Baldrige is saying that the deficit will probably run $20 billion to $30 billion higher than the administration's official midyear estimate, Sen. Donald W. Riegle Jr. (D-Mich.) challenged Stockman to say who is right.
Declining to be pinned down, Stockman said that, given both economic and legislative uncertainties, "anybody would be within their right to say the deficit could be $20 billion higher than $115 billion."
Describing the official figures as "phony, false and dishonest," Reigle declared: "You gave us dishonest numbers last year, and everyone knows you're giving us dishonest numbers again today."
As for reports that the Pentagon is pushing for a "real" (discounted for inflation) increase of 11 percent for fiscal 1984, Stockman said that only fiscal 1983 figures are binding and Congress retains the right to cut anything it doesn't want in future years.