Congress handed President Reagan another budget victory yesterday as it overwhelmingly approved the first of two big bills that together contain $30 billion in spending cuts over the next three years, including new limits on cost-of-living increases paid annually to federal retirees.
By votes of 243 to 176 in the Democratic House and 67 to 32 in the Republican Senate, Congress made cuts of varying degrees in programs ranging from pensions to food stamps and federally guaranteed home loans, adding up to estimated savings of $13.3 billion by 1985.
Another $17.5 billion in savings, largely from cuts in Medicare and Medicaid, are included in the three-year, $98.3 billion tax increase bill that Congress will consider today under intense administration pressure for passage. It was the second year in a row that Congress has followed the president and made deep domestic spending cuts to hold down the deficit even while raising spending for defense.
Although the bill passed yesterday did not give Reagan all the spending cuts he wanted, it was hailed by Senate Budget Committee Chairman Pete V. Domenici (R-N.M.) as "a very substantial down payment on the $280 billion in spending restraint" that Congress has mandated for the next three years.
The final passage of the measure, which now goes to Reagan for signature, was also regarded by congressional leaders as an inducement for conservatives to support the tax bill; they have been insisting that spending cuts be nailed down before taxes are raised. As the first stage of the latest budget-cutting exercise neared completion, the House also ignored administration veto threats and gave preliminary approval to a compromise $14.2 billion supplemental appropriations bill to keep the government operating through Sept. 30.
The spending bill now goes to the Senate, which is also expected to approve it despite the veto threats and warnings from the administration that an impasse between Congress and the White House could mean a payless payday for the military on Aug. 31.
The administration contends that the bill, while including $350 million the president wants in economic aid for the Caribbean Basin and Central America, would spend too little on the military and too much on social programs.
The three-year budget savings approved yesterday include $4.2 billion from dairy subsidies, $4.1 billion from civilian and military government pensions, $1.9 billion from food stamps and $2 billion from Federal Housing Administration (FHA) home loans and other banking-related programs.
The cuts were made to meet targets approved by Congress in its budget resolution earlier this summer, and there was disagreement over whether the targets were hit. While congressional leaders claimed the savings exceeded the overall target by about $2 billion, the administration claimed the savings fell nearly $1 billion short.
But even "that's not chicken feed. . . we're happy to get what we got," said Rep. Delbert L. Latta (R-Ohio), ranking Republican on the House Budget Committee, in a reflection of the degree to which Democratic-dominated House committees, despite initial foot-dragging, met the budget goals. Key provisions of the measure include:
* A stretch-out of payment periods for cost-of-living adjustments (COLAs) in federal pensions so that increases would be received every 13 months instead of 12 months, adding up to a 3-month delay by 1985.
* A 50 percent reduction in COLAs for most federal retirees until they reach age 62; survivors, disabled retirees and those who are aged 62 or older would continue to receive full COLAs as reflected by the Consumer Price Index. The projected CPI rate for next year is 6.6 percent; those affected by this provision would get only 3.3 percent increases in their benefits.
* Elimination of dual COLA payments to about 140,000 military retirees who hold civilian government jobs. Civilian payments would be reduced by the amount of the military COLA.
* Cuts in food stamps, largely from reductions in benefit increases that now occur automatically as food prices rise and from payments to states that fail to correct errors in payments.
* A two-year "freeze" on dairy price supports -- actually a reduction due to a 50-cent-per-hundredweight assessment against farmers as an incentive to cut their production and reduce government surplus purchases.
* An increase in price support levels and a major new acreage set-aside program, under which wheat, feed grain and rice farmers would be paid for not planting up to one-fourth of their land to bring about lower production and higher prices.
* Up-front, lump-sum payment of insurance on FHA home mortgages to replace the current system under which insurance premiums are amortized over the life of the loan.
* A 0.5 percent user fee for home loans guaranteed by the Veterans Administration, averaging $285 per family but not applying to veterans with service-connected disabilities.
Passage of the measure came easily after House-Senate conferees agreed to delete language that some members claimed might lead to a backdoor congressional pay raise after the November elections, an allegation that sent the House into such a panic Tuesday that it shelved the measure until the suspect language could be excised.
Members were still so jittery yesterday that Budget Committee Chairman James R. Jones (D-Okla.) had to reassure them that no pay raise was squirreled away in other language of the bill. And when Jones said the pay provision had been "excised," one member asked nervously if Jones had said something about excise taxes. Jones assured him he hadn't.
There was also some testiness in the Senate when Sen. William Proxmire (D-Wis.), who has championed spending cuts but is running for reelection in a big dairy state, said he would oppose the bill because of its cuts in dairy subsidies.
"I just can't believe the senator from Wisconsin, who is always willing to cut someone else's spending, would have the tunnel vision to vote against the bill on the basis that the milk price subsidies are devastated," retorted Domenici.
Except for Rep. Marjorie S. Holt (R-Md.), who was absent, all Washington area House members voted against the bill, apparently because of the pension limitations. Virginia senators supported the measure; Maryland senators voted against it.