President Reagan yesterday averted a humiliating congressional defeat on his costly military buildup as he signaled a willingness to compromise. In return he won a three-week delay in Senate action on the $245.3 billion defense budget request for next year.
But even as the Republican-controlled Senate Budget Committee agreed grudgingly to the delay, House Democratic leaders pushed forward with an alternative to Reagan's budget that would dramatically curtail defense spending, repeal the 10 percent income tax cut scheduled for July and put in place a jobs program estimated to cost up to $17 billion.
The House Democrats would shave Reagan's proposed defense spending increase of 10 percent to 4 percent after inflation. This is only slightly less than the 5 to 6 percent after-inflation increase that the Senate Budget Committee was considering.
It was a vote on this 5 or 6 percent figure that Reagan averted in winning the Senate delay on defense. He would have had a GOP-controlled committee cut his defense buildup about in half.
"He's going to seek an accommodation and he's optimistic that, with time, he can find some flexibility," committee Chairman Pete V. Domenici (R-N.M.) told skeptical and disgruntled colleagues after Reagan asked Domenici to postpone action until Congress returns from its Easter recess in early April.
Domenici, who had been summoned to meet with Reagan at the White House just as his committee was scheduled to begin work on the defense budget, said he agreed to the postponement with "great reluctance."
Other committee members, angry at Reagan for refusals to compromise on defense and anxious to avoid further delay on the budget as a whole, were more outspoken.
"I think the president is wrong," said Sen. Charles E. Grassley (R-Iowa), who noted that he ranks among Reagan's top supporters in Congress. "Every time the president has intervened in the budget process he has been wrong," said Sen. Slade Gorton (R-Wash.).
Democrats were especially apprehensive that Reagan would use the extra time for what Sen. Donald W. Riegle Jr. (D-Mich.) called a "public relations steamroller" to lobby for his full defense spending request.
Democrats are concerned that Reagan will be "going to the country and whipping us" for not agreeing to his defense request, said the committee's ranking Democrat, Sen. Lawton Chiles (D-Fla.), who, at Domenici's request, also attended the meeting with Reagan.
"The president is a master of jingoism," claimed Sen. Howard M. Metzenbaum (D-Ohio).
Domenici conceded that Reagan had offered no specific proposals for spending cuts, made no guarantees of eventual concessions and said nothing about restraint in lobbying for his original proposal.
But, he added, "It appeared to this senator he Reagan was clearly indicating he would attempt to find some flexibility in the defense numbers but needed until after Easter to find it." At another point, Domenici described Reagan as indicating that he was "optimistic" about an accommodation.
If Reagan doesn't compromise, Sen. Rudy Boschwitz (R-Minn.) warned, he'll have a "rather rebellious committee" on his hands.
Nor will Congress be satisfied with "nibbles here and there," said Sen. Ernest F. Hollings (D-S.C.). "I don't know that 10 percent down to 7.5 percent is flexibility," he added.
Aside from Domenici, the only committee member to speak up in Reagan's defense was Sen. Orrin G. Hatch (R-Utah), who said he didn't think "it's inappropriate for the president . . . to ask us for a little more time." He also said that he resented "implications that Reagan is trying to pull a fast one."
Domenici had been resisting a delay for more than a week, even after Reagan sent a letter urging it last Thursday. Senate Majority Leader Howard H. Baker Jr. (R-Tenn.), who is mired down in other controversies, also pressed for delay.
According to Domenici's colleagues, he could not continue to resist after Reagan pleaded, in effect, for time for a possible compromise. Most committee members sympathized with Domenici's dilemma, but several were critical of him as well.
"I don't blame you," said Sen. J. James Exon (D-Neb.), "but I think you're the only who could do something about it."
Reagan has criticized Congress for two years for delaying action on budget matters. By holding up the budget, at least in the Republican Senate, he may gain the tactical advantage of having the Democratic House move first and, thereby, gain bargaining leverage.
The House Democratic proposal would alter Reagan's budget radically, cutting the growth in defense spending by $9 billion, calling for additional taxes of $30 billion and for creation of a 1984 jobs program costing $15 billion to $17 billion.
In addition, the Democratic plan would provide for a six-month delay in all cost-of-living increases for federal civilian and military retirees, along the same lines as the House-passed Social Security bill, for savings of $4.5 billion.
House Speaker Thomas P. (Tip) O'Neill Jr. (D-Mass.) acknowledged that the plan was only the first step in what is likely to be a lengthy negotiation process with the Senate and White House, but it is clearly designed to appeal to the center and left of the Democratic Party.
"It became apparent very early that we could not count on any Republican votes," Rep. James R. Jones (D-Okla.), chairman of the House Budget Committee. "The Democrats will have to pass the budget on the House side."
The proposal does not specify repeal of the 10 percent income tax cut scheduled for July 1, but most tax experts agree that that is the only realistic way to achieve a $30 billion revenue increase.
O'Neill said the House might settle for a smaller tax increase. He said other proposals include a maximum individual tax cut of $700, which would raise $6 billion, or of $400, which would raise $12.5 billion.
The Democratic plan, with its tax increases and defense curtailments more than compensating for a large jobs program, would produce lower deficits than the president's spending plans from 1984 through 1987.
The Democratic defense proposal would reduce the rate of growth in the military to 4 percent in 1984, for savings of $9.3 billion over the Reagan budget. The Democrats would retain the 4 percent pay raise for military personnel that Reagan would postpone while achieving their savings in other areas, including procurement.