Budget director David A. Stockman has stepped up his effort to eliminate the western states' pet water agency despite opposition from Defense Secretary Caspar W. Weinberger, Interior Secretary William P. Clark and White House counselor Edwin W. Meese III, administration officials said yesterday.
Stockman's proposed budget cuts, as he works to put together a fiscal 1986 budget proposal for Congress, also sparked appeals to President Reagan from the Department of Housing and Urban Development and the Small Business Administration.
Stockman has been pushing to create a single federal water agency by merging the Bureau of Reclamation, which Clark oversees, into Weinberger's U.S. Army Corps of Engineers. The OMB says the plan would save $50 million, eliminate 1,200 jobs and lead to a more rational federal water policy.
But the fattened corps is a Christmas present Weinberger said he doesn't want. And the battle has become so intense that Clark, Weinberger and Meese took their case to President Reagan this week, while Stockman took his to White House Chief of Staff James A. Baker III.
By the end of the week, a White House official said the proposal remained "in limbo," although Clark, Weinberger and Meese were proclaiming it dead.
The reclamation bureau, which this year has a budget of about $1 billion, builds and manages major irrigation and dam projects in the 17 western states. It is viewed by officials and development interests there as an advocate for their region.
The corps, with a budget of about $3 billion, is in charge of navigation and flood control projects in all 50 states but is viewed by many westerners as an "eastern" agency that would be less sympathetic to their needs. Both agencies run major hydroelectric power projects, and both have large staffs of engineers, hydrologists and other technicians with similar expertise.
Weinberger and Clark balked at the merger proposal last week when it arrived in their budget documents, calling it impractical. A White House official at that point proclaimed the merger "deader than the proverbial doornail."
But Stockman, undaunted, sent requests to both agencies over the past three days for budget and personnel data so that merger plans could proceed.
The two secretaries -- both Californians who view the bureau as a dependable advocate for their region -- in turn ordered their subordinates to refuse the directives, according to sources.
As the stalemate hardened on Wednesday, Baker, a frequent Stockman ally, called Weinberger and prodded him to cooperate, according to sources. As in other battles over his budget request, the defense secretary barely budged. He provided several issue papers, but nothing more, he said.
"The president has decided this merger should not be considered, and under those circumstances, we don't want to spend any useless time preparing a lot of material when we're so busy worrying about other things," Weinberger said yesterday.
Meese took the matter to Reagan after learning of Stockman's continuing requests for data, according to two senior officials.
The president, who did not know in advance of the merger proposal or of subsequent White House claims that it was dead, ruled that the merger should be dropped from the budget, according to several sources.
But Reagan left open the possibility that it could be considered in early January at a meeting on proposals to reorganize the federal bureaucracy, the official said.
OMB officials said yesterday that they had not heard from Reagan, and that they still consider the merger a live proposal.
"We anticipate that eventually this matter will be decided by the president, and that he hasn't decided it yet," said OMB spokesman Ed Dale.
In the other budget matters, Reagan was not expected to respond until after New Year's Day to appeals from HUD Secretary Samuel R. Pierce Jr. and James C. Sanders, head of the SBA.
Sources said Pierce asked Reagan not to cut in half HUD's proposal for 100,000 housing "vouchers" for the poor, a form of rental subsidies that Pierce has promoted. Pierce also tried to save urban development action grants, which provide $440 million a year to cities, and rental rehabilitation grants to repair apartments, the sources said.
At an earlier meeting with Stockman, sources said, top HUD officials won agreement to restore much of the proposed cutbacks in public housing. HUD spokesman Robert Nipp declined to comment on the budget.
Sanders sought to persuade the president to preserve 75 percent of the SBA's functions. Sanders proposed to eliminate direct loans, agriculture disaster loans and the minority set-aside program, while saving loan guarantees, other disaster programs and management aid to small firms.
A senior SBA official said that Reagan "heard us out" but that Stockman "was very adamant" about eliminating the agency's $1.6 billion budget. The official accused Stockman of "callousness" for failing to notify Sanders before the proposal to eliminate SBA was made public.