Assistant Senate Majority Leader Alan K. Simpson (R-Wyo.) said yesterday that the Defense Department may be forced to scrap weapons systems or cancel contracts as part of a possible Senate deficit-reduction package for next year.
Finance Committee Chairman Bob Packwood (R-Ore.), in a separate interview with wire service reporters, said that Senate efforts to cut the deficit also may involve holding down future increases in Social Security benefits and possibly scuttling a reduction in the 16-cent cigarette tax scheduled to take effect in October.
Republican senators have been working to put together a package of spending cuts for several weeks, after it became apparent that the Reagan administration's budget will fall short of its deficit reduction goals.
They are considering a one-year budget freeze that would apply across the board, including defense spending and Social Security, but Simpson told a breakfast meeting of reporters that an across-the-board freeze would hold down spending on most programs but not in the Pentagon.
There, he said, "weird bookkeeping" allows funding approved in one year to be spread into future budgets.
Simpson said estimates showed that even with a freeze on defense, the Pentagon would spend an additional $20 billion next year.
As a result, Senate Republicans are considering a variety of options to get defense spending under control, including one in which "we'll have to pick a number and say 'here's your money,' and it'll come down to elimination of systems and maybe an even more dramatic approach than that -- we may have to say we'll have to break a contract," Simpson said.
He added that such a move would have to be weighed against the potentially expensive costs of getting out of a contract.
He said some weapons systems have "been identified as totally unworkable" -- such as the Sgt. York Divad antiaircraft weapon -- and should be looked at.
In addition, "we have a little list of procurement contracts and really are looking at it," with special focus on contractors who have had "egregious" cost overruns or performed poor work.
Simpson said that the senators are considering such action on their own because Defense Secretary Caspar W. Weinberger has insisted that the Pentagon's budget be allowed to increase by about 6 to 7 percent after inflation.
"There's no one more wily, more agile than Cap Weinberger," Simpson said. "He knows where all the levers are. He'll be tough to catch."
Simpson said that before the GOP senators went after any weapons system they would have to weigh the effect of its elimination or curtailment on arms control talks with the Soviet Union.
He said his personal view is that President Reagan might be open to an overall deficit reduction package even if it took broad swipes at defense because "he's not locked in there like he is on taxes -- as in, 'over my dead body.' "
In an interview with wire service reporters, Packwood said Congress may increase some federal fees and delay an 8-cent drop in the cigarette tax to help reduce the deficit.
"If I were betting -- and this is just a hunch because we haven't even addressed ourselves to that task -- my hunch would be the cigarette tax will be extended," he said. "It won't be raised, it won't be lowered, but it will be extended."