The Republican-controlled Senate Budget Committee last night brushed aside initial Democratic proposals for tax increases after rejecting more of President Reagan's domestic spending cuts, including his plan for a 5 percent pay reduction for federal workers next year. The committee voted to freeze civilian and military pay instead.
While the tax increase proposals were rejected by 4-to-1 majorities, several Republican as well as Democratic committee members indicated that they might vote to raise taxes as part of a balanced, comprehensive deficit-reduction package.
The initial votes against tax increases -- coupled with indications of willingness to consider them later -- came in the wake of a renewed effort by the White House to curb pressure for raising taxes that included phone calls to committee members from White House chief of staff Donald T. Regan.
"It isn't over till it's over," committee Chairman Pete V. Domenici (R-N.M.) observed in opposing tax increases "this early in the game" but holding out the possibility of considering them later as a "last resort" if deficits cannot be cut enough through spending reductions alone.
The initial votes on taxes came after the committee, continuing a pattern established last week of freezing domestic spending while rejecting Reagan's proposals for deep program cuts, chose to freeze the pay of military and civilian government employes instead of cutting civilian pay while raising that of the military.
It also approved a Democratic-sponsored plan to freeze the civilian work force of the government at its current level for two years.
On other issues, the Budget Committee voted to reject Reagan's proposal to kill in fiscal 1986 the $4.6 billion program of revenue-sharing with local governments next year, choosing instead to let it die when its authorization expires in fiscal 1987.
It also spurned his proposal to impose user fees for the first time for major government-assisted credit programs, including housing mortgage assistance.
As the panel completed the first stage of its work on a plan to reduce $200 billion-plus deficits to less than $100 billion over three years, it had approved cuts of $32.6 billion for next year, enough to reduce the fiscal 1986 deficit to roughly $185 billion.
Nearly two-thirds of the savings for next year came from defense. The rest came from a freeze on most areas of domestic spending. Nearly all of Reagan's proposals for reduction or elimination of programs were rejected.
But the committee had made only about two-thirds of the cuts necessary to meet the target, falling $22.3 billion short of the roughly $60 billion in cuts that would be required for next fiscal year alone.
Although the committee technically was only setting spending targets for inclusion in a congressional budget resolution, its votes are expected to be the guides in the actual deficit-reduction legislation to be passed later by Congress.
But, even with completion of line-by-line consideration of spending cuts, the committee was far from nailing down a full plan of its own. It is scheduled to begin voting on overall plans today, and there was doubt as to whether enough of a consensus had been reached to approve any particular package.
"I'm not sure there are the votes to pass anything," said Sen. Lawton Chiles (Fla.), ranking Democrat on the panel. "Maybe we have to have everything fail -- a train wreck," he said, before the committee can reach agreement.
Critical to an agreement are defense spending, cost-of-living increases for Social Security, and taxes, Chiles said. When the Budget Committee deadlocked last week on the Social Security issue, some members who voted initially against freezing cost-of-living adjustments for the retirement program indicated that they might switch in exchange for bigger defense cuts or tax increases.
But no magic formula has emerged, and it was unclear last night what effect the White House campaign against tax increases was having.
In yesterday's tax votes, the committee rejected, 18 to 4, a proposal from Sen. Ernest F. Hollings (D-S.C.) to raise taxes by $159 billion over the next three years by raising corporate taxes, increasing tax compliance and putting off the indexing of individual tax rates for inflation for a year.
Hollings would have frozen tax rates for next year and then reduced them in future years only to reflect inflation over 3 percent. He also would have modified the investment tax credit and imposed a 5 percent minimum tax for corporations.
A proposal from Sen. Howard M. Metzenbaum (D-Ohio) failed 16 to 4. It would have frozen corporate tax "subsidies" at current levels and imposed a 15 percent minimum tax on corporations, raising revenues by $44.2 billion over three years.
Even many of Hollings' and Metzenbaum's Democratic colleagues voted against their proposals, as did several Republicans who have indicated they would consider tax increases as part of an overall package. In the action on a federal hiring freeze, Hollings, the proposal's chief sponsor, said he sought savings only from attrition, not firings or reductions in force.
Hollings' proposal was approved over complaints from some senators who said it could jeopardize services such as law enforcement. "Does the drug enforcement agent killed in Mexico count as part of attrition?" asked Sen. Daniel Patrick Moynihan (D-N.Y.).
At another point, Moynihan questioned the degree to which the committee was following Reagan's lead in squeezing the size of government. "Let's be clear. We are here to dismantle the federal government, and we're doing very well at it," Moynihan said.