The budget package approved by House and Senate conferees yesterday reorders many of the spending priorities President Reagan proposed in his budget last February, sharply scaling back his requested increases for the Defense Department while preserving nearly all of the domestic programs he wanted to eliminate.
But the package hammered out in a series of tense negotiations meets the president's demand of no new general taxes and leaves the politically volatile Social Security program untouched.
The package assumes major cuts in Medicare and farm programs, a one-year freeze on the salaries of federal civilian workers, elimination of the general revenue sharing program after 1986, and allows defense spending to rise only with inflation in the coming 1986 fiscal year.
But it junks all previous proposals to overhaul the Civil Service retirement system, to kill the Job Corps, the work incentive program for welfare clients, trade adjustment assistance, the urban development action grant program, the Appalachian Regional Commission or the Economic Development Administration, or to eliminate federal subsidies for Amtrak.
The budget resolution does not spell out in legislatively binding language what specific program changes must be made to achieve the agreed-upon savings, but the conferees in many cases assume certain program changes could be made.
The legislative committees can change this later as long as they comply with the numerical targets.
According to statements by conference committee members and a summary by Democrats on the Senate Budget Committee, the assumptions behind the numbers were the following:
*Defense spending authority would be allowed to rise enough to keep up with inflation in fiscal 1986 -- from $292.6 billion in 1985 to $302.5 billion in 1986.
In 1987 it would rise 3 percent, after adjustment for inflation, to $323.4 billion, and a similar 3 percent in 1988 to $346.8 billion.
*Cost of living increases for Social Security, supplemental security income (SSI), Civil Service pensions, military retirees and related federal pension systems would neither be frozen nor cut.
*Programs for the poor, such as SSI, food stamps, welfare, Medicaid, child nutrition and education for the disadvantaged and handicapped would undergo no program benefit cuts. House Budget Committee Chairman William H. Gray III (D-Pa.) said such programs generally would increase with inflation.
Medicaid collections of unpaid private insurance benfits for low-income people who have some form of coverage would be stepped up to save $450 million over three years.
*There will be no major tax increases. But the tax committees are expected to raise about $15.7 billion over the next three years in added revenue.
Most of it, according to several conferees, might come from extending the Medicare tax to all state and local government employes, and extending the Social Security tax to all newly hired state and local employes.
These two changes alone would raise $8.4 billion over the next three years, but there were indications last night that the House might seek alternative ways to raise the money. The rest of the revenues could come from various user fees, greater customs and income tax collections through the use of more inspectors and agents, and added taxes to pay for "Superfund" toxic-waste dump cleanup.
*Most domestic programs would not be cut as deeply as the Senate and the White House had proposed. Many of the nonwelfare, nonpension programs would suffer cuts of 10 to 30 percent, but elimination of a large number of programs as once proposed by the administration would not take place. General revenue sharing would get $4.6 billion for fiscal 1986 but then would be killed. This is the major program to be eliminated.
*Education programs would be cut less than some lawmakers had feared. While $800 million in deficit reduction would come at the expense of student loans, conferees said the savings would come from restraints on government-paid interest to banks.
* Savings in the Medicare program would total about $11 billion over three fiscal years, but not through benefit cuts. The savings would come primarily from the freezes on payments to hospitals, doctors and other providers of medical services. This might require the House Ways and Means Committee to rescind an action taken last week providing a 1 percent increase for hospitals.
*Farm programs would be cut at least $8 billion, presumably through reductions in price supports.
*Cuts in the loan levels of the Export-Import Bank would total $1.7 billion over three years; postal subsidies would be cut 14 percent instead of being killed as the Senate proposed; rural housing would be cut 40 percent, and Amtrak and mass transit subsidies would be cut 15 percent each. Small Business Administration programs would be cut $2.5 billion over three years.
*The one-year freeze on the pay of civilian workers would save $5 billion. Reagan had asked for a 5 percent cut. The compromise assumes a pay increase of 3.8 percent in January 1987 and 4.7 percent in January 1988.
*Community development block grants would be cut 15 percent, while urban development action grants, the Appalachian Regional Commission and the Economic Development Administration would be cut 20 percent.
*Savings of $4 billion over three years are anticipated from cutting the Strategic Petroleum Reserve fill rate to 35,000 barrels a day.
*The conferees' agreement would accommodate 90,000 to 100,000 new low-income assisted housing contracts in 1986, according to Rep. Mike Lowry (D-Wash.).
*The measure assumes savings of $1.2 billion on veterans' medical care.
*Conferees dropped user fees for the general and federal National Mortgage Associations.
*The agreement provided for continuation of the legal services and juvenile justice delinquency grant program at existing levels.
*Space and science funding were to be frozen at 1985 levels. Foreign aid would be cut by $400 million.