In the rush to mandate a balanced budget in six years, President Reagan and Congress are confronting painful realities that were not immediately evident when the proposal was originally embraced last week.
The plan, in theory, would legally require Reagan and Congress to make difficult political choices on spending, taxes and the military that they have been unwilling to confront. It would set deficit targets that both Reagan and Congress have demonstrated they cannot meet on a year-to-year basis.
While the Senate appeared ready to approve the bill and send it on to negotiations with a less-enthusiastic House, there were increasing questions about whether it would work as advertised -- what Sen. Warren B. Rudman (R-N.H.), a chief sponsor, calls "a mechanism to force action" by the president and Congress.
For example, administration officials said yesterday that the White House was attempting to back away from the deficit target of $144 billion for next year in the plan, out of concern that Reagan might not be able to achieve it.
Sources also said that national security affairs adviser Robert C. McFarlane and Defense Secretary Caspar W. Weinberger expressed serious misgivings last week about the legislation because of the prospect it could lead to sharp cuts in Reagan's military expansion.
Although Reagan has insisted Congress keep "previous commitments" to increase defense spending, "it's hard to see how" that is possible under the existing plan, one senior administration official commented.
Their concern is focused on legislation pending in the Senate, which Reagan endorsed last Thursday, that would set targets in law leading to a balanced budget in six years.
Sponsored by Rudman, Sen. Phil Gramm (R-Tex.) and Ernest F. Hollings (D-S.C.), among others, the legislation is attached to a bill extending the federal debt ceiling to more than $2 trillion.
While not final, and subject to widely varying interpretations, the legislation has been touted by sponsors and Reagan as an automatic process that would end the years-long deadlock over annual deficits now in the $180 billion range.
If anything like the proposal now being debated in the Senate becomes law, it would have major ramifications for the way the president and Congess set the government's priorities:
*It would provide a powerful impetus to Reagan and Congress to come to grips with the deficit issue each year, perhaps overcoming the stalemate that has characterized the debate over rising red ink. By outlining a set of stringent targets for reducing the $180 billion deficit to zero, the law would create an automatic process for decisions that are now battled out year-by-year. Just the threat of such targets, and the process that is triggered if they are exceeded, could force action on the deficit.
*If the deficit targets are not met, the legislation would place additional new authority in the hands of the president to impose budget cuts. This would be a major shift away from Congress and toward the White House in the balance of power over federal spending that was established in budget reform legislation enacted in 1974.
*Both Congress and Reagan would probably face unpleasant choices they have sought to avoid in the past for a host of political reasons. For example, Reagan might be faced with the prospect of unwanted cuts in defense spending along with sought-after cuts in domestic spending. If he rejected that, Reagan might confront a tax increase offered by Congress instead. Congress might have to accept deep cuts in domestic programs it has refused to enact in the past.
*If the targets are not met, the budget ax may fall on a relatively narrow portion of the budget.
The way the legislation is now written, only about one-third of the budget, or about $300 billion, would be subject to reductions if the targets are not met. Social Security, interest on the national debt, some defense procurement and a host of other programs deemed "relatively uncontrollable" by the Office of Management and Budget would be off-limits.
*An unforeseen slowdown in the economy could throw the balanced-budget plan off track. Although Congress and Reagan may achieve one year's deficit target, a sudden recession could depress revenues, raise government social spending and create a difficult problem the next year when the targets are further away than was expected. "No one will go to jail," said a White House official, but it would throw a wrench into the target machinery.
*Reagan has not shrunk overall government spending as a share of the economy, but one of the hallmarks of his presidency has been a marked shift in priorities from domestic to defense spending. Under the new system, if the deficit targets are exceeded, Reagan would have to impose across-the-board budget cuts hitting both defense and domestic spending. Even so, some Pentagon spending, for contracts signed in prior years, is protected from cuts.
House Speaker Thomas P. (Tip) O'Neill Jr. (D-Mass.) yesterday was sharply critical of Gramm, saying he "is more responsible for the mess the nation is in than any other person than Mr. Reagan." O'Neill also criticized the Gramm-Rudman proposal as a "disgraceful maneuver to subvert the Constitution."
Rudman has denied a shift in the balance of power is contained in the plan. If the targets are not met, he said last week, the president "cannot pick and choose" what to cut and decide by how much. Rather, he said, the president's action "would be purely ministerial."
Although details are still being negotiated, the proposal works like this: a series of deficit targets, starting from $180 billion in fiscal 1986 and declining each year to zero in 1991, are written into law.
Each year, the president would be required to propose, and Congress adopt, a budget that falls within the specified target. Each year, the Office of Management and Budget and the Congressional Budget Office would be required to report jointly to the president on the projected deficit, the amount it exeeds the target -- if it does -- and the percentage spending reductions needed to bring it within the target.
If the target is exceeded, the president would be required within 14 days to impose the budget cuts.
A number of areas in the budget would not be affected, however, including Social Security, interest on the national debt, some Pentagon spending and programs deemed by OMB to be "relatively uncontrollable." This is a major point of contention since it would be left to the Executive Branch, and not Congress, to decide which programs fit this description of "relatively uncontrollable."
Half the spending cuts would come from automatic spending increases for inflation in entitlement programs, such as food stamps, Medicare and Medicaid, and others. The programs could not be cut, just the inflation adjustments.
The other half would come through an across-the-board cut in remaining discretionary spending. About 60 percent of the defense budget would be subject to such cuts. Once the cuts are imposed, the president and Congress can come up with alternatives.