The House and Senate have been sparring all year over the defense budget and related issues. In that sense the House was following form in rejecting Tuesday night, in part for its defense provisions, the proposed continuing resolution to fund for the rest of the fiscal year the agencies whose regular appropriations bills have not been passed. On defense, the conference committee had tilted toward the Senate. In almost identical circumstances earlier in the year, on the conference report on the defense authorization bill, the House had also voted no.
But this vote counts more. The reason is a multiplier effect inside the new Gramm-Rudman budget process; it has created a new game for everyone to learn, a game called Baselines. Gramm-Rudman sets out declining deficit targets for the next five years and provides for automatic spending cuts, half from defense and half from domestic programs, if in any year the president and Congress fail to hit their target. The question is: automatic cuts from what levels? The higher you can lift your starting point or Baseline in any year, the less your program has to fear from Gramm-Rudman and the stronger your position will be in the likely scramble to produce a budget by orthodox means as the deadline for automatic cuts approaches.
Gramm-Rudman is scheduled to inflict its first cuts next spring. The starting point will be the continuing resolution. In the past the defense appropriations conference has been the decisive moment in the budget process for the Pentagon each year. Now it may be only a prelude.
The House in its appropriations bill voted to hold the Pentagon to $292 billion in spending authority this fiscal year, the same as last year, without allowance for inflation -- and it did not exactly vote to appropriate even that. It found more than $6 billion in spending authority from prior years that the Pentagon had not used, and told the services to use it this year instead. That meant that this year's new appropriations could be that much less. The House also tied to its bill a set of procurement reforms it has been trying to pass all year.
The Senate has turned aside the reforms, and has called for $302 billion in spending authority, enough of an increase to cover the expected inflation rate and the amount contained in the congressional budget resolution, which the administration has now embraced. The continuing resolution conferees 1) dropped the reforms, 2) agreed to give the Pentagon $299 billion in spending authority, more than splitting the difference in the Senate's favor, and 3) voted to make this authority all new. That way the Pentagon would have all its old appropriations in reserve for Gramm-Rudman.
The matter has gone back to conference. By the standards of the first Reagan term, however, the Pentagon loses even if it wins. Actual defense spending will continue to rise this fiscal year as a result of past appropriations. But new appropriations -- the feedstock for future spending -- for the first time in the Reagan administration will apparently not rise perceptibly, and under Gramm-Rudman could even fall. The defense side of the budget has hit an uncertain plateau.