An exhausted and deadlocked Congress adjourned for the year yesterday after failing to enact a three-year, $74 billion deficit-reduction measure that was the centerpiece of congressional efforts to come to grips with the persistent federal budget problem.
The end of the road was reached late yesterday afternoon when the Senate, splitting on largely partisan lines, voted to send the legislation back to a conference with the House when this 99th Congress reconvenes in January. Democratic critics of the decision said it effectively killed the measure.
President Reagan had threatened to veto the measure if it cleared Congress in its present form. Senate Majority Leader Robert J. Dole (R-Kan.) said the threat was repeated to him yesterday by White House chief of staff Donald T. Regan.
But Senate Democratic leader Robert C. Byrd (W.Va.) charged that by sending the bill back to the House the Republicans were merely trying to spare Reagan the embarrassment of vetoing legislation that would cut spending.
"It's a way to kill this bill, a way for Reagan to avoid facing up" to the deficit issue, Byrd said. "I say let the president veto this measure if he chooses to."
Just before adjourning for the Christmas recess, the Senate passed and sent Reagan a bill to extend until March 15 the 16-cent-a-pack cigarette tax, which apparently reverted to 8 cents a pack at midnight Thursday.
The 16-cent tax was a temporary levy, and the deficit-reduction measure would have made it a permanent tax.
The cigarette tax had been among several revenue-raising measures, spending cuts and changes in federal programs that were lost -- until at least next year if not for the remainder of this Congress -- when the lawmakers abandoned efforts to break the impasse that developed largely over funding of the "Superfund" toxic-waste program.
The proposals included a major restructuring of the tobacco price-support program that was sought by the industry and most tobacco-state senators, and a settlement of a long-standing dispute over offshore oil revenues that would have boosted the incomes of several coastal states.
In addition to the temporary cigarette-tax extension, the Senate also passed and sent to Reagan a similar extension to March 15 of the freeze in the reimbursement rate to doctors and hospitals under Medicare.
Amid the rush to leave town and growing bitterness over the deadlock with the House, almost a third of the Senate was absent for the key vote on the deficit-reduction bill. In it, the Republican majority, by a vote of 35 to 29, defeated a Democratic attempt to force passage of the House version.
The Senate then, by voice vote, returned the package to a new conference with the House. It was uncertain whether the House would even agree to reconvene a new conference on the deficit-reduction disputes.
Senate Budget Committee Chairman Pete V. Domenici (R-N.M.), who led the Senate deficit-cutting effort throughout the year, said as the Senate closed down, "From the standpoint of deficit reduction, we end the year on a very dismal note."
He added that there was "plenty of blame to go around. . . . The White House is as much to blame as both houses. They haven't been as diligent as they should have."
Domenici estimated that, without the deficit-reduction package, Congress would exceed its budget targets for the fiscal year by about $20 billion. And when it returns in January, Congress will be faced with even more difficult budget issues as it begins to operate under the mandatory deficit-reduction provisions of the Gramm-Rudman-Hollings law.
That new law sets a mandatory deficit target of $144 billion for the fiscal year that begins next Oct. 1. The failure to agree this year on the three-year deficit-reduction bill, which included about $18 billion in spending cuts and new revenues for fiscal 1987, is going to put that target even farther out of reach, lawmakers said.
The deadlock that killed the deficit-reduction package centered on the Superfund cleanup program. A House-Senate conference committee agreed Thursday to a Senate-backed broad-based tax on manufacturing that was designed to raise $5.7 billion over five years.
But the House, which initially had adopted a narrower tax on the petrochemical industry to finance the program, rebelled against the conferees' report and voted to strip the deficit-reduction bill of the Superfund provisions and send it back to the Senate.
As the disputed measure bounced between the two chambers in what was described as a high-stakes game of legislative "chicken," the House and the Senate each voted a second time to hold its position as the impasse stretched into the early morning hours yesterday.
The weary Senate recessed at 2 a.m., returning nine hours later for another try at breaking the deadlock. Dole and other Senate Republicans met with Office of Management and Budget Director James C. Miller III to discuss changes in the legislation that might avert a presidential veto.
Dole eventually produced a list of five provisions -- including the Superfund tax on manufacturing -- that he said would have to be stricken from the bill before Reagan would sign it. But by that time, most House members had left town for the holidays, and House leaders said they could not summon the legally required number of lawmakers even to consider changes in legislation coming from the Senate.
Other House members, including some Republicans, also made it clear that some of the changes sought by the White House and the Senate would be unacceptable.
"We are not going to play Ping-Pong," said House Democratic Whip Thomas S. Foley (Wash.), reflecting the House's bipartisan displeasure with the ongoing impasse and its determination not to yield to last-minute Senate demands.
In these circumstances, the Senate was left with a choice of passing the House-approved version with no changes or giving up for this year. It chose to give up.
In urging that the bill be sent back to another conference with the House, Dole appeared intent on avoiding the spectacle of a major deficit-reduction measure dying in the Republican-dominated Senate. While Democrats charged that the call for a new conference would have the same effect of killing the bill, Dole said: "We'll get back and see what we can salvage in another conference."
The Senate finally adjourned for the year at 6:28 p.m., with the all-but-deserted House formally following suit 12 minutes later -- almost three months beyond its target for adjournment.
Dole said the Senate's first order of business when it reconvenes on Jan. 21 would be legislation on the proposed sale of the Conrail railroad system to Norfolk Southern.