The first austerity blueprint under the new balanced-budget law was issued yesterday, showing that the automatic spending cuts triggered by a record-breaking $220 billion deficit this year will slice widely but unevenly through the federal establishment, creating both winners and losers.
In reporting on the first automatic spending cut of $11.7 billion, the Office of Management and Budget and the Congressional Budget Office provided new details about how President Reagan and Congress have inflicted the pain on some programs and people, while exempting others from the budget knife.
Among the winners this year are Reagan's missile defense program (the Strategic Defense Initiative) and Navy fixed-price aircraft contracts, both of which Reagan shielded from cuts. He also protected most of the military personnel account. Congress protected Social Security recipients as well.
But the budget knife will slice widely into domestic programs ranging from agriculture to health and education. College student aid and mass transit subsidies will be cut. Inflation adjustments for civil service, military and other retirement and disability programs are being wiped out this year.
The specter of automatic cuts has spurred budget strategists on Capitol Hill to look for possible alternatives on domestic spending, but they said yesterday there is uncertainty over whether Congress will take such action.
The first round of cuts will trim 4.3 percent from domestic agencies and 4.9 percent from defense, but the cuts must be absorbed in the seven months of the fiscal year remaining after March 1.
The reductions were detailed in a report that marks the first phase of the Gramm-Rudman-Hollings law designed to eliminate the federal deficit by fiscal 1991. The budget offices reported, as expected, that the deficit outlook has seriously deteriorated since autumn, and they jointly predicted $220.5 billion in red ink for this year, setting in motion the $11.7 billion in automatic cuts Congress had previously ordered.
Office of Management and Budget Director James C. Miller III said the administration will seek a "minimum of disruption" in carrying out the cuts. He predicted that there will not be furloughs or reductions-in-force of federal workers but will be "less hiring" or a freeze in some agencies.
Overall, the first cuts represent a small fraction of the estimated $996.5 billion in federal spending for this year. But they are an important precursor to far bigger cuts that will result under the Gramm-Rudman-Hollings law if Reagan and Congress deadlock over the deficit in fiscal 1987, which begins Oct. 1.
This year, Reagan used special authority granted by Congress to shield parts of the Pentagon budget from cuts. Of the $272.8 billion in defense programs this year, $163.4 billion was put off-limits. Reagan protected more than $60 billion in military personnel accounts from the first round of cuts.
In passing the law, Congress also shielded some programs, including Social Security and net interest on the national debt.
Yesterday's report shows that about one-third of the spending for domestic programs, or about $240 billion, is subject to the first round of cuts. Some programs, like Medicare, guaranteed student loans, foster care and adoption assistance and veterans medical care, are given special treatment under the law, so the cuts will be limited. Congress also gave special treatment to pay for federal workers.
Budget Director Miller said yesterday that, due to fiscal restraint, the administration plans to seek "no major supplemental" appropriations bills this year, but other officials said supplemental appropriations for Nicaraguan rebels and the Internal Revenue Service are likely.
The balanced-budget law set a target deficit of $171.9 billion for this year. The budget offices reported yesterday that target would be exceeded by $48.6 billion, due to congressional inaction on the deficit, higher farm program costs as well as slower than expected econmic growth.
Meanwhile, congressional budget strategists were exploring the possibility of trying to pass an alternative to the automatic cutback order. One option would avoid the domestic part of the 1986 automatic cuts.
But doubts have been expressed over the practicality of such a move given the March 1 deadline and misgivings over whether some of the contemplated proposals meet the spirit or letter of Gramm-Rudman-Hollings.
"I just don't think it [an alternative] is very likely to happen," Miller said yesterday. Some congressional sources expressed similar views.
Under one widely discussed strategy, the non-defense cuts would be supplanted by roughly $7.5 billion worth of domestic spending cutbacks and revenue increases that Congress considered but failed to pass late last year. The 1985 plan would be modified to exclude taxes for the "Superfund" toxic-waste cleanup program and other controversial provisions that led to last year's impasse.
When combined with the military cuts in the sequester order, this would exceed the $11.7 billion target for cuts for fiscal 1986, although it would fall short of the total savings that would be achieved by adding the new cutbacks to the savings that were supposed to be passed last year.
Rep. Richard A. Gephardt (D-Mo.), chairman of the House Democratic Caucus and a drafter of the budget-balancing compromise, expressed doubt yesterday whether such a move would meet requirements of the legislation