The new Gramm-Rudman process for trimming the deficit has modestly begun. It was fashionable when the amendment passed to disparage it, in part because it postponed the pain. But it did not postpone it forever -- or even for very long. The Office of Management and Budget and Congressional Budget Office have now affirmed what everyone already knew -- that this year's deficit will not just be beyond the $171.9 billion Gramm-Rudman triggering point, but over $200 billion again -- so that under the law a round of automatic spending cuts must occur. These are supposed to take effect Mar. 1 in the amount of $11.7 billion, half from domestic programs, half from defense.
The $11.7 billion will hardly demolish the deficit, but because so much of the budget is exempt, it will sharply pinch the civilian agencies (including the most basic administrative agencies of the government, the Internal Revenue Service, for example). It will also require a sizable further reduction in defense spending authority (though the effects of this are disputed, because the Pentagon still has large unobligated balances from past appropriations). The cries of pain have already begun to be heard. That is of course the point. Gramm-Rudman was a weighting exercise, an assertion of the primacy of reducing the deficit over the claims of the programs whose costs the deficit reflects.
The more serious question is how the new rules will affect the fiscal 1987 budget, which the president is preparing to send to Congress next month. The Gramm-Rudman deficit target for 1987 is $144 billion. The president will reach it without a tax increase and with an increase for defense, mainly by proposing further deep domestic spending cuts. To augment these he will also propose the sale of selected federal assets, such items as hydroelectric dams and petroleum reserves. Congress is unlikely to go along, and both sides are already invoking the prospect of a second round of Gramm- Rudman spending cuts next fall.
Thus Les Aspin, chairman of the House Armed Services Committee, warned sarcastically last week that, if Congress and the president fail to agree on an alternative, Gramm-Rudman is likely to force $80 billion in defense cuts over this and next fiscal years, a complete reversal of the Reagan buildup that even "Jimmy Carter would assail as a threat to our national security." But the president a few days later in a television interview said that, if such cuts occur in 1987, Congress will be at fault. In the first place, he "never favored" that part of Gramm-Rudman stipulating spending cuts if he and Congress fail to agree, the president said for the first time. And in any case, "if the Congress will cooperate with us in making the cuts that have to be made where we have selection over them, we'll never have to resort to that sequestering of programs in which you just automatically go in with a meat ax approach."
There is, of course, another alternative: a tax increase. The president is opposed to this, and he is still staking out his bargaining position. No harm in that. But Gramm-Rudman says that, this year, he can not bargain at the expense of the deficit. Whatever program is adopted this year will have to be financed.