President Reagan yesterday sent a "hard choices" $994 billion budget to a highly skeptical, election-minded Congress that responded with howls of pain, ridicule from Democrats and GOP pressure for an early compromise.
House Armed Services Committee Chairman Les Aspin (D-Wis.) called the proposal "dead before arrival," and Sen. Bill Bradley (D-N.J.) said there were not even 25 votes in favor of it in the Republican-controlled Senate. Senate Budget Committee Chairman Pete V. Domenici (R-N.M.) called for a summit meeting "to see if we can put a package together," including tax increases opposed by Reagan.
Many lawmakers complained that the budget would cut too deeply into domestic programs and not enough into defense, a complaint that has greeted all of Reagan's budgets.
The debate over defense spending versus domestic spending erupted even as the budget documents arrived on Capitol Hill. Defense Secretary Caspar W. Weinberger, unveiling his proposals before congressional committees that handle defense spending, was warned that he must compromise on military cutbacks or the nation will face a fiscal "train wreck" later in the year.
The constraints of new budget-balancing law narrowed available options, and Congress, despite early deadlines required by the law, appeared a long way from agreeing on an alternative.
Senate Majority Leader Robert J. Dole (R-Kan.) warned that "before we start driving nails in everything, we ought to take a look at it the president's budget ." House Minority Leader Robert H. Michel (R-Ill.) suggested joint Senate-House task forces to "help the members develop slight alternatives within the narrow parameters that we're obliged to honor."
The president's spending blueprint for fiscal 1987 meets the $144 billion deficit target of the new Gramm-Rudman-Hollings budget-balancing law by proposing $38 billion worth of spending cutbacks and service charges, many of them previously rejected by Congress.
The administration would kill many domestic programs, slash even more of them, shift others to state and local governments and, in a major initiative, sell a wide array of federal assets, such as government-owned oil fields. Activities ranging from hydroelectric power delivery to housing and crop insurance would be taken over by the private sector. Hardly a domestic program, from infant feeding to health care for the elderly, would emerge unscathed.
Amtrak subsidies and other mass transit aid, legal assistance for the poor, the Small Business Administration, housing construction, agricultural extension services, two criminal justice programs, Export-Import Bank direct loans, Urban Development Action Grants (UDAG) and economic development programs would be eliminated, along with the nearly century-old Interstate Commerce Commission and a veterans' education program that is less than a year old.
Heavy new cuts would be made in such major programs as Medicare and Medicaid. Able-bodied welfare recipients would have to accept jobs; Medicare recipients would have to pay higher premiums; at least 1 million college students would lose federal aid.
The budget proposes to continue the military buildup at a rate of 8 percent after inflation (from $286.1 billion to $320.3 billion), increase spending for foreign security assistance and space exploration, and protect the politically sensitive Social Security program.
While it would impose new fees for activities ranging from sport fishing to meat inspection, including higher charges for late payment of taxes, the budget would hold the line against any new tax increases.
It was Reagan's sixth budget, consistent with others in its shift of budget resources from domestic to military programs, and his first since enactment of the budget-balancing legislation, which is aimed at eliminating deficits within five years.
While the proposal meets the Gramm-Rudman-Hollings targets, with $400 million to spare for next year and a surplus of $1.3 billion by fiscal 1991, Reagan's budget was based on optimistic economic forecasts that anticipate robust growth and declining unemployment, inflation and interest rates over the five-year period.
Under a less optimistic scenario that could include a recession before the decade is out, as some economists foresee, the deficit-reduction targets could be missed by significant amounts because of falling tax revenues and increasing costs of unemployment and social welfare programs. Failure to meet the annual targets would trigger automatic spending cuts, which both Reagan and Congress want to avoid.
Reagan's budget assumes the economy, which expanded by 2.5 percent during the past year, will grow by 4 percent annually over the next three years, slowing slightly in later years. Inflation would rise a little to 4 percent next year and then decline to 2 percent by fiscal 1991. Unemployment would fall gradually from 6.9 percent to 5.5 percent. Short-term interest rates would fall from about 7.3 percent to 4 percent.
The budget was dismissed in advance by many lawmakers when it became clear, through leaks of its contents, that it would not vary significantly from the direction of earlier budgets. Congress has increasingly altered Reagan's budgets and appears likely to do the same this year, although Democrats indicated that they plan to make the most unpopular aspects of it the target of vocal attacks at first, starting with a coast-to-coast hearings on it by the House Budget Committee during next week's congressional recess.
"The president deserves his day in court, and he will get it," said House Speaker Thomas P. (Tip) O'Neill Jr. (D-Mass.).
Both O'Neill and House Majority Leader James C. Wright Jr. (D-Tex.) dismissed Reagan's invitation in his State of the Union address Tuesday night to work together to resolve budget problems. Wright characterized it as "window-dressing."
Office of Management and Budget officials spoofed the notion of a "dead-on-arrival" budget by donning surgical gowns and delivering the document in a siren-wailing ambulance to reporters who were awaiting copies at the Government Printing Office. An OMB aide was carried upstairs on a gurney, where he arose, alive and well, to say the budget, too, was in good shape.
Expanding on the up-beat message of his State of the Union address, Reagan said in his budget message that "conditions are now in place for a sustained era of national prosperity" but warned that "we risk losing all we've achieved -- and more" if deficits are not controlled.
His budget, he said, shows that "eliminating the deficit is possible without raising taxes, without sacrificing our defense preparedness and without cutting into legitimate programs for the poor and elderly."
But that contention was disputed both on and off Capitol Hill, where the domestic spending cutbacks ran into a barrage of criticism.
In a typical response, Rep. Thomas A. Daschle (D-S.D.), chairman of the Veterans Affairs subcommittee on education and employment, reacted with what he called "outrage and amazement" at Reagan's proposal to terminate a new GI bill for education of veterans that Congress approved and Reagan signed only last year. Daschle quoted an Army document as saying termination of the program would damage recruitment efforts and said he was scheduling hearings Feb. 19 on legislation to improve it.
From outside Congress, the Center on Budget and Policy Priorities took issue with an assertion by the president that his budget protects programs for the poor and charged that low-income programs would be cut by $9 billion next year, $23 billion over five years. The center, a critic of Reagan's budget priorities, said programs for the poor would be reduced by one-sixth by fiscal 1991.
The budget would trim agriculture and food spending by 17 percent, with major cuts in rural housing, conservation, crop insurance, extension services and nutrition programs, including school lunches. "We won't let it happen," said Sen. Charles E. Grassley (R-Iowa), speaking of the overall farm-program cuts.
Education outlays would decline from $18 billion to $15.4 billion, with cuts coming primarily from student aid and vocational education. New financial-need requirements would be imposed for student aid, and interest-free loans would be ended.
Spending for Medicare and Medicaid would increase but not at rates anticipated by current law, saving $15.5 billion from Medicaid and $55 billion from Medicare over five years. Medicaid payments to the states would be capped. Medicare savings would come from premium increases, lower hospital payment rates, cuts in medical training funds and a variety of other changes.
Job training assistance would be cut by 12.5 percent. The work incentive (WIN) program to help welfare recipients find jobs would be eliminated, and summer youth jobs would be scaled back. The Job Corps, which Reagan tried to kill last year, would be severely cut.
There would be a relatively small, $94 million increase in the space program and substantial increases in foreign security assistance, despite warnings that it will run into trouble because of budget constraints. Foreign aid would be increased from $14.9 billion to $16.2 billion. Aid to Israel would be cut by $600 million, to $3 billion, although Israel and Eqypt would remain the top aid recipients. Contributions to U.N. agencies would be cut by about one-fourth. Nearly $2 billion is being sought over two years to improve embassy security.
Many anti-pollution programs would be consolidated into a new block grant program, as would scaled-back highway and transit programs. Energy conservation grants would be ended.
New charges would be imposed for a variety of government services, including use of national parks and Coast Guard services. A proposal to increase grazing fees for federal lands was dropped, however. The budget assumes passage of legislation to retain the 16-cents-a-pack tax on cigarettes, despite Reagan's earlier opposition to it.
In the move to "privatize" some government services and profit from sale of federal assets, the budget would sell power-generating operations at Bonneville and Southwestern projects, auction off the Elk Hills and Teapot Dome petroleum reserves and start selling government loan portfolios and excess government properties. Together, these would produce savings of $6.7 billion next year. The budget also lists $1.2 billion in "federalism" savings that amount to transfer of funding responsibilities to state and local governments.