Key legislators in both parties said yesterday that President Reagan may have underestimated defense spending for fiscal 1987 by $10 billion to $15 billion, and some analysts said this could push spending over the limits of the new balanced-budget law.
House Budget Committee Chairman William H. Gray III (D-Pa.) called Reagan's budget "invalid" and said the president should revise it.
Senate Budget Committee Chairman Pete V. Domenici (R-N.M.) said he was "truly disturbed" by the Pentagon's estimate of its spending next year. A committee statement said there is "widespread belief" that military spending figures are "substantially understated" in Reagan's budget. Domenici put the figure at $10 billion to $15 billion.
Defense Secretary Caspar W. Weinberger, however, defended the administration's projections, saying that it was "impossible to estimate ahead of time" exactly how much the Pentagon would spend next year. He also said the military was instructed to spend more slowly than in the past and use a "great deal more caution" because of the new Gramm-Rudman-Hollings balanced-budget law.
At issue is the amount of defense outlays, or actual spending, for fiscal 1987, which begins Oct. 1. Reagan's budget estimates that outlays will increase 6 percent, to $282 billion next year. But given recent experience, some congressional analysts said this figure appears to be significantly understated.
Such estimates of actual Pentagon spending are difficult because military expenditures for weapons systems are spread out over several years, even though Congress may have appropriated all the money in one year. A sudden slowdown or acceleration in military spending can result in significant changes in the estimates.
In recent years, the administration's outlay projections have tended to be too high. "No one's really got a handle on it," said a congressional budget analyst familiar with the issue.
But the argument is important because the Gramm-Rudman-Hollings law requires Reagan and Congress to reduce the deficit to $144 billion in fiscal 1987. Reagan has boasted that his budget met that target, with a proposed deficit of $143.6 billion. But if defense spending has been underestimated, the target would not be reached.
Domenici did not suggest that the defense figure had been deliberately underestimated to comply with the balanced-budget law. Gray was more critical, saying that Reagan "ought to take this budget back and resubmit it" because it would exceed the legal deficit targets.
The dispute over defense spending came as top administration officials defended Reagan's budget proposal while critics on Capitol Hill complained about its continuing tilt toward defense and its cuts in social programs.
The president, during an Oval Office photo session, was asked about statements from Democrats that the budget was "dead on arrival."
"Well, they may have prejudged there," he said. "We'll give it artificial respiration."
In a speech to political appointees yesterday, Reagan reiterated his opposition to any slowdown in defense spending or a tax increase.
"Well, during the last campaign, one candidate took his case for higher taxes to the American people and he was victorious in one state and the District of Columbia," Reagan said. "Even liberal economists should be able to add up the score. The American people don't want higher taxes."
Senate Majority Leader Robert J. Dole (R-Kan.) yesterday endorsed proposals for a budget summit meeting involving congressional leaders and the White House. "We'll finally get around to it, I hope sooner rather than later," he said in reference to a summit proposal Wednesday from Domenici.
Also yesterday, Reagan sent to Congress a legislative agenda, reiterating the initiatives in the State of the Union address and highlighting some not included in the speech, such as a proposal that Congress approve a joint resolution on the budget, which would require the president's signature.
The legislative agenda also included tax and antitrust law revision, product liability changes, efforts to resist protectionist trade legislation and open foreign markets, a study of a possible international monetary conference, enterprise zones, deregulation of the trucking industry, changes in regulation of the financial services industry, complete deregulation of natural gas pricing and part of the oil pipeline industry, and legislation to provide for standardized nuclear power plant design.
Other initiatives included federal tuition tax credits, school vouchers, additional flexibility for localities to use bilingual education funds, a restructuring of federal college student aid, a higher education savings account, retargeting of teacher training funds, and additional efforts to improve the administration of literacy programs to lead to reduced costs.
Reagan also noted his charge to the Domestic Policy Council to study welfare and poverty, saying that current programs cost $120 billion a year, "yet we have almost 30 million people still in poverty and these programs are run in such an uncoordinated fashion that many who are not poor receive benefits intended for the poor."