Urban officials and members of Congress have joined forces in an effort to invalidate a major presidential impoundment tool that some critics said could provide President Reagan with a virtual line-item veto in budget battles with Congress.
On Thursday, four Democratic members of Congress joined city officials and local housing and development groups in asking the U.S. District Court here to nullify portions of the 1974 budget impoundment control act that allows the president to "defer" approved spending authority from one fiscal year to the next.
The suit, filed by the same "public interest" law group challenging the constitutionality of the Gramm-Rudman-Hollings balanced-budget law, specifically seeks to undo nearly $7 billion in deferrals for housing and community development funds for the current fiscal year that Reagan announced Feb. 5.
On Capitol Hill, meanwhile, a collection of Democratic and Republican lawmakers -- some concerned with salvaging municipal aid programs and others resentful of the process Reagan used -- have initiated legislative challenges to the process and some of the specific cuts.
Sen. Slade Gorton (R-Wash.) said it was "fundamentally wrong" and "profoundly unjust" for Reagan to try to withdraw spending authority already approved and anticipated by municipalities in drawing up their budgets.
"Of course he's interested in deficit reduction, but he's also interested in his own set of priorities," Gorton said in a telephone interview. "So there is certainly an ideological cast to these deferrals."
Rep. Charles E. Schumer (D-N.Y.), one of the plaintiffs in the lawsuit, said that if the president is permitted to use the process, "it would mean you would have to pass any legislation he didn't like twice . . . . That is not what is in the Constitution nor what the Supreme Court intended."
The center of the new controversy is a relic from the last era of intense White House-Capitol Hill financial tug of war, President Richard M. Nixon's efforts to impound congressionally authorized spending for programs he opposed.
In 1974, Congress passed the Congressional Budget and Impoundment Control Act, giving the president power to "defer" approved authority, provided that individual deferals were not nullified by either chamber of Congress.
In 1983, however, the Supreme Court, in a far-reaching decision altering the balance of power in government, invalidated single-house vetoes in particular and voided or jeopardized legislative vetoes in some 200 laws.
Plaintiffs in the suit filed Thursday argued that since the authority to defer was granted only with the accompanying safeguard of a one-house veto and this veto has been declared invalid, the authority itself should be negated.
"While this lawsuit is limited to housing funds, the issue at stake here is the entire power of the president not to spend money," said Alan B. Morrison of the Public Citizens Litigation Group, which filed the suit. "This is going to be the administration's way not to spend the money it didn't want in the appropriations bills in the first place."
The law provides two mechanisms for presidential denial of funds. One, generally considered more favorable to Congress, is the rescission, in which the president announces his intention not to spend funds. He may not go ahead on that decision, however, unless Congress affirmatively acts to agree within 45 working days. In his Feb. 5 message, Reagan announced $9.9 billion in rescissions.
The deferral is considered more favorable to the president, however, because it holds unless Congress, in effect, vetoes it. To achieve the veto, both chambers must pass legislation specifically invalidating the deferral, and that legislation is subject to presidential veto.
Reagan's Feb. 5 report contained $22.9 billion in new and revised deferrals.
With that in mind, Sen. Donald W. Riegle Jr. (D-Mich.) has introduced legislation, with bipartisan cosponsorhip, to reject the housing deferrals.
Rep. Gerald D. Kleczka (D-Wis.) plans to introduce similar legislation in the House. Meanwhile, Rep. Bruce A. Morrison (D-Conn.) is proposing that deferrals require the same kind of congressional ratification now needed by rescissions.