President Reagan's budget falls $15.7 billion short of the $144 billion Gramm-Rudman-Hollings deficit-reduction target for fiscal 1987, largely because defense spending was underestimated, the Congressional Budget Office said yesterday.
The nonpartisan CBO concluded that Reagan underestimated deficits by $151 billion over the next five years, enough to miss the fiscal 1991 target of a balanced budget by $40 billion.
In another rebuff to Reagan's spending blueprint, Senate Budget Committee Chairman Pete V. Domenici (R-N.M.) said "few, if any," committees in the Republican-controlled Senate have indicated willingness to go along with the specific deficit reductions in that plan.
"The response from Senate authorizing committees has been very weak, I'm sure the weakest so far" since Reagan took office five years ago, said Domenici in reference to program terminations, asset sales and user fees that the president proposed in hopes of meeting the target in the Gramm-Rudman-Hollings budget law.
The two developments appeared to increase pressure on the administration to accede to a budget compromise incorporating a tax increase as the price to be paid for a resumption of Reagan's military expansion program, which was stalled in a budget squeeze last year.
Domenici has been warning since Reagan unveiled his budget proposal a month ago that it will be difficult if not impossible to finance new military growth without a tax increase, possibly in the $10 billion to $20 billion range.
CBO's conclusion that Reagan's military program would cost $14.5 billion more than the administration claims, coupled with congressional reluctance to go along with the domestic cutbacks that offset military increases in Reagan's budget, seemed to strengthen Domenici's hand.
But Sen. Ted Stevens (R-Alaska), chairman of the defense appropriations subcommittee, disputed CBO's conclusion and said his panel would not be guided by it in developing a defense spending bill for next year.
CBO's conclusion was welcomed, however, by House Budget Committee Chairman William H. Gray III (D-Pa.), who, like Domenici, was on record as charging that the administration was underestimating defense spending.
This could be important in clearing away the partisan underbrush that has often cluttered the path to House-Senate agreement on budget ground rules and could make it easi er to produce a congressional budget with bipartisan support. Such an accord is not likely to resemble Reagan's blueprint.
In his budget, Reagan claimed that proposed program cutbacks and terminations, user fees and other savings totaling $38 billion would produce a fiscal 1987 deficit of $143.6 billion, just under the $144 billion target set by Gramm-Rudman-Hollings.
But CBO, assuming a higher spending rate for the military programs that Reagan proposed as well as somewhat slower economic growth and higher interest rates, recalculated Reagan's deficit for next year to be $159.7 billion.
This is $15.7 billion over the target and $16.1 billion more than Reagan estimated. The dispute over defense accounted for $14.5 billion of the difference.
Instead of a small surplus in fiscal 1991, the year that Gramm-Rudman-Hollings prescribes a balanced budget, Reagan's plan would have a deficit of $40 billion, CBO contended.
A spokesman for the president's Office of Management and Budget defended the administration's calculations and said, "We continue to stick by our estimates of defense outlays." Otherwise, he noted, "We CBO and OMB are very close."
The defense spending dispute involves how much will actually be spent in a given year under spend ing authority that Congress approves, often for programs that are spread over several years. CBO said it was guided by historical patterns, while OMB assumed a slower spending rate for a variety of reasons, including better management and uncertainty over the effects of Gramm-Rudman-Hollings.
In related action, the House approved an extra $5 billion to finance existing farm price-support and other subsidy programs, enough to last until late summer, according to House Appropriations Committee Chairman Jamie L. Whitten (D-Miss.). While required under existing law, the funding will add to deficit-reduction problems as the year wears on.
Also pending before Congress are proposed modifications in last year's farm bill that could also add to the deficit.
Efforts to reach an agreement on a deficit-reduction bill left over from last year continued yesterday in the Senate, without an apparent breakthrough.
Once calculated to save about $75 billion over three years, the measure has been whittled down to $21 billion in an attempt to avoid problems that have been stalling it. But it is being pushed by oil and tobacco state lawmakers, as well as deficit-reduction advocates, because it includes program modifications that would benefit their states.