House and Senate negotiators yesterday approved a plan to revive the Gramm-Rudman-Hollings budget-balancing law, with a new mechanism for requiring automatic spending cuts if Congress and the White House do not meet their deficit-reduction goals.
The repair of the 1985 budget law would substantially ease the law's original annual deficit targets, requiring a balanced budget by fiscal 1993 -- two years later than originally required.
However, a key Senate Republican said he continued to have reservations that the proposal could lead to disproportionate cuts in the defense budget.
The lingering questions raised late yesterday by Sen. Pete V. Domenici (R-N.M.) could be resolved today when he has a chance to study the fine print of the proposal. That would pave the way to possible approval early next week, when the measure would be attached to legislation raising the government's borrowing ceiling.
However, if Domenici fights the compromise on the floor, it could impede final passage.
Another key Republican, Sen. Phil Gramm (Tex.) said last night that his reservations had been resolved and that he expects to "vigorously support" the measure and urge President Reagan to sign it.
House Ways and Means Committee Chairman Dan Rostenkowski (D-Ill.) said that he will move the bill to the House floor on Tuesday, with the support of about two-thirds of the House Republican negotiators.
Under the plan, Congress would have to cut the deficit by $23 billion for fiscal 1988, which begins Oct. 1, through a combination of spending cuts and increased revenues. The plan is expected to require as much as $15 billion in new revenues.
The proposal assumes that the federal deficit in fiscal 1988 would be reduced to about $144 billion, well above the $108 billion target set in the original law.
The Supreme Court struck down the original automatic spending cut mechanism, raising objections that it violated the Constitution's separation of powers. In an effort to get around the ruling, the new mechanism would be triggered by the president's Office of Management and Budget rather than the General Accounting Office, an arm of Congress.
Despite Domenici's reservations, Senate Budget Committee Chairman Lawton Chiles (D-Fla.) said, "We have a situation that I think can be straightened out. Obviously we want them all on board."
"We're in great shape," Senate Finance Committee Chairman Lloyd Bentsen (D-Tex.) added.
A Gramm-Rudman-Hollings repair has been a high priority of the Democratic leaders who control the 100th Congress because they say they believe that only the threat of steep automatic cuts in the defense budget will force Reagan to back away from his oft-repeated threat to veto the tax increase Congress needs to implement its $1 trillion budget.
B.J. Cooper, deputy White House spokesman, said yesterday, "We'd oppose any Gramm-Rudman fix that would force the president to choose between a tax increase and a huge across-the-board cut that would hurt defense."
But Cooper said the administration will not take any position on the pending matter because "we don't know everything that's in it."
Domenici raised two related concerns yesterday about the proposal. He said he had no assurance it would guarantee the pledge in the congressional budget for a $7 billion bonus in defense spending if Reagan accepts the tax increase. Also, he fears that if the automatic spending cuts are triggered, the Pentagon budget could shoulder more than the 50 percent burden required by the budget balancing law.