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URGENT Budget Packages Sent To Reagan

December 22, 1987

WASHINGTON (AP) _ The long-delayed deficit reduction package promised by Congress gained final approval Tuesday morning after the House and Senate approved and sent to President Reagan a $17.6 billion tax and entitlement bill and then a huge companion spending bill.

The tax and entitlement bill was passed Monday night in the House, 237-181, and then early Tuesday in the Senate, 61-28. The second half of the budget agenda, a record $600 billion spending bill to fund the government through next September, was then passed 209-208 in the House and 59-30 in the Senate.

Together, the bills would reduce the fiscal 1988 deficit more than $32 billion, fulfilling an agreement with Reagan designed to reassure still-shaky financial markets.

″We need desperately to send the country a message tonight that the president and the Congress can govern this country,″ said Rep. Leon Panetta, D-Calif., one of the lawmakers who drafted the deficit reduction pact.

House-Senate negotiators Monday night also cleared up the last major block to getting the president to sign the bills. They dropped from the spending bill language reinstating the fairness doctrine, a policy suspended by the Federal Communications Commission earlier this year that required broadcasters to provide exposure to opposing political viewpoints.

The president, who has already vetoed fairness-doctrine legislation, had promised again Monday to kill the entire budget package if it were included.

Lawmakers were eager to go home for the holidays, and enactment of the bills apparently would avoid the threat of a government shutdown Tuesday.

White House spokesman Ben Jarratt said early today that federal workers should report to work as usual. But, because the debates had extended past midnight and the administration needed to review the massive documents, a final decision on a possible shutdown later would be made during the day.

″I think great progress has been made,″ Reagan said as he met with Republican congressional leaders earlier Monday. ″I hope that they can get one (a budget package) down here that I can sign so we can all go home for Christmas.″

Senate Majority Leader Robert C. Byrd, D-W.Va., said, ″It’s an achievement of which we can be proud.″

The bills were being rushed to the House and Senate floors after an intense weekend of negotiations that nailed down an agreement to provide $8.1 million for the Contra rebels in Nicaragua, over the objections of House liberals. But while crucial for the president’s support, that aid was only a tiny portion of the legislation.

The Contra aid was attached to a $600 billion spending bill covering virtually all federal domestic and military operations for fiscal 1988, which began Oct. 1. It contains everything from new irrigation projects to expanding the 65 mile-per-hour speed limit to Stinger missiles sales to Bahrain.

The mammoth spending bill was needed because, for the second year in a row, Congress combined into a single package what would normally be 13 separate annual appropriations bills. The legislation was bigger than last year’s because of inflation, but it also contained cost-cutting of $5 billion in military programs and $2.6 billion in domestic accounts.

The budget agreement with the president required a minimum of $30.2 billion in deficit reduction, and lawmakers said they were exceeding the target.

Much of the savings was in the companion budget bill, which contained $9 billion in new taxes this year, cuts in Medicare costs and farm subsidy reductions.

About $7.5 billion of the deficit reduction would be accomplished through refinancing of government loans, including U.S. military loans to foreign countries and loans to rural electric and telephone cooperatives.

Most of the tax hikes were aimed at corporations, but consumers will continue to pay the 3 percent federal tax on telephone service that was due to expire at the end of 1987.

Even with the deficit-cutting, this year’s federal deficit is expected to be somewhat higher than the $148 billion in red ink Washington incurred in fiscal 1987. That is because of one-time revenues the government collected this year generated by the revision of the income tax law, and because of projections for a worsening economy.

The Treasury Department reported Monday that the government ran up a $25.77 billion budget deficit in November, bringing the shortfall in the first two months of fiscal 1988 to $56.51 billion. The two-month total was $4.13 billion or 8 percent higher than the comparable period last year.

Under the budget agreement, reached by Reagan and congressional leaders in the weeks following the Oct. 19 stock market crash, both bills were to be presented to the president at the same time.

Passage of both measures would cancel the $23 billion in federal spending cuts ordered by Reagan on Nov. 20 under the Gramm-Rudman budget-balanci ng law.

Congress was supposed to complete, and the president sign, all fiscal legislation before Oct. 1. As the political stalemate evolved into bargaining and compromise, the government was kept operating under a series of emergency spending bills, the latest of which was expiring at 12:01 a.m. EST Tuesday.

The deficit-reduction agreement reached Nov. 20 finally laid out the blueprint for action, but it took more than a month to nail down the details.

Among the hundreds of compromises:

-A ban on smoking on domestic airline flights of two hours or less.

-An eight-month delay in enforcing clean-air standards on local governments.

-Limits on the mortgage income tax deduction for the wealthy.

-A $425-million budget for the space station project.

-Reductions in subsidies for wheat, corn, cotton and rice growers.

-Naming Yucca Mountain, Nev., as the likely repository for the nation’s nuclear waste.

-A 2 percent pay raise in January for federal civilian and military employees. Members of Congress, whose two raises early this year brought their salaries to $89,500, exempted themselves from another boost after bitter disputes.

Lawmakers took to the House floor Monday to complain loudly of the delays in passing the bills, which cut into their month-long holiday recess.

House Speaker Jim Wright, D-Texas, who had to cancel a planned speech in Israel on Monday, attained his 65th birthday in the House chamber when the clocked ticked past midnight Tuesday morning. He told reporters he too was bothered by the delays but said the schedule was not of paramount importance.

″I think it is more important to the American people that the job be done well, than to be done quickly,″ he said.