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Proposed Revisions Give Reagan Upper Hand On Gramm-Rudman

September 25, 1987

WASHINGTON (AP) _ The proposed revision to the Gramm-Rudman budget-balancing law favors President Reagan’s spending priorities in his fiscal battles with Congress, according to a new congressional analysis.

Figures released to lawmakers Thursday by the non-partisan Congressional Budget Office indicate that Reagan’s defense buildup would be better protected than domestic programs under the new Gramm-Rudman plan.

The president said Thursday he had not decided whether to veto the bill passed this week by the House and Senate.

The Gramm-Rudman language was attached to legislation needed by next Thursday to increase the ceiling on the national debt and avert a Treasury default.

Restoring Gramm-Rudman means that government agencies would have their budgets cut across the board unless the president and Congress agreed on a way to reduce the deficit. In fiscal 1988, $23 billion in deficit reduction would be required as an interim step toward a balanced budget.

White House officials have said they are concerned that Democrats in Congress could use the threat of those cuts to force Reagan to accept a tax increase or accept deep cuts in military spending.

But the new Congressional Budget Office figures show the defense budget faring better than domestic programs.

In theory, the $23 billion in automatic spending cuts would come equally from the Pentagon and domestic programs. However, those calculations do not take into account congressional plans to increase military spending only slightly compared to domestic programs.

The result is that the automatic cuts would drop the Pentagon budget to $285 billion, only $4 billion less than the level Congress was anticipating if Reagan refused to endorse a tax increase.

Domestic programs - which Reagan has been seeking to cut - would be hit with 8.5 percent cuts from their expected levels. That does not include Social Security, veterans’ benefits and welfare programs, which are exempt from any reduction.

″It really is a close call for him,″ said Sen. Pete V. Domenici, R-N.M., the senior Republican on the Senate Budget Committee who has opposed the Gramm-Rudman revisions.

″Frankly, I think he’s going to sign it ultimately on the basis of the year-and-a-half debt limit,″ he said.

The bill would increase the debt limit to $2.8 trillion, the largest single increase in the statutory debt in history, up from the current limit is $2.111 trillion. The administration requested that increase to carry the Treasury’s borrowing needs until May 1989, past the end of Reagan’s term.

A temporary debt bill expired at 12:01 a.m. Thursday, forcing the Treasury to begin using up its cash reserves. If government borrowing isn’t resumed by Oct. 1, the Treasury could default for the first time in its history, which would be an international financial calamity.

The Gramm-Rudman amendment would restore the threat of automatic spending cuts for the first time since the Supreme Court last year stripped that feature out of the original version.

Reagan supported the original bill, which passed when Republicans controlled the Senate. Democrats now control both houses of Congress.

The original Gramm-Rudman was more ambitious than the newer version, envisioning a balanced budget by fiscal 1991 - two years earlier.

It envisioned a budget deficit of just $108 billion in fiscal 1988, which begins Oct. 1, compared to $144 billion in the new schedule. Without the threat of the automatic cuts, Congress and the White House failed to even propose ways of making the more rigid timetable.

The original law’s cutback scheme was ruled unconstitutional because an officer of Congress, the comptroller general, ordered the reductions. The Supreme Court said that violated the separation of powers doctrine.

The new version would let the president’s budget director order the cuts, but its guidelines strictly limit White House discretion in that task. Lawmakers have expressed confidence that the new version can be found constitutional.

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