Brawling over the Budget

On Capitol Hill, politics and deficits make strange bedfellows

The squabbles were ostensibly over the fiscal 1984 budget. But behind last week's skirmishes on Capitol Hill, Democrats and Republicans were in fact scurrying to stake out the political high ground for 1984.

House Speaker Tip O'Neill made the first move. He proposed, "on the grounds of fairness," a $700 ceiling on individual savings from the final 10% installment (taking effect July 1) of President Reagan's threeyear, 25% tax cut. Such a "tax cap" would generate only about $6 billion in federal revenue savings. But the Democrats had more in mind than painting themselves as deficit fighters. "It is time that the burden of Reaganomics is shared by those in the upper-income groups," O'Neill declared. "This has been a program of the rich, by the rich and for the rich." Retorted Reagan: "I'll give him my autograph on the veto bill."

In fact, the cap would also affect people who consider themselves middle-income: single taxpayers with annual adjusted gross incomes over $39,000 and families with adjusted gross incomes over $48,000. The truly wealthy already got their bonanza a year ago, when the top rate on unearned income from investments was slashed from 70% to 50%. "If the Democrats succeed," said Marlin Fitzwater, a Treasury Department spokesman, "the real impact would be on the Middle American, because the rich and the poor already have their tax cuts."

Many House Democrats, however, are gambling that the fairness question will play well by 1984 when, they assume, the economic recovery will have slowed. "Reagan will call us taxers and spenders," admitted Missouri's Dick Gephardt. "But it's worth it to address the fairness issue and the deficit problem."

The outlook for a budget resolution was cloudy. "The odds," said Senate Majority Leader Howard H. Baker Jr., "are no better than fifty-fifty." Both the $863.6 billion House version and the $849.7 billion Senate version contain more tax increases and domestic spending, and less defense, than Reagan requested in his Jan. 31 budget message. Reagan cannot veto a budget resolution. But he can veto individual appropriations measures, and he promises to do so if they substantially exceed his own spending guidelines.

The biggest hurdle for congressional budgetmakers is domestic spending hikes, which the Senate set at $12.5 billion and the House at $28.9 billion; Reagan requested a $6.4 billion reduction. House Democrats privately concede that they are willing to pare back if the Republicans promise to help pass a compromise budget on the House floor.

But the chances of Republican cooperation in the House are growing dimmer. Last week Congressman Phil Gramm of Texas, a recent convert to the G.O.P., persuaded more than 120 of his colleagues to sign a pledge committing them to uphold Reagan's vetoes. The total is within striking distance of the 146 needed to turn back Democratic override attempts. Reagan's veto strategy does not sit well with all Republicans, however. Oregon Senator Mark Hatfield, chairman of the Senate Appropriations Committee, has in the past held up appropriations measures threatened with a Reagan veto by delaying final action in committee, so that the hostage bills never reach the Senate floor. Should he do so again, the stage would be set for a reprise of last fall's rancorous political battles over a continuing budget resolution to keep the Government funded. This file is automatically generated by a robot program, so viewer discretion is required.