Budget Deal

They said it couldn 't be done

The skeptics had concluded that the House and Senate were so far apart from each other and both so distant from President Reagan's desires that Congress would never be able to agree on spending and revenue goals for fiscal 1984. There were dire predictions that the entire congressional budget process would collapse. Yet last week, amid a lot of partisan rhetoric, both chambers reached agreement on an $859 billion budget resolution that the President was known to oppose.

The long struggle had begun last January, when Reagan presented a budget so in the red and so heavy on increased military spending that not a single Republican Senator was willing to introduce it. Reagan wanted a 10% hike in defense funds and virtually no tax increases until 1986, when, he proposed, some $50 billion in new revenue would be sought if the economy did not sharply improve. He insisted that there be no tampering with his 10% income tax rate cut, scheduled to go into effect this July 1.

What Congress at last agreed on was a resolution calling for a 5% jump in military funds, amounting to about $23 billion. It proposed as yet undefined tax increases of $73 billion over three years, beginning with $12 billion in 1984. The resolution increases domestic spending by $21.5 billion more than Reagan wants, but $8.5 billion of this is to be used only if Congress later decides that recession relief programs are needed. The result is that the congressional target deficit is roughly $10 billion less than Reagan's for 1984 and by 1986 would be some $40 billion less than the President's projections.

The compromise measure passed easily in the Democratic-controlled House but needed Republican support in the Senate. Among the 19 Republicans voting for it: Senate Majority Leader Howard Baker Jr. of Tennessee and Senate Budget Committee Chairman Pete Domenici of New Mexico. Meant as an incentive to congressional selfdiscipline, the resolution does not go to the White House for approval or veto. The stage is thus set for a bitter, lengthy clash between Capitol Hill and the White House over specific tax and spending bills.

The House also voted to put a cap of $720 on the amount any family would save as a consequence of the July 1 tax cut--a move that would raise $6 billion. It was passed by Democrats to dramatize their claim that Reagan's tax policies favor the rich and penalize the poor. No matter, the cap has little chance to pass the Senate, and even if it did, it would be vetoed by Reagan, a veto that Congress lacks the votes to override. The vain effort will provide the Democrats with a measure of campaign fodder. This file is automatically generated by a robot program, so viewer discretion is required.