Retreating on Defense

By GEORGE J. CHURCH

In January, Ronald Reagan called the idea "very risky." Three weeks ago, in a TV speech to the nation, he said it "would jeopardize our security." Early this month, he added the adjective "irresponsible." Even last week, when allies in Washington phoned White House aides in Lisbon, the last stop on Reagan's European tour, the President, in the doubtlessly understated words of one adviser, "wasn't thrilled about it."

But by then Reagan had no choice. If he still wanted sweeping cuts in civilian spending, he would have to swallow a budget resolution that included a provision for what he called "zero growth" for the military: no increase in Pen tagon outlays next year beyond what is necessary to keep up with infla tion. Nothing else could squeak through the Republican-controlled Senate--and even so, the vote scheduled on Thursday was going to be breathtakingly close. The President finally said yes, and Senate Majority Leader Robert Dole quickly spread the word. Secretary of Defense Caspar Weinberger, who had turned Reagan against accepting deep cuts in military spending many times before, phoned Lisbon to protest. Stories differed as to whether he got through to Reagan directly; in any case, he was too late. The President got on the transatlantic phone, according to some accounts, to call wavering Senators and urge them to accept the deal he had so long resisted.

He prevailed--but barely. Needing every vote, Republican leaders summoned California Senator Pete Wilson from Bethesda Naval Hospital, where he was recuperating from surgery to remove a ruptured appendix. Wilson arrived in an ambulance as the roll call was in progress at 1:30 a.m. Friday; hospital aides trundled him onto the Senate floor in a wheelchair, a needle and intravenous tube still inserted in his arm. Senators gave Wilson a standing ovation, which he turned to laughter by asking deadpan, "What is the question?" He voted yes on the budget resolution, but Hawaii Democrat Spark Matsunaga rushed in from his Senate office to vote no, and the tally was deadlocked at 49-49. Vice President George Bush was in the chair, however; he had cut short a Western speechmaking tour and rushed back from Phoenix Thursday morning. Bush cast the tie-breaking vote.

Majority Leader Dole uncorked some champagne bottles in his office at 4 a.m. to celebrate, and took a call from Reagan in Lisbon, where it was 10 a.m. "We know you're a little disappointed on defense," Dole told the President, "but we may have some adjustment later on." Senate Budget Committee Chairman Pete Domenici took the phone to promise Reagan that the final figure on military spending, after all congressional budget action is completed, would be "no lower than this number or we just won't have a budget."

Reagan chose to treat the Senate vote as a triumph. Coming home from Europe Friday afternoon, he stepped off a Marine helicopter onto the South Lawn of the White House and exclaimed to a welcoming crowd of more than 100 Government employees, salted with luminaries like Treasury Secretary James Baker: "How sweet it is to return to a 50-49 Senate victory for spending restraint and no tax increase!" He insisted that if zero real growth in military spending is inadequate to protect the national security, "I will not hesitate to request, and the Senate leaders have assured me that they will consider, supplemental funding." Said Reagan: "This was the only serious deficit-reduction package that could pass the Senate."

White House aides contended that the budget resolution, military spending aside, gave Reagan most of what he wanted. Dole estimated it would reduce outlays by $56 billion below the totals foreseen earlier for fiscal 1986, which starts Oct. 1, and by $295 billion over three years. Both figures are a bit higher than Reagan had requested in his February budget. If all projections prove out, the deficit would shrink from an anticipated $213 billion in the current fiscal year to less than $100 billion by fiscal 1988.

But the composition of the cuts is not quite what Reagan had suggested. The President accepted a one-year freeze on Social Security benefits, which otherwise would go up 4% within the next year as an adjustment for inflation. That exposed him to bitter charges that he was violating a 1984 campaign pledge never to approve any cut in benefits. The President rather lamely replied at his farewell-to-Europe press conference in Lisbon that he had never intended to guarantee increases, but merely to protect the aged against reductions.

The budget resolution abolishes 13 federal civilian programs, as Reagan had asked. But it keeps in existence at reduced funding levels several other programs and agencies that Reagan wanted to eliminate. It also reduces spending less than the President recommended for such major programs as Medicare and farm subsidies.

In essence, the Senate took money for social programs from the military. The $302.5 billion in Pentagon spending authority (the right to sign contracts) that the Senate approved for fiscal 1986 is a bit more than $20 billion below Reagan's initial request in February, and $10.3 billion less than a compromise figure the President grudgingly approved five weeks ago. The resolution would allow the military budget to rise 3% in excess of the expected rate of inflation in each of the following two years; Reagan initially wanted increases of 8.2% and 8.8%.

Weinberger did not hide his chagrin. "Nobody wanted to make these cuts," he said. "The President didn't, and I certainly didn't." Though the Pentagon does not yet know what it will do without, the vote seems sure to slow the U.S. military buildup that was one of Reagan's proudest accomplishments throughout his first term (see box).

The immediate concern of the Pentagon and the White House will be to keep the Democratic-controlled House from reducing the military budget increase even below the rate of inflation (estimated by the Senate at 3.4% for the Pentagon in the next fiscal year). House Budget Committee Chairman William Gray complained that "still, under the Senate proposal, the Pentagon would receive an increase for inflation while domestic programs would be frozen or cut." Gray pledged a "more equitable" House resolution. His opposite number in the Senate, Domenici, replied that rather than agree to any further military cuts he would boycott an eventual House-Senate conference and leave Congress with no budget resolution at all.

However this fight comes out, it was obvious early on to almost everyone except Reagan and Weinberger that even the Republican-controlled Senate would not pass any significant increase in military spending this year. The politics were simple: Senate Republicans figured they had to do something to cut the budget deficit before it did real damage to the already slowing U.S. economy. But the cuts in civilian spending that Reagan demanded were bitterly unpopular with many of their constituents. To mollify them, the Republicans felt they had to make the Pentagon share in the sacrifice. All those tales of military extravagance, of $400 hammers and $600 toilet seats, had taken a toll. A / feeling had grown too that after years of rapid increases in military spending under Reagan, U.S. fighting strength had been adequately rebuilt.

The public seems to agree. In a new poll for TIME by Yankelovich, Skelly & White Inc.,* respondents were asked what they thought was the gravest problem the nation faced. Some 23% volunteered the budget deficit as an answer, more than those identifying any other subject. What should be done to reduce the deficit? Cut spending, said 60%. What spending? Respondents put military outlays at the top of the hit list; 64% wanted them slashed.

Reagan long seemed oblivious to this feeling. His own popularity is still high; 61% of respondents in the Yankelovich poll judged him to be providing generally excellent leadership, about the same rating as over the past year and a half (the poll was taken in the middle of the uproar

over his visit to the German cemetery at Bitburg). The President originally proposed a military budget increase of 5.9% in excess of inflation; in April he came down grudgingly to 3%, but would not budge beyond that.

As the President left on his ten-day European swing and Senate voting began on parts of the budget package, Dole tried out varying combinations of spending cuts in about 100 meetings with shifting coalitions of Senators. But the voting lineup kept coming out the same. Faced with almost unanimous Democratic opposition, Dole needed every Republican vote. But ten to twelve Republicans adamantly refused to approve any military increase that would exceed the inflation rate.

By last week Dole knew he had to put a full budget resolution to a vote quickly; ballots on individual provisions would shred the package beyond recognition. He put the deal together with the help of White House Lobbyist Max Friedersdorf and Budget Director David Stockman, who spent nearly all his time during the final week in Dole's three-room office suite. They put through a series of calls to Reagan's traveling party in Lisbon--White House Chief of Staff Donald Regan took most of them--informing the President's aides what was happening.

Weinberger's role in the end-game maneuvering seems to have been peripheral. The Secretary of Defense visited Dole's office at midweek to make a final, unavailing plea for a 3% military budget increase in excess of inflation. His final call or calls to Lisbon got no different result, and he left Washington for his summer home in Northeast Harbor, Me., before the Senate vote. White ) House aides say he did not speak directly with the President as the decision was being made. Weinberger took strong exception to those suggestions. "I had no problem reaching him," he said. "One way or another, we are always able to talk."

By Wednesday afternoon Stockman transmitted the numbers to Lisbon by electronic facsimile, and Dole, Domenici and Friedersdorf placed a this-or- nothing conference call to Regan. The chief of staff took the news to Reagan as he was dressing for dinner with the President of Portugal. "Is this the best deal we can get?" asked Reagan. His chief of staff replied that it was. Regan phoned Dole Thursday morning with the President's acceptance, and the last roundup of votes began. Four Republicans who could not accept the civilian spending reductions voted against the budget resolution. Dole won over only one Democrat, Edward Zorinsky of Nebraska. But his vote and Bush's proved decisive.

White House aides insisted that Reagan had known all along he would have to give on military spending and had been following his often repeated theory of effective bargaining: ask for more than you can get and offer not even the slightest hint of concession until absolutely sure you have obtained the maximum. As the President himself put it to reporters in Lisbon, "I've always kind of believed in leaving a cushion there for dealing." Reagan's advisers observed, too, that the civilian spending cuts in the budget resolution further Reagan's objective of reducing the size and power of the Federal Government, an overriding goal. While all that is true, the definition of what constitutes the best deal that Reagan can get has clearly changed.

FOOTNOTE: *The pollster interviewed 1,000 registered voters between April 30 and May 2. The potential sampling error is plus or minus 3%. When compared with the results of previous polls, the potential sampling error is plus or minus 4.5%.

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With reporting by Sam Allis and Alessandra Stanley/Washington