Numbers That Add Up to Trouble

The notion that the Gramm-Rudman Amendment, without modifications or a tax increase, can magically make the deficit disappear collapses as soon as one studies the numbers involved. With annual spending now at almost $1 trillion, the act's purpose is to reduce to zero an annual deficit currently running at some $200 billion. Yet about 70% of this year's budget, and at least half in future years, could be protected from automatic cuts. That means the increasingly painful slashes will have to come from just part of the pie, and more than half of that portion goes to the military. The ax would thus fall mightily on many unprotected programs citizens have come to expect from Government: the National Park Service, student loans, Amtrak, air-traffic controllers, federal prisons, the FBI, border patrols, medical research, farm supports, transit aid, Coast Guard missions and countless other programs. In addition, the new legislation will hinder recent federal efforts to catch spies, improve security at U.S. embassies, curb the flow of drugs and fly sorties with the space shuttle. Even then, critics argue, military manpower and weapons purchases would have to be sharply curtailed if the plan is left to work as advertised.

By next October, just before the elections, Congress is supposed to produce a fiscal 1987 budget that cuts the deficit to $144 billion. A year later it must be reduced to $108 billion, then drop over the next three years in stages to zero.

Cuts of that magnitude will drastically alter the role of Government in a way that goes well beyond what Americans have come to expect. A foretaste came last week when Budget Director James Miller produced a hit list of programs to be slashed next year. On it were items that the Administration has long thought cuttable. Among them: the Job Corps, the Small Business Administration, rural housing loans and the Economic Development Administration. Estimated savings: far less than what might be necessary for fiscal 1987 alone.

To those cuts, Miller added some zingers of his own: elimination of funding to aid highway safety; deep, possibly fatal reductions in the Public Health Service's organ-transplant network; and the end of many child abuse-prevention grants. He would also eliminate Amtrak subsidies, rejected by Congress this year because it would effectively end long-haul passenger trains.

The Gramm-Rudman plan requires that 50% of the automatic cuts come from defense. For the current fiscal year, Pentagon planners will be allowed to find their own way of apportioning the approximately $6 billion required. Although that would entail for the first time since 1979 a reduction in military spending after inflation, it could probably be accomplished thanks to "shock absorber" clauses that apply only for the current fiscal year. In future years, cuts in military spending of 10% or more may have to be made, with little Pentagon discretion about where the ax will fall.

Because of lead times in defense work, the President might have to cancel or postpone as much as $36 billion in weapons contracts to achieve an immediate saving of $10 billion in any fiscal year. For a program like Reagan's Strategic Defense Initiative, where budget tightening has already slowed work on some technologies, Gramm-Rudman could conceivably achieve by legislative fiat what the Soviets failed to do in Geneva: halt any real progress on the program. But Pentagon analysts fear the greatest cuts would come from reducing vital manpower levels and such operating funds as those for food and fuel.

The legislation sets up a timetable for the crises it will create. As each year's budget makes its way through Congress, the Office of Management and Budget and the Congressional Budget Office are required to estimate the size of the deficit for the General Accounting Office. The GAO in turn tells the President, who by September must issue an order that cuts spending across the board to reach the required levels. That is the theory. In reality, however, if the cuts are as drastic as the plan now portends, it merely sets up another series of showdowns between an Administration and a Congress reluctant to make painful cuts and eager to avoid any blame.

CHART: Text Not Available