Gramm-Rudman Game of Chicken

By Evan Thomas.

It was as if two football captains, meeting to shake hands before the kickoff, tackled each other instead. Congressional leaders had come down to the White House last week to talk over the year ahead on Capitol Hill, when the two principal players, President Reagan and House Speaker Tip O'Neill, began sniping across the deep ideological divide between them. After the Republican President seemed to imply that some people were jobless simply because they were lazy, the Democratic Speaker exploded. He charged that Reagan's economic notions are a "bunch of baloney" that might "go over big at the country club" but not with the rest of the nation. As the two venerable Irishmen squared off, G.O.P. Senator Alan Simpson of Wyoming had to plead with them "to stop beating up on each other. It makes it difficult for the rest of us to get any work done."

The spat was a discouraging omen for a year on Capitol Hill that promises to be the fiscal equivalent of Apocalypse Now. Beginning this week, as the President delivers his delayed annual State of the Union address to Congress and submits his budget proposal for fiscal year 1987, the Government must face up to the full force of Gramm-Rudman, the automatic deficit-reduction measure enacted last year to balance the budget by 1991. Unless Congress and the White ^ House can fashion a budget that reduces the federal deficit (now estimated at more than $220 billion for fiscal 1986, which began last October) to $144 billion for fiscal 1987, the infernal machinery of Gramm-Rudman will grind into gear, indiscriminately slashing some domestic programs by as much as 25%. It is a prospect that calls for compromise, yet neither side is rushing to make the first move. Instead, the Hill and the White House seem locked in a long and drawn-out game of chicken.

The President's opening gambit shows no give at all. The budget that he touts in his address to Congress and releases publicly on Wednesday is essentially a reiteration of his standard line. As he has done ever since he took office in 1981, Reagan will insist that it is possible to slash the deficit, increase defense spending (next year by 3% after inflation), and still not raise taxes. Using rosy economic forecasts to lowball the deficit, the White House would lop off the $40 billion or so mandated by Gramm-Rudman by making brutal cuts in domestic spending. Some federal programs, such as the Small Business Administration and the Job Corps, would be wiped out altogether. Others, like Medicare and federal housing subsidies, would be sharply cut. To raise additional revenue, the Government would sell off large chunks of federal property, including Washington National Airport.

In his State of the Union address, the President will try to depict his budget plan as an exciting opportunity to liberate the forces of free enterprise from the shackles of Big Government. It is doubtful that many Congressmen will be moved. Already last week some legislators were pronouncing the Reagan budget "dead before arrival." Still, more realistic Hill leaders were aware that the President's budget cannot be dismissed out of hand, as it has been in the past. Congressional budget writers may differ on how to get there, but Gramm-Rudman requires that Congress and the White House arrive at the same bottom line. "They can't just declare the President's budget to be dead," says a White House aide. "They'll have to at least do a heart transplant."

The broad outlines of corrective surgery are clear enough. One element would be a tax increase, perhaps taking advantage of the drop in oil prices to impose an oil-import fee and gasoline tax. The rest of the savings would come from cuts spread more evenly across the board--including defense and even Social Security, which is exempt from the automatic reductions required by Gramm-Rudman.

Such a proposal contains deep political peril. Conventional Washington wisdom holds that it is impossible to raise taxes or cut Social Security unless the congressional leaders of both parties, as well as the President, are actively in support. What is more, there is little time to act. Under the rigid timetables set by Gramm-Rudman, Congress cannot afford, in its usual fashion, to dither all year long over the budget. If lawmakers fail to pass a budget, the automatic cuts will kick in on Oct. 1. Says Democratic Senator Don Riegle of Michigan: "Congress has never, ever, met a timetable as swift as this will be. It's like riding a bullet."

Some Hill leaders would like to junk the creaky and ponderous budget process and instead try to hammer out a grand compromise at a "summit" meeting between Hill leaders of both parties and the Administration. So far, however, Reagan has shown no willingness to come to the bargaining table. He seems to believe that if he stands fast, the Hill will eventually blink and adopt his budget. He figures that Congressmen will not want to go to the voters in November to explain why they raised taxes and jeopardized national security.

House Democratic leaders are equally wary of sitting down to a budget summit with the G.O.P. unless the White House clearly takes the lead. If there are to be big cuts in domestic programs, says an aide to Speaker O'Neill, "we want those cuts to carry a big sign saying 'Reagan did it.' "

Finger pointing is a traditional congressional substitute for legislative action. Even so, few Congressmen truly relish the prospect of a search for scapegoats. Most lawmakers know that if there is no sensible budget passed by September, there will be plenty of blame to distribute when the public begins to feel the bite of the Gramm-Rudman cuts just as voting day rolls around.

With reporting by Laurence I. Barrett and Barrett Seaman/Washington