Breaking the Budget Logjam

By WALTER ISAACSON

By a whisker, the House okays a G.O.P. plan for spending cuts

When the crucial vote was over, the House chamber broke into weary applause. Not great cheers, because few members were truly enthusiastic about the fiscal 1983 budget that lad finally been adopted. But Republicans were pleased that they had fulfilled President Reagan's plan to cut deeply into domestic spending while allowing for a defense buildup and a reduction in federal taxes. And many Democrats joined in the ovation, out of relief that the lingering issue had at last been resolved. The final tally: 219 to 206.

Proposed by Republican Delbert Latta of Ohio, with the backing of the White House, the plan was the tenth budget that the House had considered in the past three weeks. It was very likely the last real alternative to having no budget at all. This fear of total failure--and of continued castigation by Reagan as the cause of all economic woes--was the key to the congressional vote. "The members perceived that this could be it," said Mississippi Republican Trent Lott. "There was a feeling that we had to pass a budget today." Added Liberal Democrat James Shannon of Massachusetts: "We were more scared of looking like we were in disarray than anything else."

House Speaker Tip O'Neill and Budget Committee Chairman Jim Jones fought hard for a Democratic alternative that contained more money for social programs and less for the military. When that plan failed on a vote of 225 to 202, the Democratic leadership did not try to line up opposition to the Republican plan. The Republican proposal, which calls for spending of $765.2 billion and a deficit of $99.3 billion, was finally passed with the help of 63 Democrats. Explained Democrat Cecil Heftel of Hawaii: "Not because it was a good budget or a fair budget or an accurate budget. But because it was the only budget."

The Democrats, including most of the conservatives known as "boll weevils," were needed to offset the defection of 32 Republicans. These included a new conservative bloc of Republicans called the "yellow jackets," who supported the Latta plan on a key procedural tally but voted against final passage of the budget out of protest against high deficits, and a moderate G.O.P. group known as "gypsy moths," who objected to the cuts in domestic spending. One top White House aide, flying back from Europe with the President, joked: "What the whole congressional process needs is a good dose of insecticide."

Excoriated by liberals for being unduly harsh on the poor, the Latta budget appropriates $473.7 billion for domestic programs, which is $8 billion less than in Reagan's 1982 budget and almost $20 billion less than in Jimmy Carter's 1981 budget. For fiscal 1983, which starts in October, the plan cuts funds for food stamps by $1.4 billion, to $11.4 billion.

Nevertheless, as with some other large spending programs, the cuts in the food stamps simply slow the rate of growth for that program, which cost $5.8 billion in 1979 (or $8 billion, allowing for inflation). The House Republicans authorized $214 billion for defense, which is $26 billion more than this year's allocation but $7 billion less than the President had sought, and pledged to raise $21 billion in unspecified new tax revenue in order to keep their projected 1983 deficit below $100 billion. (The Congressional Budget Office estimated last week that the Latta deficit would actually be $109.8 billion, a figure the Republicans assiduously ignored.)

Lingering discontent about the Latta budget means that Republicans still have a lot more work to do to make their spending plan stick. The House resolution now goes to a conference committee that will try to work out a compromise with a budget passed by the Senate last month that provides for $19 billion more in spending. Then comes the hardest part: the "reconciliation" process, in which various congressional committees must make their 1983 spending and tax legislation conform with the budget guidelines. In an election year, there will be a temptation to fund politically popular programs and vote against tax measures, even if it means busting the budget plan. Says Heftel: "We're dealing with an illusory budget that is a political document."

Reagan was nonetheless elated by the Republican success. From Bonn, he placed a phone call to G.O.P. Leader Robert Michel on Capitol Hill. "We pulled it off!" exulted Michel. "That's terrific," replied the President. Said Michel afterward: "At least we have really made a start." Indeed, simply by showing that it could agree in principle on a spending plan, Congress gave a jolt of confidence to the jittery U.S. economy. The Dow Jones industrial aver age shot up more than eleven points the day after the House budget passed. The long-term reaction of business leaders and financial markets remained unclear. Un less they become convinced that the Government's monetary and fiscal policies are under control, interest rates are likely to remain high, threatening any recovery from recession. -- Walter Isaacson.

Reported by Neil MacNeil and Evan Thomas/Washington

With reporting by Neil MacNeil, Evan Thomas

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