Holding the Line

Reagan vetoes a spending bill

During the congressional battle on raising taxes, Ronald Reagan emphasized that he was still committed to cutting federal spending. Any appropriation bill that threatened to spill over the budget limits previously agreed to by Congress, he said, would be vetoed. His first test came last week: a $14.2 billion supplemental spending bill that provides additional money for fiscal 1982 programs. That amount was both too much and too little to satisfy Reagan, who felt that it shortchanged defense in favor of added domestic outlays. "So even though it means delay in getting legislation," the President announced in a Saturday radio broadcast, "I have vetoed that supplemental appropriations bill."

The veto decision was not easy. The bill contained two key spending elements that the Administration sorely wanted: funds to meet the military payroll through the end of the current fiscal year and $350 million for the Caribbean Basin Initiative (C.B.I.) aid package to Latin America and the Caribbean area. In hopes of persuading Congress to revise the package, Reagan and Budget Director David Stockman had sent strong signals to Capitol Hill that the measure as written would probably be vetoed. But many legislators calculated that when the bill reached him at his California ranch, the President would reluctantly sign it, if only to obtain the C.B.I. and military funds. "Congress thought they had us hostage," said one top White House aide, "but they were wrong."

One immediate consequence of the veto is that funding for military personnel runs out on Aug. 31. "It would be unfortunate in the extreme not to be able to pay the Marines we just sent to Beirut," deadpanned a senior presidential aide. In fact, however, the payroll will be met by a clever but controversial juggling of the books that will postpone the Pentagon's payment of income withholding and Social Security taxes. The White House hopes that when Congress reconvenes, it will pass a revised bill authorizing the requested funds for the military and for Caribbean aid.

That may not happen so easily. One staunch supporter of the spending bill was Republican Senator Mark Hatfield of Oregon, chairman of the Appropriations Committee. He threatened to work assiduously against any future defense increases if the President vetoes the legislation. If new defense appropriation measures are blocked in the Senate, the military will probably be forced to operate under makeshift "continuing resolutions" that will simply extend funding at current levels. These are roughly $500 million less per month than Reagan wants. Hatfield also pledged to work against reauthorizing spending for the C.B.I, if the bill is vetoed. These bleak prospects prompted Defense Secretary Caspar Weinberger and Secretary of State George Shultz to urge the President to sign the appropriations bill.

Because leaders in both parties on Capitol Hill urged the President to accept the spending plan, Congress is likely to be in a foul mood. "I don't think anything is to be gained by vetoing this one," said Senate Republican Whip Ted Stevens of Alaska before Reagan's action. "The President is being advised on the basis of confrontational politics with the Congress." Democratic leaders viewed the measure as part of an implied compromise for bipartisan support on the tax bill passed two weeks ago. Killing the bill would be "very ungracious," said House Majority Leader James Wright of Texas. Admits a presidential aide: "Strong attitudes in Congress have made this decision difficult."

Indeed, the spending plan, which passed the Senate by voice vote and the House by 348 to 67, could conceivably survive the veto. Even before the President acted, Stevens had claimed: "A veto would be overridden by the Senate. I'm confident of that."

Although the President's veto is justified as a money-saving action, the bill actually spends less than the Administration had requested. What the White House really objects to is the way the money is distributed: $918 million more than it wants for such programs as student loans, highway construction and senior citizens' services; $2.3 billion less for a variety of defense programs. But the veto, aides say, is intended to send a strong signal to the financial markets that the President plans to hang tough on domestic spending. It also serves a political purpose. Says one aide: "It is a good issue for us. It keeps our right wing happy, and there is still a lot of support out there for containing Government spending."

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