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Federal Pension Hikes Lost as Cutting of Deficit Begins

January 07, 1986|KAREN TUMULTY and TOM REDBURN | Times Staff Writers

WASHINGTON — The earliest effects of a new balanced-budget law were beginning to be felt Monday, even as those seeking to block the measure filed a complicated legal brief explaining why they believe the law is unconstitutional.

Federal retirees began receiving checks, mailed last week, that do not include the 3% cost-of-living increase that they had expected.

Thus, with little public fanfare, the government has imposed the first of what are scheduled to be a series of drastic budget cuts aimed at chopping the federal deficit to zero by 1991. If Congress does not pass budgets that meet a series of declining deficit ceilings, the law would impose automatic cuts on most defense and domestic spending programs.

This year's budget already is in effect, but it is virtually certain that the law will require $11.7 billion in spending cuts during fiscal 1986. On Oct. 1, it is expected to require a dramatic $50-billion reduction in the fiscal 1987 budget.

Under the deficit-cutting law, the government will save $1.4 billion this year by denying federal pensioners, military retirees and black-lung benefits recipients the inflation adjustments that they have come to expect at the beginning of each year.

However, the largest government-sponsored retirement program--Social Security--will remain untouched by the landmark law, known as the Gramm-Rudman Act for its sponsors, Republican Sens. Phil Gramm of Texas and Warren B. Rudman of New Hampshire. Railroad retirees also will be spared the brunt of the cuts, because their scheduled benefit increases are paid under a separate program from other federal retirement plans.

The full extent of this year's cuts--an additional $10.3 billion in a wide range of federal programs--will not be felt until March 1 under the law.

Opponents, led by Rep. Mike Synar (D-Okla.) and 11 other congressmen challenging the law's constitutionality, continued Monday to gear up for a fight in U.S. District Court that they hope will kill the measure. A three-judge panel is scheduled to hear arguments in the case Friday.

Represented by Nader

Synar, represented by consumer activist Ralph Nader's Public Citizen Litigation Group, argued in a complicated legal brief that the measure would unlawfully give to unelected officials--the government workers who would determine the size of the automatic cuts--power intended under the Constitution to be wielded by Congress or the President.

"Under our system, we elect members of Congress to decide the key questions of how our government is run," said Alan B. Morrison, an attorney for Synar.

Monday's brief follows one presented last week by the Justice Department, which argued that it is unconstitutional to bind the President to implement spending cuts based on deficit figures provided by the comptroller general of the General Accounting Office, an arm of Congress. Synar's attorneys raised a similar objection, although they focused their criticism on the similar role envisioned for the Congressional Budget Office.

The brief contended also that the law is unconstitutional because it does not allow the courts to review the spending cut decisions made by the various agencies.

However, the Justice Department has argued that the court should throw out Synar's suit on a complex technicality when it hears arguments Friday. Thus, the department is in the curious position of asking the court to uphold the Gramm-Rudman legislation on technical grounds while acknowledging the merits of the substantive case against the law.

Morrison acknowledged that the passage of the revolutionary law reflects the White House's and Congress' inability in recent years to take the politically dangerous steps required to reduce the deficit. But he insisted that throwing out the law would force them to face up to difficult choices.

"The message that will go out if we win this case will be that the day of the gimmick is over," he said. "I would hope that people would get the message that shortcuts are not the way to solve hard problems."

Plan Off to Creaky Start

Despite the court challenge, the untested machinery designed to enforce the budget cuts got off to a creaky start over the weekend, as officials of the Congressional Budget Office, the Office of Management and Budget and the General Accounting Office raced to meet a Jan. 20 deadline for submitting to the White House a detailed outline of budget cuts proposed for hundreds of federal programs and agencies.

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