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Meets Gramm-Rudman Deadline to Avoid Painful Vote : Senate Backs 'Gimmick' Deficit Cut Plan

September 20, 1986|BOB SECTER | Times Staff Writer

WASHINGTON — The Senate wriggled around a self-imposed deadline for slashing fiscal 1987 deficits as it passed a $13.3-billion reduction package early today that even supporters said was concocted largely through budgetary sleight of hand.

Pressed to comply with ground rules set out in the Gramm-Rudman budget-balancing law, the Republican-controlled chamber voted 88 to 7 for a plan that relied heavily on highly speculative gimmicks such as asset sales and a new crackdown on tax cheats to raise revenue and reduce red ink.

Election Day Looms

Under the Gramm-Rudman law, senators would have been forced to engage in a politically volatile vote--less than two months before Election Day--on a package of harsh across-the-board spending cuts affecting a wide range of military and civilian programs if they had failed to approve an alternative schedule of cuts by midnight Friday.

"I'm not going to say I'm proud of the product, but, all things considered, it's as good as we can do," said Pete V. Domenici (R-N. M.), chairman of the Senate Budget Committee.

But many other lawmakers expressed unhappiness with the Senate action. Sen. William L. Armstrong (R-Colo.) dismissed the plan as a "travesty" and "a package of golden gimmicks, a package of smoke and mirrors." However, he announced his intention to vote for it.

One opponent, Ohio Democrat Howard M. Metzenbaum, suggested that Armstrong's assessment had been too generous. "It's so much smoke you can't even see the mirrors," Metzenbaum sniped.

Across-the-Board Cuts

The complex Gramm-Rudman law requires Congress to devise a plan to bring the projected deficit for fiscal 1987, which begins Oct. 1, down to $154 billion. Failing that, lawmakers then must approve or reject enough across-the-board cuts to slash the deficit even further, to $144 billion.

The law required Senate action by midnight Friday but gives the House more time to consider alternatives. House leaders have crafted a $15-billion deficit-cutting program and have scheduled a vote on it for next week.

Federal economists have pegged the projected deficit for fiscal 1986 at between $225 billion and $230 billion but estimated recently that red ink in 1987 would drop to about $164 billion--still $10 billion above the first Gramm-Rudman target and enough to force a vote on the sweeping cuts.

Opposition to Tax Hikes

Democrats have complained that President Reagan has aggravated the deficit problem by resisting tax increases or military spending cuts. Facing certain Administration resistance, Senate negotiators dropped a plan to raise revenue by increasing cigarette taxes and turned down suggestions to impose an oil import fee or increase gasoline taxes.

Critics of the Senate plan said it was a stopgap approach that could actually aggravate attempts to reach the $108-billion deficit goal set by Gramm-Rudman for fiscal 1988. For example, the plan calls for the sale of federally held loan assets to raise $4.8 billion in revenue. But the Treasury will lose future income from the repayment of those loans if it sells off part of its portfolio.

In addition, the plan contemplates a $2.1-billion windfall from the sale of Conrail, as well as $3.7 billion from a tightening of federal tax laws to catch more cheaters.

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