YOU ARE HERE: LAT HomeCollections

2 Bills to Trim Billions From Deficit Signed

December 23, 1987|KAREN TUMULTY | Times Staff Writer

WASHINGTON — President Reagan signed two giant deficit-reduction bills Tuesday as the first session of the 100th Congress came to a close.

The two controversial bills, one of which was passed by only a one-vote margin in the House,carry out a plan to cut the deficit by $33 billion this year and $76 billion over two years.

Also approved as Congress met into the early morning hoursTuesday was the first major housing legislation in six years, a two-year, $30.2-billion measure.

The housing provision would make permanent the Federal Housing Administration home mortgage insurance program. It would permit public housing tenants to organize and manage the buildings in which they live and give them the option of buying their homes.

It also would encourage home ownership in distressed neighborhoods by providing grants of as much as $15,000 to low- and moderate-income families for the purchase of new or rehabilitated homes. The grant program would be limited to $25 million in fiscal 1988 and $100 million in fiscal 1989. Also included is a provision that would increase from $90,000 to $101,250 on single homes the amount that the FHA can provide in mortgage insurance.

Data on Credit Rates

In addition, the Senate passed a bill that requires issuers of credit cards to give potential customers more extensive information about what those cards will cost. Similar legislation already has passed the House, which means that a final version is likely to be sent to President Reagan next year.

The measure includes $140.5 million for Los Angeles' Metro Rail subway project, the largest single-year appropriation for the $3.8-billion system. About $95 million will help pay for the construction under way on the first downtown leg, with the remainder earmarked for a second segment extending to Hollywood.

The legislation also funds a $1.5-million RTD study of how to extend Metro Rail west as far as Westwood and provides $150,000 for a study of a possible extension eastward from downtown's Union Station to serve Boyle Heights.

As expected, it cuts back by about 5% federal bus-operating aid to the Southern California Rapid Transit District and other systems. The RTD, projecting more than a $30-million budget deficit next year in part because of reduced federal aid, has been considering spending cuts and fare hikes.

Stock Market Crash

The deficit-reduction legislation was Washington's response to the Oct. 19 stock market crash, which was blamed in part on a federal budget shortfall projected to reach almost $180 billion this year.

Its two installments are a $600-billion spending bill, which cuts projected spending on most federal programs by $7.6 billion, and legislation that raises $9 billion in new taxes, orders the sale of federal assets, reduces spending on government benefits programs such as Medicare and takes other deficit-reduction steps.

Reagan said the legislation will "place our country on the right course toward reducing the federal budget deficit and continuing the longest peacetime expansion in history." Senate Budget Committee Chairman Lawton Chiles (D-Fla.) hailed it as "a major victory for the American people and the nation's economy."

Little Enthusiasm

However, most in Congress greeted it with little enthusiasm. Most Republicans objected to the fact that Reagan had capitulated on his pledge not to raise taxes. Many Democrats complained that it was too harsh on domestic programs.

Moreover, a large measure of its savings are one-time windfalls rather than long-range changes in the patterns of spending and taxation that have allowed the deficit to balloon.

Underscoring that ambivalence, the House passed the spending measure by the narrowest of margins: 209 to 208. The Senate passed it 59 to 30.

The spending bill, which was several thousand pages thick, also funds most government agencies through next September and contains provisions that range from funding for the Nicaraguan rebels to a smoking ban on airline flights of two hours or less.

The tax legislation passed the House 237 to 181 and the Senate 61 to 28. Most of its new levies will fall upon corporations and wealthy individuals. The tax that will be felt by most Americans is an extension of the 3% telephone excise tax that had been scheduled to expire.

Staff writer Rich Connell contributed to this story.

Los Angeles Times Articles