'90 deal on budget imperiled Capitol Hill move may free money for economic package

January 22, 1992|By Gilbert A. Lewthwaite | Gilbert A. Lewthwaite,Washington Bureau of The Sun

WASHINGTON -- Congress is preparing to demolish the "fire wall" erected by the 1990 budget agreement between defense and domestic spending to enable this year's "peace dividend" to be used as part of an emergency economic growth package.

In the House, the Democratic leadership has asked the Government Operations Committee to move on what one aide called a "tear-down-the-walls" bill early next month, following President Bush's State of the Union and budget messages Jan. 28 and Jan. 29.

In the Senate, aides to Budget Committee Chairman Jim Sasser, D-Tenn., were busy yesterday drafting similar legislation.

And Sen. Robert C. Byrd, D-W.Va., chairman of the Appropriations Committee, joined the clamor for removal of the wall between defense and domestic spending, saying, "That wall has outlived its usefulness and, like the Berlin Wall, must come down.

"I hope that the Congress can work with the administration to alter the agreement in a controlled fashion which reflects our altered priorities."

President Bush said in a recent interview with David Frost that "there may be room for some maneuvering" within the 1990 agreement that sets defense, domestic and international spending caps and prevents the transfer of funds among the three categories.

Mr. Bush said Defense Secretary Dick Cheney was exploring additional cuts in the defense budget of about $50 billion.

White House spokesman Marlin Fitzwater said last week that the president's budget plan for fiscal 1993 would reflect "a shift of resources from defense to civilian needs."

A direct shift would breach the wall unless the agreement was amended, but officials at the White House and the Office of Management and Budget refused yesterday to confirm the administration's interest in modifying the pact, which Mr. Bush has lauded frequently as a major restraint on congressional spending.

The officials said President Bush will use his State of the Union and budget messages next week to explain how he proposes to finance his growth package.

The House legislation to amend the budget agreement was introduced last year by John Conyers Jr., D-Mich, chairman of the Government Operations Committee, which has jurisdiction over budget reforms. Republicans on the committee stalled the bill, waiting for a signal from the White House, but the Democratic leadership has decided to try to push it through Congress.

"When you have the president coming out basically inclined to do the same thing, and you have the Democratic leadership, you have the makings of what would appear to be a consensus," said Jeff Biggs, press secretary to House Speaker Thomas S. Foley, D-Wash.

A Democratic member of the Government Operations Committee staff said, "Nobody can do anything unless you move money from defense to other sections. There is no peace dividend unless we pass this bill. It's tear down the walls."

Changes in the 1990 agreement are likely to be limited to removing the wall that separates defense and domestic spending and will not affect the ceilings on overall spending.

The agreement also sets a goal of reducing the budget deficit $50 billion by fiscal 1995. To curb deficit spending, it separates taxes and entitlements from appropriations, mandating that any new spending program has to be self-financing or financed by savings in other programs.

The agreement is widely credited by politicians and economists with holding the deficit in check and reassuring the financial markets.

If it is amended, the next political confrontation will be over how to spend the newly available money resulting from defense cuts. The argument will center on whether the savings should be channeled into tax cuts to bolster consumer spending, used to finance a major public works program as an alternative means of kick-starting the stalled economy or earmarked for reducing the budget deficit.

A poll released yesterday showed a dramatic increase in the percentage of voters favoring defense cuts -- from 26 percent after the Persian Gulf war to 46 percent early last month. The poll, taken for the Campaign for New Priorities, a coalition of labor and women's groups, also showed a large number of voters wanted any defense savings spent on domestic programs. Thirty-two percent suggested spending on education, job creation and the environment, and 15 percent favored giving priority to housing and health care for the poor.

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