Deficit, Slump, Soviet Decline Help Push Democrats to Weigh Budget Pact Changes
WASHINGTON - House Democrats began debating in private caucuses yesterday whether to press for a new budget blueprint that would respond to changing world priorities and cut the escalating U.S. deficit by $1 trillion by the year 2000.
Such a deal would raise taxes, dramatically reduce defense spending, trim some entitlement programs, and shift some money into favored domestic programs, Democratic congressmen said after the closed-door meetings.
A proposal, if approved by Democratic leaders and the House Democratic caucus, could surface this fall, the lawmakers said.
The factors not anticipated by negotiators of last fall's budget agreement include the prolonged economic slowdown, the Persian Gulf war, and the breakup of the Soviet Union.
The White House does not seem likely to go along with revision. Richard Darman, director of the Office of Management and Budget, has stressed that the administration would not under any circumstances agree to reopen the agreement just before next year's presidential election.
"An election year is not a context in which you get the best public policy" on the budget, Mr. Darman said after a Senate hearing last week. "Even if it were appropriate, on the merits, to renegotiate the agreement," he said, any improvement that could be made in the deficit next year - which is expected to reach over $350 billion - would be only "marginal."
Regardless of whether the budget agreement is redrawn next year, House members said there is a growing possibility that they will have to vote on raising the $4.145 trillion national debt limit just before the election.
Budget negotiators had attempted to avoid that by including an unprecedented, $915 billion increase in the debt limit in the agreement. But analysts now warn that - depending on how much the deficit swells as a result of the current economic slowdown - the Treasury Department could run into the limit by November 1992, and almost certainly by December 1992.
Yesterday's caucus debate about initiating a new budget deal is only the latest such move by the Democrats. Two of their presidential candidates - Sen. Tom Harkin, D-Iowa, and Gov. L. Douglas Wilder of Virginia - have called for overhauling the budget agreement, and the Senate earlier this month passed a resolution saying Congress and the President should consider doing so.
Underlying the calls appears to be the Democrats' growing belief that defense spending is too high in light of the collapse of Soviet standing and the pressure for increased spending on education, unemployment, infrastructure, and other domestic areas, said Rep. James L. Oberstar, D-Minn.
Democrats want to shift money from defense, a move barred by the agreement's use of separate spending caps for defense, domestic, and international programs in fiscal 1993.
Some Democratic leaders pressing for revision also point to the spiraling deficit, which is expected to reach over 6% of the gross national product next year.
Democratic analysts are estimating that to bring the deficit down to between 1% and 2% of GNP by the end of the century, Congress will have to find another $1 trillion of savings from tax increases and spending cuts in defense, entitlements, and other areas.
In yesterday's caucuses, House Democrats debated cutting defense by another 10% to 25% beyond the current 25% defense reduction already required by 1995 under the agreement, members said. The most radical proposal would cut the defense budget from its current level of $291 billion to around $200 billion.
Some of the money taken from defense could be "targeted" toward favored domestic programs under any new Democratic initiative, but a large part of it would have to go toward deflating the bloated deficit, a House member said.
Mr. Darman and other administration officials dispute the contention that recent events point to more sharp cuts in the defense budget, however. "There have been enormous and unpredictable changes in the Soviet Union," Mr. Darman said. "But suppose in the next couple of months it doesn't go in the direction" of democratization and demilitarization? he asked.
The administration would agree to further defense cuts if the progress in the Soviet Union were "judged to be stable and irreversible," he said, "but that's doubtful."