Senate Backs GOP Budget 50-49; Crucial Votes Ahead

WASHINGTON —  A $52-billion deficit reduction package backed by the Reagan Administration survived an important early test Tuesday, getting a 50-49 endorsement from the Senate, but it is likely to be picked apart as senators begin amending it today.

Senate Majority Leader Bob Dole (R-Kan.) said the test vote, almost strictly along party lines, “proved that we can keep the Republican majority together” on the fiscal 1986 budget package, despite strong opposition to many of its controversial provisions.

But he conceded: “What we demonstrate the next seven or eight days may be something else.” Even after the Senate considers as many as 60 amendments, the crucial vote will be the final one to accept the amended package--or perhaps even to go back to the original one.

The test vote had been delayed twice since last week as Dole scrambled to win crucial Republican votes for the package, which is a compromise between President Reagan and Senate GOP leaders. In many cases, Dole had to agree to allow Republican holdouts--particularly those who face reelection in 1986--to offer amendments that would dramatically change the proposal.

For example, Republican Sens. Paula Hawkins of Florida and Alfonse M. D’Amato of New York plan to try today to defeat a proposed curb on cost-of-living increases in Social Security benefits. And Sen. Charles E. Grassley (R-Iowa) said he expects to offer an amendment that would allow the Pentagon budget next year to grow by no more than the inflation rate.

In other instances, Dole already has restored funds for relatively small but politically sensitive programs--such as aid for handicapped children and the Rural Electrification Administration--that had been slated for sharp cuts or elimination.

Despite his efforts at appeasement, Dole was unable to sway Sens. Charles McC. Mathias Jr. of Maryland and Bob Kasten of Wisconsin, who sided with a united Democratic minority. Sen. John P. East (R-N.C.), another supporter of the package, did not vote because he is hospitalized for an illness.

The Republican plan would trim $52-billion worth of spending in fiscal 1986 and slice that year’s deficit, projected at $227 billion under spending plans now in effect, to $175 billion. With the cuts, fiscal 1988’s deficit would drop to $98 billion.

While many elements of the package have ignited opposition from powerful interest groups, Social Security clearly has become its emotional and political flash point. The plan would hold yearly Social Security benefit increases over the next three years to two percentage points less than the inflation rate, with a guarantee of at least a 2% increase each year.

$22.7-Billion Cut

Over three years, this would amount to a $22.7-billion cut from current policy, under which Social Security recipients would expect to receive annual increases equivalent to the full rate of inflation, projected at about 4% a year through 1988.

Beyond Social Security, the budget package would cut or eliminate federal subsidies for dozens of other popular domestic programs, including farm subsidies, Amtrak support, the Small Business Administration, Medicare and Medicaid.

At the same time, it would allow Pentagon spending to grow by 3% a year beyond inflation. Although this is half the after-inflation increase that Reagan originally requested, many senators argue that it is unfair to boost military spending when social programs are being sacrificed.

‘Some Hard Choices’

Dole, facing a barrage of Democratic accusations that the package is unfair, contended that there is “just as much concern on this side as there is on that side for senior citizens, the handicapped, farmers, veterans and all the other hot buttons in this package. . . . I hope in the final analysis we will do what the American people want us to do--make some hard choices.”

Some critics insist that, as the projected deficit rises beyond $200 billion, spending cuts alone are not enough. They say that Congress must take the politically difficult step of voting for a tax increase, despite Reagan’s promised veto.

Spending cuts, Sen. Ernest F. Hollings (D-S.C.) argued Tuesday, amount to “half a haircut.” He roared at Republicans: “You suck that bullet. You have it in your mouth, but you won’t bite it.”

Corporate Taxes

The most widely discussed option--at a time of headline-grabbing disclosures that some of the nation’s largest and most profitable companies pay little or no taxes--is to place a minimum tax on corporations. Dole, however, said that such a levy should be considered only as a part of overall tax reform, not as a deficit-reduction measure.

The Republican budget package, which includes cuts in student aid and other education programs, would reduce college student aid “so General Electric doesn’t have to pay taxes,” Hollings charged. “We look to the next election rather than the next generation.”

Hollings, a Senate Budget Committee member, has proposed combining $234 billion in spending cuts with $145 billion in taxes over three years, one of several Democratic-sponsored proposals likely to be debated in coming days. The Republican package, by contrast, contains $297-billion worth of spending cuts over the same three years.