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March 28, 2011
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October 19, 1987
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Sanitized Copy Approved for Release 2011/03/28: CIA-RDP89M00699R000100010010-7 STAT Deputy Director Intelligence Community Staff NOTE FOR: All ICS Elements SUBJECT: Gramm-Rudman-Hollings The attached article gives useful insight into the FY 1988 budget problem that forces us to look~at draconian measures with regard to ICS spending. Though the final outcome and impact is hard to predict, we must be prepared for the worst to minimize the impact. STAT Sanitized Copy Approved for Release 2011/03/28: CIA-RDP89M00699R000100010010-7 Sanitized Copy Approved for Release 2011/03/28 :CIA-RDP89M00699R000100010010-7 Reagan, Hill in Countdown To Automatic Spending Cuts By Tom Kenworthy WaAin~tan Pat Sall Wrker The Democratic-controlled Con- gress and the White House yester- day began hurtling toward a colli- sion over the federal budget that some lawmakers predict could ul- timately yield "deep and crippling" spending cuts in programs already hobbled during the Reagan era. Beginning afive-week countdown required by the nation's new bal- anced-budget law, the Congression- al Budget Office yesterday detailed how spending on everything from student loans to A[DS research will be indiscriminately slashed next month if Congress and the Reagan administration cannot find other means of reducing the federal deficit. The CBO report on the likely im- pact of $23 billion is across-the- board spending cuts begins what promises to be the final act in the budget-and-tax stalemate that has preoccupied the executive and leg- islative branches for more than 10 months, an act that may spell defeat for the Democratic strategy of forc- ing President Reagan to accept a tax increase. Under the revised Gramm- Rudman-Hollings budget law signed by Reagan last month, agencies will begin to feel the first pinch of the automatic cuts next week when the administration's budget office is- sues its version of yesterday's CBO report. Spending would be frozen at the levels mandated by the Office of Bee BUDGET, A18, CoL 1 Sanitized Copy Approved for Release 2011/03/28 :CIA-RDP89M00699R000100010010-7 Sanitized Copy Approved for Release 2011/03/28 :CIA-RDP89M00699R000100010010-7 ~ounicxu ~v ~l ~u .r~ ~ ~.u~ Y ~~ ~1~ ~ ~~~ BUDGET, From Al between the executive and legisla? trenchment ? during the Reagan ~ live branch .... " years and because of the large Pen- , Management and Budget beginning The prospect of across-the-board tagon buildup over the same period, Tuesday and would become final cuts next month has led this week the reductions would be felt most ? Nov. 20 when OMB files an updated to a renewal of almost desperate heavily by traditionally Democratic ? estimate. pleas by members of Congress for constituencies. ' The $23 billion cut would be ap- the Reagan administration to nego- The anguished cries of some in- ; portioned 50-50 between defense tiate a budget compromise. It has terest groups are being heard on and domestic spending programs, also brought the first salvos of a Capitol HiU as lawmakers are urged but because of exemptions and spe- campaign to lay the blame at the to protect some of the programs cial rules only 20 percent of the president's feet if the cuts do occur, that face the deepest reductions, . federal budget is at risk. [n most an effort that could foreshadow a such as agriculture and education. cases, spending would still exceed major political theme in next year's Charles B. Saunders Jr., vice last year's levels because the ?base elections. ~ president for governmental rela- ' ' from which the reductions are made Touting the $12 billion tax? bill lions at the American Council of is calculated from 1987 appropri- just passed by the Ways and Means Education, for example, called pro- ation levels plus 4.2 percent infla- Committee, for example, House jections of a nearly $500 million cut ? lion and the cost of salary in- Speaker Jim Wright (D-Tex.) urged in student' financial aid "a disaster" creases. the White House "to cooperate with that would mean the elimination of But compared to what spending the Congress" in raising taxes in aid for most middle-income families. would otherwise be with normal order "to avoid the guillotine" of With the kickoff of the five-week growth, the Pentagon would sustain automatic cuts. Gramm-Rudman-Hollings season, a 10.4 percent reduction and do- And Senate Budget Committee government agencies across Wash- mestic programs would be trimmed Chairman Lawton Chiles (D-Cla.) ington also girded-with varying by 8.7 percent. greeted the CBO report with the degrees of concern-for the Reagan has decided to exempt observation that it could "be the projected cuts. military personnel from the cuts, start of the countdown to a major Here is how some government meaning that the brunt would fall embarrassment ... or it can mark spending could change if the full on procurement, research and de- the opening of the hunting season $23 billion is cut: velopment, and operations and where Congress and the White ^ Defense: Overall spending au- maintenance. House work together to find the thorny, which provides for outlays Though the projected $23 billion savings necessary to reduce the spread over more than one year, cut would be far less than the $35.2 deficit in a responsible way." would be set at $279 billion. That is billion in spending reductions Warning of "deep and crippling $10 billion lower than the smallest pushed through Congress in the reductions" in key domestic pro- amount considered in the congres- 5rst year of the Reagan administra- grams, Chiles asked: "Can it be so sional budget and $33 billion less lion, it would be twice the size of hard to find a rational way to find than requested by Reagan. In actual the only previous round of automat- $23 billion in savings out of a $1 outlays for fiscal 1988, the Penta- ic reductions, in 1986 under the trillion budget?" - gon would get about $270 billion, first version 'of Gramm-Rudman- . Absent any changes in spending about $3 billion less than last year. Hollings. or tax policies, the CBO projects Procurement of weapons systems Because of Reagan's adamant that the fiscal 1988 deficit would be would be particularly hard hit, with ' opposition to a tax increase, many about $179 billion, approximately a reduction of $9.3 billion in budget members of Congress predict that $42 billion less than the record high authority. Operations and mainte- the automatic spending reduc- of $221 billion in fisca11986, but far nance would be cut by $8.7 billion lions-or at least ascaled-back ver- above the budget law's original goal in budget authority. sion of them-will go into effect. of $108 billion.Robert W. Helm, the department "The president is absolutely de- Edward M. Gramlich, CBO's act- comptroller, said the cuts in weap- termined to take" the automatic ing director, told the Senate Budget ons purchase accounts "cannot help cuts, said Sen. Ernest E. Hollings Committee that because Congress but have an impact on efficient pro- (D-S.C.). has added another $1 billion in curement from the standpoint of Though congressional tax-writing spending this year, the deficit re- stretch-outs, unit cost increases committees are drafting tax bills ductions needed to prevent the au- and things like that " that would raise about half of the somatic cuts may be as high as ^ Agricnltare: Programs under the $23 billion needed to meet the def- $24.6 billion. Agriculture Department would suf- icit goal, it is unclear whether a tax However, the automatic cuts, if fer the largest domestic spending bi'.1 will pass Congress. And many triggered, would still total only $23 cuts-about $1.1 billion in out- on Capitol Hill say that overriding a billion. lays-with only major nutrition pro- presidential veto of a tax bill would The balanced-budget law ex- grams spared. be nearly impossible. ? empts from the automatic cuts The largest dollar cuts would oc- In adefiant statement yesterday, some major entitlement programs cur in farmers' direct payments, Reagan called the tax plans pro- such as Social Security, most fed- ranging from their income-support posed by House and Senate com- eral retirement and disability ben- subsidies and commodity price-sup- mittees "an exercise in fiscal irre- efits, veterans pensions and some port loans to disaster payments and sponsibility." He vowed to veto the programs for low-income people. crop insurance. These cuts could be proposals if they are passed by Con- Special rules offer limited protec- $750 million in 1988. gress. _ ? lion to other areas of the budget, ~ Two other USDA agencies that The looming fiscal battles, Sen. J? including Medicare and veterans' could take heavy hits are the Ex- James ~zon (D-Neb:) said this health programs. tension Service and the Agricultural week, will contribute to "the great- Because the brunt of the cuts Research Service. est series of confrontations that falls on discretionary domestic pro- ^ Education: Budget authority for __ _ _ _ ?L-r L..... ...le.~e.....n rd nrner~mc under fhP nPl1a(t[nent Of Sanitized Copy Approved for Release 2011/03/28 :CIA-RDP89M00699R000100010010-7 ? Sanitized Copy Approved for Release 2011/03/28 :CIA-RDP89M00699R000100010010-7 ~LI.tS .UCLlil~ ...........~..~.~..~~.. ~. ~~....~... ,..,,. ~~ .,... ~ Education would be cut by $1.4 bil- lion and fiscal 1988 outlays by al- most $300 million. One of the largest cuts, $358 million in budget authority, would come in the Chapter 1 program that provides compensatory education services to disadvantaged children. In addition, financial assistance for needy college students would be cut by $497 million in budget au- thority and $93 million in fiscal 1988 outlays, probably lowering awards to more than 1 million stu- dents receiving Pell Grants. "We don't believe the worst-case scenario is likely to occur," said Bruce M. Carnes, deputy undersec- retary at the department. Education groups are more alarmed. Susan Frost, executive director of the Committee for Ed- ucation Funding, said the projected Chapter 1 cuts would virtually nul- lify gains made when the program was reauthorized by Congress this year. ^ Health and Human Services: A broad array of programs, ranging from Indian health to the Centers for Disease Control to the National institues of Health, would be cut a total of $2.8 billion in outlays for fiscal 1988. The cuts would have afar-reach- ing impact not only on hospitals and doctors but on patients. Some pa- tients would #tave to make up some of the cut, mostly on doctors' bills, out of their pockets. Medicare payments to doctors and hospitals would be cut 2.3 per- c~nt for the remainder of the fiscal year for a total of $1.5 billion. In addition, the National Insti- tutes of Health would lose about $561 million in budget autority and $261 million in actual outlays. Plans to significantly boost AIDS funding might also be shelved. ^ 1Y~anaportation: Programs could lose $2.4 billion in outlays, leaving the department's budget virtually static from last year. Officials at the department are particularly worried about potential cuts to the Federal Aviation Admin- istration of more than $280 million in outlays. Cuts at FAA could jeopardize plans to hire 1,000 new air control- lers, slow modernization of air traf- fic control systems and delay local airport improvements. Cuts to highway aid of $1.2 bil- lion and mass transit of $300 mil- lion could delay local projects. ^ Space and Science: NASA would be cut by about $240 million, affect- ing not only the space shuttle pro- gram but severely curtailing plans ES-NiMTE OF SPENDING FISCAL 1987 OCTOBER AltrO~MTIC LEVEL BUDGET PROGRAMS APPROARIATKINS BASELINE? CUTS AFTER CUTS Rment of peferge: CArrwrnxut~r and Re?onal ~i1Y ?utlayS _ _ ; ._. ` fidget erstbe~r _, CutFaya ..::.....'': 3p.0 ": ' 35:7 2.~ `93:ti 29.$ :"::. 33:5 at9 ->! : .> 4fl 3 ~'S 2 ~ 42:3 39 7 . 4~i3 .. 0 >;+ X3,7 ri3 9 9#i9 '9~i>9 11 b...: ti0 5 i 1 B2?3. ....:: 63:8 `! 3~... 13 ~,8 :157;b ^tl~v ~4 93 't38 ': :9.2 .: .: .::.:.:::. 4#. 7:::: ~1;fi lJ~~: ?Fiscal 1987 spending bvels plus inflation and pay raises. Figures may not add to totals because of rourwing. Sources; Congressional Budget Office and Office of Management and Budget extremely tough on us "said NASA deputy controller Gary Allison. "There's no way we could meet those reductions without major im- pacts on our programs." The National Science Foundation would lose $148 million in budget authority, and more than $75 mil- lion in actual outlays for fiscal 1988. ? Interior and Energy: Interior Department programs would lose $446 million in outlays for fiscal 198$. The .Energy Department would be cut $839 million. ment has not done aprogram-6y- program analysis, officials say the impact would be far greater than in 1986. "This one is going to be more significant," said Joseph W. Gor~ell, deputy assistant secretary for pol- icy, budget and administration. Staff writers Molly Moore, Laura Parker, Cass Peterson, ~e Rensberger, Spencer Rich, Ward Sinclair and Barbara Vobejda and staff researcher Michelle Hall Sanitized Copy Approved for Release 2011/03/28 :CIA-RDP89M00699R000100010010-7