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Automatic Budget Cuts Looming

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Washington--Automatic budget reductions that could drop spending for federal education programs below fiscal 1987 levels seemed a virtual certainty late last week, as White House and Congressional negotiators faltered in their efforts to conclude a deficit-reduction agreement by the Nov. 20 deadline.

A measure that would delay the automatic cuts until Dec. 16 was cleared for a House vote on Friday. But neither the Senate nor the President seemed willing to agree to a postponement of the $23 billion in across-the-board cuts mandated by the Gramm-Rudman-Hollings law.

"The situation is very uncertain and very volatile," said Michael Edwards, government-relations director for the National Education Association, last Friday.

Negotiators had hoped to stave off the automatic cuts by devising a package of tax increases and spending cuts that would meet the deficit-reduction target and garner enough support in the Congress for passage.

The so-called economic summit between the White House and Congressional leaders was convened after the Oct. 19 stock-market crash, as economists and political leaders worldwide called on the United States to take steps to reduce its deficit.

Capitol Hill sources said last week, however, that after 19 days of negotiations, many political leaders had turned their attention away from the wavering financial markets and toward the 1988 elections, making such budget alternatives as tax increases politically difficult.

If the automatic cuts are triggered, education programs will lose about $1.4 billion from the baseline figure of $20.7 billion--the fiscal 1987 funding level plus an adjustment for inflation.

The reduction will drop education spending to the $18.8 billion mark, $800 million below the $19.6-billion appropriation for 1987, and $2.5 billion below the amount the Senate Appropriations Committee has approved for the 1988 fiscal year.

Congress can Supersede

Lobbyists held out hope last week that even if the automatic reductions were triggered, the budget negotiating team would pull together a package within the 10 legislative days the Gramm-Rudman-Hollings law allows for Congressional action to supersede the cuts.

But prospects for such a package were uncertain late last week. "Part of my concern is the Republican revolt in Congress," said Susan Frost, executive director of the Committee for Education Funding.

The Republican Caucus late last week came out against the package that negotiators were reportedly close to agreement on.

Caucus members were reportedly unhappy with the mix of tax increases and spending cuts, and ac8cused the President of retreating on those issues in order to spare the defense budget deep reductions.

Under the Gramm-Rudman-Hollings law, the defense budget would take an $11.5-billion reduction and domestic programs would lose $11.5 billion. Under the agreement being negotiated by the summit conferees, defense programs would lose only $5 billion and domestic programs would lose $2.6 billion.

Those cuts, combined with $9 billion in new taxes, $3.8 billion in reductions in entitlement programs such as guaranteed student loans and Medicare, and an unspecified amount in one-time savings, such as refinanced loans, would bring the deficit-reduction package to about $30 billion.

"I hope that, once people actually understand what the sequester [automatic cut] means, they will support the package," said Ms. Frost.

Last Friday, the budget negotiators were hammering out the final details of the package, and also were trying to agree on the ratio of tax increases and spending cuts that would net $45 billion in deficit reductions for the 1989 fiscal year.

Their agreements, however, were only skeletal. The proposals must go to Congressional committees, which will actually write the legislation."This is where our major effort comes in," said Ms. Frost. "We will be working to maintain education as a priority."

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