Education Apparently Spared Under Agreement on Budget

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Washington--Budget reductions in federal education programs for the fiscal year 1983 seemed less likely last week, as the chairman of the Senate Budget Committee and President Ronald Reagan--after three months of intense debate--reached agreement on a new budget proposal.

The plan, which was expected to be approved with minor amendments by committee members, would provide approximately $13-billion for programs administered by the Education Department for each of the school years from 1982-83 through 1985-86.

Senator Pete V. Domenici, Republican of New Mexico, told participants in a late-evening session of the Budget Committee on Wednesday that Mr. Reagan had agreed to the budget compromise, which would "freeze" spending for domestic pro-grams at fiscal 1982 levels for the next three years.

The Senator, returning from a telephone discussion with the President, quoted Mr. Reagan as saying "I am for it. I will do everything I can to see that it is passed and becomes law."

The proposal would include changes in the Guaranteed Student Loan program--the department's fast-growing "entitlement" program--by tightening eligibility standards for students who seek the federally-subsidized college loans and by requiring students to assume responsibility for the in-school interest subsidy that the government now pays for the loans.

The compromise between the Republican Senator, whose committee is responsible for developing a budget resolution that would set broad federal spending targets, and the President came after the committee had voted unanimously, 20-0, to reject Mr. Reagan's proposed budget for the fiscal year 1983. Mr. Reagan's budget would have reduced the education budget by 23 percent, to $9.95 billion.

The committee's action was taken after nearly a month of closed-door negotiations between House and Senate leaders and high-ranking Administration officials failed to result in an agreement on how to revise the Reagan budget.

The negotiations had ground to a halt late last month after the President held a final meeting with Representative Thomas P. O'Neill Jr., Speaker of the House of Representatives. Mr. Reagan and the Speaker were unable to agree on two important elements in the budget negotiations, the personal-income-tax cuts and the cost-of-living increases in the Social Security program.

Senator Domenici, a participant in those negotiations, said he had concluded after that meeting that the committee would be forced to work on its budget resolution without the Administration's approval. The Senator began the first of last week's all-day Budget Committee sessions by presenting what he called a "tough, bold plan."

Tax Increases

The Domenici proposal, in addition to holding domestic spending programs to fiscal 1982 levels, would have provided the President with his proposed increases in the national defense budget, but it included tax increases to fund the plan.

"For my friends who want the large military build-up, I say, 'We must pay for what we need,"' the Senator said.

The compromise later worked out with the White House includes a $22-billion decrease in the President's proposal for increased military spending, coupled with $95 bil-lion in tax increases. The tax plan would not eliminate the personal-income-tax decreases enacted last year by the Economic Recovery Tax Act, one of the cornerstones of Mr. Reagan's economic plan.

Instead, the tax increases would come from a variety of other sources, possibly including a luxury tax, a minimum tax on corporations, increased excise taxes, and the closing of some tax "loopholes," according the Senator's proposal.

The plan would also reduce spending for Social Security programs by $40 billion, provide no increases in pay for military and federal employees, and eliminate cost-of-living increases for veterans' benefits and pensions.

The Domenici proposal would reduce the expected federal deficit for 1983 from $132.4 billion--the amount estimated by the Congressional Budget Office to result from the President's budget--to $105- billion.

Vol. 01, Issue 33

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