Explaining the Budget

The most controversial aspects of Reagan's proposals for the 1984 budget are the 10 percent increase in military spending and the spending freezes or cuts in many domestic programs. Experts do not expect the budget, submitted to Congress last week, to emerge from the Hill unscathed.

During their review, congressional leaders are considering ways to cut defense allocations and at the same time upgrade job prospects for the unemployed in the form of a $5 billion program, which would supplement the $4.5 billion highway jobs program enacted last month.

Increased deficits are also a concern to both the White House and Congress, but each has separate solutions. Increased spending on unemployment benefits and the recent downturn of inflation have caused the deficit figures to be larger than earlier projections for 1984 indicated. To combat this problem the Administration has included in the budget package a stand-by tax proposal which calls for a five percent tax surcharge as well as a barrel increase in oil taxes to go into effect in 1986 or 1988 if the expected economic recovery does not materialize. When asked why he does not want the contingency plan to take place in 1984, the President quipped. "Are you kidding, in an election year?"

House Democrats, led by Speaker Thomas P. O'Neill and Majority leader Rep. James Wright (D-Texas), have proposed dismantling the third year provision of Reagan's 1981 tax bill, which called for across the board tax cuts in the next three years, ending in a five percent cut for 1984. They maintain that the theory of supply side economics put into practice by the bill has not worked and to avoid any further damage. Democractic leaders propose scrapping the third year of the tax cut bill which they feel is causing increased deficits.

Proposed cutbacks in domestic programs include foodstamps and Aid to Families with Dependent Children. The Head Staff Program for pre-schoolers from low-income families will see a six percent increase as will Medicare, though rising health care costs consume any real increases. A bi-partisan Social Security package will trim the program's growth by increasing payroll taxes and delaying cost of living adjustments to those receiving benefits.

The administration is looking for savings in financial aid by tightening guaranteed student loans eligibility requirements. A change in the Pell Grant Program for low income students would require students to finance part of their education costs out of their own pockets through summer earnings, work-study or Graduate Student Loans. But the maximum amount of a Pell grant award would be increased from 1800 to 3000.

The Administration's proposed 10 percent increase for defense--although a significant hike--is still $10 billion less than their 1981 projections for the 1984 budget. A large part of the additional money is to go towards the development of strategic weapons already approved by Congress. There are no requests in the budget for new weapons. The one area where the President wants to keep expenses down is the area that Congress is most reluctant to scrimp on--military pay.