Ouch! Ouch! Ouch! This Will Hurt

By GEORGE J. CHURCH

Confusion and agony dominate the debate. Confusion, because no one can say which of the proposed cuts in Government spending might become law. The drastic ones recommended in Ronald Reagan's new budget? The arbitrary ones contemplated by the Gramm-Rudman-Hollings Act? Whatever might emerge from a tortured compromise between President and Congress? Agony, because one thing is quite clear in any event: whenever, however and by whomever the job is done, any major shrinking of the gargantuan federal deficit must involve spending surgery that will hurt more citizens more seriously than ever. As that realization sinks in, the cries of anticipatory pain are growing ever louder.

Reagan opened his news conference Tuesday night by daring Congress, in effect, to substitute a tax increase for some of his spending cuts. Said the President: "Those who say that our budget is DOA--dead on arrival--are really saying, 'Brace yourself for a tax increase' . . . rest assured that any tax increase sent to me will be V.O.A.--veto on arrival." On a visit to St. Louis the next day, Reagan's motorcade pulled up to a side door of his hotel to bypass 150 angry farmers who oppose his budget priorities. Adding to their pain: some 75,000 letters from the Farmers Home Administration began going out last week to borrowers who have fallen behind on loan repayments, warning them to start catching up within 30 days if they hope to avoid eventual foreclosure.

To elicit more protests, the House Budget Committee, led by its low-key but & effective chairman, William Gray of Philadelphia, held hearings on Reagan's proposed cuts in five cities coast to coast. "Ronald Reagan has declared war on the city of Chicago," fumed Mayor Harold Washington. The President's "dastardly" budget, exclaimed Budd Bell, head of the Florida Clearinghouse on Human Services at a hearing in Tallahassee, "will result in the dismantling of many lifesustaining programs." Ron Anderson, president of Parkland Memorial Hospital in Dallas, denounced cuts in Medicare, Medicaid, maternal- and child-health grants and childhood immunization programs as being likely to produce "short-term gains and long-term tragedies."

What is the alternative? Not to continue spending as before, acknowledged Democrat Gray. "We are going to have deficit reduction, and it is going to affect everybody," he remarked. At best, Reagan's opponents hope to slash the Pentagon budget enough so that reductions in civilian outlays will be less draconian than the President proposes. But those cuts would still be severe. And this year the Gramm-Rudman-Hollings Act, despite its murky status, ensures that the issue will not slide.

To be sure, a three-judge federal panel has ruled that the law's mechanism for triggering automatic cuts in spending is unconstitutional. Washington experts believe a final ruling by the Supreme Court may come in late June. But whatever the outcome, the law will continue to exert a powerful influence.

Appearing as a guest at a meeting of TIME's Board of Economists last week, New Hampshire Republican Warren Rudman, one of the Senate sponsors of the bill, explained why. To meet the law's deficit targets ($144 billion for fiscal 1987, which begins Oct. 1, vs. an expected $202.8 billion this fiscal year), Congress by Aug. 15 would still have to calculate equal percentage cuts in the 50% or so of all federal spending that is not exempt. If a Supreme Court decision prevents those cuts from being put into effect automatically, they would have to be embodied in a joint resolution brought up for a straight yes-or-no vote within one week. Congress could reject the resolution, or the President could veto it, but they would still be under pressure to cut spending lest they be accused of dereliction of duty by permitting the deficit to go on growing. Said Rudman: "The fallback procedure, I believe, will work--not with the certainty of the original (automatic) provision, but it will work." Said House Democratic Whip Thomas Foley: "Gramm-Rudman may rule from the grave."

Though there is no chance that Congress will enact the President's budget intact, his proposals offer a rough guide to who might be hurt by the spending reductions everyone agrees are inevitable. Even if Congress reaches some alternative, or if Gramm-Rudman-Hollings comes into play, the programs targeted by the President are bound to be affected. With so much cutting to be done, and more than half of the budget (Social Security, other entitlements and interest on the national debt) legally or politically off limits, almost every discretionary spending program will be at risk. Among the areas of greatest controversy and of the most severe potential pain:

Health. Because of tighter and tighter restrictions on Medicare reimbursements, hospitals are discharging many Medicare patients early --"sicker and quicker," as many doctors put it. In addition, patients this year face higher payments out of their own pockets: as much as $492 for the first day's stay, vs. $400 previously. Reagan wants to cut up to $5 billion more from health-care spending, and Congress may have to accept a figure almost as high. Part of the pain will inevitably fall on the elderly: in Reagan's proposal they would have to pay $18.70 a month in premiums, vs. $15.50 now. Shortening hospital stays may be desirable, but the process throws a greater burden on nursing-home and home health-care services. "But more home-care visits are not being funded," says Susan Lang, an official of Visiting Health Services in New Jersey. Indeed, Reagan's budget proposes that, for the first time, Medicare beneficiaries themselves pick up $5 of the cost of each home health-care visit.

AIDS Research. Reagan proposes rescinding $51 million of the $244 million that Congress had appropriated for AIDS research this fiscal year. A budget increase in 1987 would bring appropriations back only to $213 million, which would have to be stretched over many types of research. The Administration contends that money cannot usefully be spent any faster; some researchers predictably disagree. One leading investigator figures that an adequately funded effort to develop a vaccine against AIDS would consume $200 million all by itself.

Housing. "Low-income housing has been hit more drastically than any other area," says Jo Reed, legislative analyst for the American Association of Retired Persons. Even after severe recent cuts, spending on construction and rent subsidies was supposed to total $9.8 billion in fiscal 1986. Reagan would chop outlays to $3.7 billion this fiscal year and $2.3 billion next year by eliminating the subsidies entirely and replacing them with vouchers that would help poor and elderly people rent privately built houses and apartments. Besides saving money, says the Administration, that step would "introduce the benefits of competition" into low-income housing and give the poor "a choice of suppliers." Some choice, critics reply. "One runs out of adjectives horrible enough to describe what this will mean for low-income and elderly housing," says Father Donald Sakano of New York City's Catholic Charities.

Education. "The Administration is proposing a lobotomy for the brainpower of America," charges Michigan Democratic Congressman William Ford. Hyperbole, perhaps, but the proposed cuts would indeed be severe. Some 5.7 million college students now get federal grants or loan guarantees; that number would shrink by 1.3 million next year. That, says the Administration, would "target available aid to the most needy." The blow might fall most heavily on students at black colleges, some 60% of whom get some kind of federal assistance; but many youths at other institutions, and their parents, would be affected too. Jim Reid, an engineer in Rochester, figures that he can keep his son Peter in the state university system with some sacrifice. Says Reid: "My wife and I would just have to sell the camper or our second car, or take out a personal loan." But Natalie Hart, a sophomore at St. Louis University, fears she will get only half the $6,100 aid that she had counted on for her junior year. If so, says she, "I'll probably end up going to a community college or going to school just part time."

Mass Transit. The Southeastern Michigan Transportation Authority has cut bus service between Detroit and its suburbs by 50% since 1982; officials fear that any additional deep cuts in federal transit subsidies may force it to cease operations entirely. Others around the country have joined in the chorus to protect funding for transit. "It seems bizarre that the man who wants to finance an effort to get from Washington to Tokyo in two hours also wants to hamper travel from the Rockaways to Manhattan," says Robert Kiley, chairman of New York City's transit system. Federal officials argue that their proposals mainly serve to give localities more discretion in spending / transportation dollars. "We shouldn't have to tell local areas they need a road or they need a bus system," says a Transportation Department spokeswoman. She adds that cutting funds could lead to using those remaining more efficiently, as by contracting out service to private bus companies. "To claim that a 10% budget cut means a 10% service reduction is a knee-jerk reaction."

Assistance to States and Cities. Georgia is deferring or canceling a variety of projects that were to have been funded partly by federal cash that the state now seems unlikely to get. The town of Avera (pop. 250) will have to wait at least a year to replace the rusty pipes that cause drinking water to come out orange, and Glynn County cannot start building a center for care of the mentally retarded. Chicago Budget Director Sharon Gist Gilliam fears that the city may have to close 42 day-care and after-school centers serving 2,050 children and end its adolescent drug-abuse program under Reagan's budget proposals.

Rural Electrification Administration. It would seem to have amply fulfilled its purpose: power lines have been extended into 98.8% of all rural areas. The $2 billion that REA is to lend to local power cooperatives this year at low interest rates will go to expand and maintain existing systems, and to keep rates down--not only for farmers but for residents of what have become bedroom suburbs surrounding such cities as Washington and Atlanta. But the Reagan Administration's renewed attempt to kill REA faces dead-end opposition from millions of consumer-owners and thousands of elected officials of the co-ops.

Job Corps. It houses, feeds and trains youths at a cost that works out to around $9,000 a year each. "Because of the very high costs per enrollee," says Labor Secretary William Brock, "we will be able to keep only the best centers, and others will be closed." But closing many of them would "affect young adults that no one else is helping," says David Maranville, director of the Los Angeles center. The Job Corps is expensive, its advocates admit, but it is one of the few remaining programs that offer what Reagan in his State of the Union message called a "ladder of opportunity." Reagan's proposal to cut the program nearly in half, they argue, would pull the rungs from this ladder for some 40,000 youths who seek to escape the ghetto.

The trouble with all the yelps is that there is no easy way out. Trimming the deficit means ending many Government services that people have come to ^ count on. Reductions that might be ordered under the Gramm-Rudman-Hollings Act would cut less savagely into some types of social entitlements than would Reagan's budget, but they could cut even more deeply into some discretionary domestic programs that are not protected. In addition, if Gramm-Rudman- Hollings goes into effect for fiscal 1987, it would bite deeper into military outlays than even most of the Pentagon's critics want. Secretary of Defense Caspar Weinberger estimates that the cuts would force the discharge of as many as 330,000 of the 2.1 million men and women now in uniform.

There is recurrent talk of a compromise that would trade lesser military and social-spending reductions for some limits on outlays for Social Security and other entitlement programs. Rudman for one favors subjecting beneficiaries of entitlement programs to some form of means test and hopes that his legislation will force a compromise containing that idea, but thinks it will probably have to wait until next year. Meanwhile, no matter what compromise may be reached this year, even if it includes some new taxes that could partly alleviate the budget crunch, the President and Congress face one certainty: whatever they do to reduce the deficit is going to hurt. The crucial question in this election year is: What level of public squawks and protests will they tolerate before they lose the political will necessary to tackle the enormous problem?

With reporting by Christopher Redman/Washington and John E. Yang/Tallahassee