Senate backs $7000M Reagan Budget

Press, 14 May 1981, Page 6

Senate backs $7000M Reagan Budget

NZPA-Reuter Washington The American Senate yesterday overwhelmingly passed a $700.8 billion Federal Budget bill containing almost all the sweeping social welfare cuts and increased defence spending proposed by President Ronald Reagan. Afterwards Mr Reagan said the 78-20 vote, which included support from 28 opposition Democrats, was an “example - of bipartisan cooperation and represented democracy at its best.” The Administration now was "closer to achieving our goal of fiscal responsibility and a Government that lives within its means,” he said. Last week the Democratcontrolled House of Representatives approved its

version of the Budget, calling for spending $688.5 billion, $5l billion less than the package proposed by the former President Carter. A joint Congressional committee will now reconcile the two bills, both of which had President Reagan’s endorsement. The Administration yesterday turned its attention to gaining Congressional approval of its controversial plan to cut taxes for individuals and businesses by a total of 30 per cent over three years. In Congressional hearings yesterday the Treasury Secretary (Mr Donald Regan). tried to persuade a sceptical committee that Mr Reagan’s plans would not cause big deficits over the next few years.

Many legislators fear that a tax' cut will stimulate inflation and they ask whether it would generate sufficient new revenue to offset spending deficits by 1984, when the Administration say it will balance the Budget. Mr Reagan has said that the tax cut proposal is -an integral part of his economic plan designed to cure inflation, running at 12 per cent, unemployment at 7 per cent, and interest rates approaching 20 per cent. Mr Reagan told House Republican leaders on Tuesday that there was the same widespread support for his tax cut programme as there had been for his Budget plan, indicating he was not ready to go along with any compromise bill.