Reagan gains victory on deficits plan

Press, 19 May 1984, Page 10

Reagan gains victory on deficits plan

NZPA-Reuter Washington The Senate has given President Ronald Reagan a victory on his plan to cut United States budget deficits by $2lB billion over three years by freezing nondefence spending and raising taxes.

The proposal was approved on a 65-32 vote despite complaints by opposition Democrats that defence spending should aso be cut to relieve pressure on rising American interest rates.

The plan would raise military spending levels by an average of 7 per cent over the three-year span and freeze at 1984 levels

most discretionary spending on domestic programmes. The specific programme reductions were not spelled out but would amount to $143.5 billion over three years. The plan includes $74.3 billion in higher revenues, among them increased cigarette, wine and liquor taxes. The Senate package must be reconciled with a plan approved by the Demo-cratic-controlled House of Representatives which would reduce deficits by a total of $2BO billion in the financial years 1985, 1986 and 1987.

Mr Reagan originally sought, a SUSISO billion

“down payment” on deficit reductions as a way to help hold down the upward pressures on interest rates which have been worrying many domestic and international financiers. But Democrats claimed during the debate that the Reagan plan would raise the deficits gradually after 1985. They lost all attempts to make further cuts, mainly on defence.

The non-partisan Congressional budget office estimated the Senate version would reduce the deficit to SUSIB2 billion next year. The deficit would rise to SUSIB6 billion in 1986 and to SUS2O4 billion in 1987.