Domenici: taming 'great American expenditure machine'

When President-elect Ronald Reagan takes the reins of power in January, he may get a special lasso to rope in a galloping federal budget. The lasso: impoundment power.

If the new Congress fails to slow the growth of government, it should give Mr. Reagan the right to impound money already ordered to be spent, says the Senate's new budget chief, Sen. Pete V. Domenici (R) of New Mexico.

That right was taken away from chief executives in 1974 after President Richard Nixon angered a Democratic Congress by refusing to spend billions of dollars appropriated for domestic programs.

Now Republicans control the Senate. And they have gained strength in the House of Representatives, solidifying what many observers see as a "philosophical majority" for conservatives in the House. This opens the possibility that the 97th Congress might give more authority to White House Budget cutters.

"If Congress sets its own budget limits and then is unable or unwilling to meet them, then the President should have the authority to get there," said the new chairman of the Senate Budget Committee in an interview.

Domenici's committee, and a parallel one in the House, were set up in 1974 to bring some order, and perhaps fiscal constraint, to what he calls "the great American expenditure machine."

Until last May, when he was appointed Secretary of State, Sen. Edmund S. Muskie (D) of Maine was Senate budget chairman, playing "cop on the corner" for sometimes- errant Democratic budgetmakers who tried to stay within their agreed-upon spending ceilings and tax revenue floors.

Under the new GOP budget chairman, whose major obstacle will likely be a Democratic House rather than a president of his own party, a number of changes are expected besides granting impoundment powers to Reagan.

Domenici plans to hold hearings on a constitutional amendment that would limit federal spending to a set percentage of the gross national product (GNP). What he proposes, however, far surpasses the budget cuts considered by the new President.

The current spending level of 22.3 percent of GNP in fiscal year 1980 would be brought down to 19 percent in FY 1985, offers Domenici, allowing for a $520 billion cumulative tax cut -- or an average rebate of $10,000 for a family of four over the next five years.

But a drop of just one percentage point, says budget expert Allen Schick of the Library of Congress, translates into more than a $25 billion cut in the first year, or almost double what Reagan proposes.

Explains Domenici, "Anybody that believes it can be done with trivial cuts is absolutely believing in a myth. Minor surgery won't do the job to stop the growth of the federal budget.

Domenici's staff foresees less than a 10 percent tax cut a year for the next three years, as advocated by Reagan. A 7 or 8 percent cut might allow a balanced budget by 1983. The difficulty is reflected in the FY 1981 budget, which is expected to have a $50 billion deficit.

Domenici also wants to close loopholes that let Congress override its own budget limits, coordinate closely with finance and appropriation committees, and prevent many multiyear spending obligations.