Democrats rally round counterbudget as reply to GOP

Not for years have Democrats and Republicans in Congress divided so sharply over an issue as in the current budget fight -- and the battle may set its impress on American politics for a generation.

Ronald Reagan won the first round with his surprise, landslide November presidential election victory in which the American people declared their dissatisfaction with the inflationary economy and their demand that something be done about it.

Republicans have presented a new budget, startlingly radical in some particulars and likely to pass the Republican-controlled Senate.

Now the Democrats have made their political answer: They have regained their confidence. Big, white-maned, bearlike Speaker of the House Thomas P. O'Neill Jr. (D) of Massachusetts is rallying their assorted coalition forces and a counterbudget has been presented.

The Reagan election victory, as seen here, already has changed the American economic and political landscape.The federal government has extended itself too far, even many Democrats now agree, the inflationary US Treasury deficit is out of hand, and there must be a curtailment of the federal budget and taxes. Rarely in political history has a presidential election so clearly and suddently emphasized such an economic point. The Reagan administration quickly exploited it in the presentation of the new White House budget, put together in unprecedently short order by 34-year-old David A. Stockman, the new budget chief.

Now the stunned Democrats have rallied and are regrouping. They still control the House, which is the tax-initiating body. And they have evolved a political theory: The 1980 GOP victory was not a "mandate," Speaker O'Neill proclaims, it was the loss of individually exposed congressional seats brought about by economic misfortunes of the Carter administration and by some mistakes, which are acknowledged. The Democrats have accepted the key Reagan concepts of budget retrenchment, defense buildup, reduced federal regulation, elimination of waste and fraud, and the work ethic. To some observers, this incorporates one of the fastest political conversions in history.

Now comes a Democratic counterattack directed at the Reagan three-year, 10 percent-a-year, across-the-board tax cut, known as the Kemp-Roth proposal, which the Democrats specifically repudiate. There are these other Democratic moves: They are charging Republicans with aiding the rich rather than the middle class and poor, they are saying they can carry out acceptable parts of the Reagan program and do it better than the Republicans, and they are making an emotional appeal to minority groups to remember 50 years of past Democratic favors.

Republican mobilization around a new budget immediately has been unprecedented in its swiftness in modern times. Mr. Stockman, Treasury Secretary Donald T. Regan, and the President are carrying the battle.

Now congressional Democrats have launched their counterattack:

1. The leadership released, April 8, a budget alternative for 1982 calling for heavy federal retrenchment, assorted tax cuts, and a smaller deficit. Reagan projections were challenged as overoptimistic.

2. On the same day, a series of Democratic leadership statements, orchestrated by impresario O'Neill and based in part on a closed caucus in the House Ways and Means Committee under chairman Dan Rostenkowski (D) of Illinois, blasted the Republican tax-cut program, though inferentially accepting the Republican demand for federal retrenchment.

3. Speaking in Chicago April 9, Congressman Rostenkowski said he was proposing a one-year, $40 billion tax cut in the "spirit" of the Reagan plan.