Underneath smoke of deficit debate blazes fire of reform

On the surface, the drama over the federal debt limit has all the suspense of a television soap opera rerun. Once again, Congress bumps perilously close to a funding deadline for the government. As usual the bureaucracy is issuing threats of dire consequences. The warning this year is that social security checks might bounce unless Congress raises the debt ceiling to permit the government to borrow more money.

Behind the theatrics, this miniseries has in fact become a stage for a major struggle over control of the gigantic federal pocket-book.

The ending is all but certain. Congress will have to raise the debt ceiling from its current $1.8 trillion to the historic high of $2 trillion.

But as they do so, they are considering a far-reaching question about the balance of power between the White House and Capitol Hill. A large group of senators is insisting that the new debt-limit bill include a measure to mandate a balanced budget by 1991 and grant new authority to the president to cut spending.

The proposal, cosponsored by Republican Sens. Phil Gramm of Texas and Warren Rudman of New Hampshire and Sen. Ernest F. Hollings (D) of South Carolina, would set maximum limits for deficits for the next five years. If Congress failed to meet those targets, the president would be required to make an across-the-board percentage cut in certain federal programs.

Republican supporters of the legislation maintain it makes no shifts in constitutional authority. ``This bill does not create new powers,'' Senator Gramm has said.

Critics respond that it would transfer control to the president. House Speaker Thomas P. O'Neill Jr. (D) of Massachusetts told reporters yesterday that the Gramm-Rudman measure is ``a disgraceful manner [in which] to subvert the Constitution of the United States'' and an affront to the Founding Fathers' plan for ``three distinct and equal branches of government.''

The balanced-budget proposal represents a pendulum swing from a decade ago. In 1974, Congress wrested budget power back from then-President Richard Nixon by passing a budget reform act that prohibited a president from impounding funds that Congress voted to spend. At that time, President Nixon had withheld money from some antipoverty programs.

Since enactment of that bill, Congress has had a greater say on spending. Also since then, the national debt has soared upward from about $500 billion to $2 trillion by the end of the current fiscal year. President Reagan has long sought line-item veto power over spending. Such authority would permit him to veto single projects or programs within appropriation bills. But the line-item veto would require a constitutional amendment, which Congress has refused to pass.

The Gramm-Rudman proposal, which could be enacted by simple law, would be a less potent tool than the line-item veto. This measure would reduce the red ink by forcing Congress to make budget cuts, or else abandon the task to the executive branch.

Supporters say that cuts made by the administration would be set by formula, leaving no discretion for the president. Detractors say that the result would be big cuts in social programs like aid to education, while weapons contracts would be exempted. President Reagan has endorsed the Gramm-Rudman plan with the proviso that the defense buildup be continued.

Democrats, who at first seemed to favor some form of Gramm-Rudman bill, are fast backing away after studying it closely.

A study by Senate Democratic staff members issued yesterday found that under the proposed plan several programs would be ``almost completely eliminated'' or slashed dramatically during the current fiscal year. The study projects that participation could drop by 27,000 children in Head Start and by 2 million children in education programs for the disadvantaged.

A House Budget Committee study projected that less than one-third of the budget, including mostly social programs, would be subject to automatic reductions under the Gramm-Rudman proposal.