BUDGET: Democrats on House Panel Spare Benefits : Social Security Spared by House Panel Democrats

WASHINGTON —  Democratic members of the House Budget Committee, aiming to match the deficit reduction approved last week by the Senate, agreed in a closed meeting Tuesday on a budget plan that spares Social Security recipients from any curb on their benefits.

Rejecting the one-year freeze on Social Security benefits contained in the Senate plan, the House members focused on the defense budget as a source of spending cuts and agreed to allow no increase in Pentagon spending in fiscal 1986. The Senate plan--itself a sharp reduction of President Reagan’s initial request for a 6% after-inflation rise in military spending--would have allowed enough growth to keep pace with expected inflation of about 4%.

House Budget Committee Chairman William H. Gray III (D-Pa.) disclosed few details of the package but sources said it would slice next year’s projected deficit by at least $56 billion. The Senate plan would make a dent of about the same size in a deficit now expected to approach $230 billion. Like the Senate plan, the House plan does not include new taxes.

With Democrats outnumbering Republicans on the Budget Committee, 20 to 13, the plan that was agreed to Tuesday seems almost certain to prevail when the full committee meets formally. Gray said he hopes to complete action on the plan by Thursday and to be ready to debate it in the House next week.

Future Uncertain

How it will fare on the House floor is uncertain. A group of Democrats, led by influential former Budget Committee Chairman James R. Jones (D-Okla.), contend that denying next year’s Social Security increase should accompany the tough stance on defense. Jones said he is drafting a substitute measure that he may offer as an alternative.

Although the committee was deeply divided over freezing Social Security benefits, it had become clear during a Democratic caucus earlier Tuesday that the idea lacked adequate support among other House Democrats.

No Official Vote

No official vote was taken in the closed-door session, but House Speaker Thomas P. (Tip) O’Neill Jr. (D-Mass.) said at least a 4-1 majority opposed the benefits freeze.

Reminded that he had said publicly last January that Social Security should be “on the table” as Democrats and Republicans seek a means of slashing the deficit, O’Neill said: “On the table--but never to the point that you were going to hurt the most needy senior citizens.”

Some Democrats, including Rep. Anthony C. Beilenson of Los Angeles, said that although protecting Social Security has proven a potent political issue for Democrats in the past, freezing it now could help them “make the strongest possible statement on the budget.”

Such a move, he said, should come as part of an overall budget freeze and could include setting aside funds to protect the poorest elderly.

Defense Trade-Off

The total freeze on defense spending proposed by the committee Democrats represents about a $4-billion cut from the Senate plan, which would allow the Pentagon’s budget to grow roughly 4% to keep it in line with inflation. However, the Democrats’ decision to grant Social Security cost-of-living raises more than wipes out those savings, adding $6 billion to spending next year.

In many other areas, the plan resembles the one passed by the Senate, with slight modifications. Sources said it would allow general revenue sharing, the federal government’s no-strings-attached grants to local governments, to expire at the end of 1986. But, unlike the Senate, it would also cut the program’s funding by 25% next year.

Like the Senate plan, it opts to cut rather than terminate many programs the Reagan Administration wants to kill. For example, it would slice Amtrak’s budget by about 7%, contrasted with a Senate reduction of about 13%.