Cutting Defense Funds Requires a Delicate Balancing Act : Budget: Clinton’s relations with the Pentagon are already damaged, and many Democrats are unwilling to be perceived as lax on national security.

WASHINGTON — The new economic plan that President Clinton is scheduled to outline Wednesday is expected to open debate on a central question in his continuing effort to forge a coalition of New Democrats: How much money should be shifted from the defense budget to domestic programs?

On one hand, the President’s all-important relationship with congressional Democrats--as well as his personal convictions and campaign rhetoric--push him in the direction of sizable defense cuts.

At the same time, he has significant reasons to hesitate. His relations with the Pentagon already are damaged as a result of the issue of gays in the military and the President’s own draft avoidance as a young man. Moreover, Democrats have suffered in the past when they appeared not to take national security seriously enough. And savings on defense also may be needed to cut the deficit.

“It’s a very careful political dance” that Clinton faces, says Carol Lessure, legislative director for the Defense Budget Project, a private research group.

As an opening salvo in the battle over spending, Defense Secretary Les Aspin has indicated that the Pentagon will propose only a few billion dollars in cuts for fiscal 1994, and the question on Capitol Hill is whether that figure will be big enough.

Although Sen. Sam Nunn (D-Ga.), chairman of the Senate Armed Services Committee, seems likely to support Clinton’s modest cuts, his House counterpart, Rep. Ronald V. Dellums (D-Berkeley), just took over the House Armed Services Committee and is receptive to deeper slashes.

Also uncertain is whether the House and Senate Budget and Appropriations committees--under pressure to come up with new financing for domestic programs--will accept Aspin’s plan, or will demand still deeper cuts in defense. Senate Budget Committee Chairman Jim Sasser (D-Tenn.) says Aspin’s figure is “probably too small.”

In past years, conservatives have used a variety of tactics to keep the defense budget reasonably intact. To begin with, the 1990 budget law, enacted after George Bush’s budget compromise that year with Congress, has prohibited the lawmakers from shifting money from the defense budget to finance domestic programs. A budgetary “fire wall,” lawmakers called it.

Then, too, many lawmakers who initially favored big cuts in defense spending began having second thoughts about the possibility of throwing defense workers out of jobs--particularly in the midst of a recession.

This year, those pressures have eased somewhat.

The budgetary “fire walls” expire in late September, at the end of fiscal 1993, making it procedurally easier to shift defense “savings” to domestic uses. Moreover, in many sections of the nation the economy appears to be recovering at last. And Congress has a raft of new members, many of whom favor cutting military spending more deeply.

At the same time, some analysts warn that the defense debate may become skewed by an expected disclosure that simply keeping current military programs intact may prove far more costly than the Bush Administration had let on--possibly adding $50 billion to whatever Aspin is planning to spend between now and fiscal 1997.

Stanley A. Weiss, chairman of Business Executives for National Security, points out that the General Accounting Office has predicted that newly expected cost add-ons for current production of major weapons programs could bloat the price of existing defense programs by as much as $35 billion by fiscal 1997.

And Nunn has raised the possibility that the latest Bush-proposed budget, which assumes some $70 billion in cutbacks over that time period as a result of management changes in key defense programs, could be overestimating the likely savings by as much as $50 billion.

Aspin warned last week that the $10.8 billion that he has asked the military services to cut will not be the Administration’s final proposal. The Pentagon also has to pay for a rash of new base closings expected later this year. And both Clinton and Congress want to enact more “conversion” programs to help the defense industry adjust to the cutbacks.

Moreover, Aspin himself is said to be planning to restore some of the defense programs that the outgoing Bush Administration had cut--such as the V-22 Osprey aircraft and construction of fast sea-lift ships. So the final number that Clinton proposes in his budget plan this year is likely to be substantially smaller.

Even so, Stephen Hess, a Brookings Institution political analyst, argues that Clinton may be playing it shrewdly if he ends up sending Congress a total package of military cutbacks similar to what Aspin is proposing--seeming first to act “responsibly” himself and then leaving room for Congress to deepen the cutbacks somewhat.

“It would be very difficult to imagine that Congress will cut defense spending so much more sharply that he (Clinton) actually would have to veto the bill,” Hess said in a telephone interview. “This way, he’s been responsible. If Congress cuts more, he can ‘reluctantly’ accept their decision.”