President calls for patience, change
In his first State of the Union message -- against a backdrop of dark recession splashed with federal red ink -- President Reagan assured the American people the nation's economy was already on the road to recovery.Skip to next paragraph
Subscribe Today to the Monitor
Mr. Reagan urged Americans to stay the course with the plans in place. And he offered ''a bold and spirited initiative'' -- a multibillion dollar swap of federal and state programs -- as the new 1982 feature of Reaganomics and its ''new federalism.''
''We have an economic program in place completely different from the artificial quick-fixes of the past,'' Reagan said, arguing that standing pat with last year's program remained the best policy. ''The program for economic recovery that is in place will pull the economy out of its slump and put us on the road to prosperity and stable growth by the latter half of this year.''
On deficits, too, the President asked patience. His own new forecasts ''will show major deficits, starting at less than $100 billion and declining,'' he said. ''Raising taxes won't balance the budget,'' he said in response to those calling for tax hikes. ''Higher taxes would not mean lower deficits.''
''More important,'' he said, ''we are making progress with three keys to reducing deficits: economic growth, lower interest rates, and spending control. The policies we have in place will reduce the deficit steadily, surely, and, in time, completely.''
Because of its stand-pat theme, Reagan's State of the Union message -- as prepared for delivery -- was being read in Washington more as a political document than as a concrete new agenda.
It sets the stage for the 1982 elections. It attempts to postpone until 1983 any major corrections in the administration's economic formula -- what Washington likes to call ''the tough decisions.''
Any major adjustments -- a tax hike, cuts in defense, dropping the third year of his three-year tax-cut package -- would have to come at the urging of Congress, or be precipitated by a severe economic downturn or crisis in the next few months.
The political reading is basically the same on both sides of the party aisle, and among administration officials.
''We're putting off the very tough decisions until after the election,'' says one Cabinet official. ''To have done it now - something like a tax hike, to send a reassuring signal to the financial markets - would have been to admit our program was a failure.''
The Cabinet official concedes he is worried that the President's most innovative budget feature, a ''new federalism'' swap of programs and costs between Washington and the states, faces a ''difficult battle'' in Congress. And if passed, the program would be tough to implement.
He and other members of the administration are even more worried about leaving the impression ''that $100 billion deficits don't matter,'' and risking Republican prospects this fall on the supply-side economists' promise of quick recovery from the recession.
Republicans in Congress have no great enthusiasm for another bruising round of budget cuts.
''I would hope this would be a year of consolidation and correction (of the President's program) rather than of more social experimentation,'' says Rep. Jim Leach (R) of Iowa, president of the progressive Republican Ripon Society. ''I just hope they (the White House) don't put their head in the sand.''
''There are some very unpopular decisions that are going to have to be made sooner or later - decisions on excise taxes, user fees, closing tax loopholes, delving into social security. The President has apparently decided to put off those decisions in consideration of their impact on the election this fall,'' says Rep. Donald J. Pease (D) of Ohio, member of the Democratic Whip organization in the House.
''Apparently he's going to go after some of the entitlement programs, which is easy for him to do philosophically,'' he says. ''But in terms of reducing the deficit, there's got to be some extra income. If he's ducking these, that's a sign he and the White House strategists are taking the safe route by delaying them. They've decided they can defend large budget deficits more easily than they can fend off people upset about tax increases.''
Democratic leaders, their eyes equally on the fall election, will offer no legislative relief for the President this session. They tried compromise and alternative routes last session and were beaten, they say.