PRESIDENT Reagan has been having second thoughts about his earlier enthusiastic support for the Gramm-Rudman balanced-budget measure -- and, in fact, is now said to be considering a possible veto of the legislation if it passes Congress in a form that requires substantial cuts in defense. Clearly, the measure -- which would require Congress and the White House to reduce the deficit by fixed annual target levels over the rest of the decade, until the budget is in balance by 1991 -- warrants a careful rethinking by Mr. Reagan, not to mention Congress itself.
When Reagan first endorsed the legislation, the political gain for the White House, and Republicans in general, seemed considerable. Democrats were caught off guard by the essentially GOP-led effort to balance the budget. And the measure promised to give Reagan, and subsequent presidents, some added leverage over the budget process, in the sense that the White House would be able to make cuts in the budget if lawmakers themselves were unable to do so.
Washington's newfound eagerness to balance the budget is commendable. It would have been better, of course, had the nation's leadership gotten around to enacting a comprehensive deficit reduction package during the past year or so, when the deficits substantially increased.
Still, the Gramm-Rudman measure would create as many problems as it would purportedly resolve, as Mr. Reagan is discovering. The President is said to be concerned that the bill would require deeper cuts in defense than the White House welcomes, or require enactment of a tax increase to meet annual deficit reduction targets. But concerns about Gramm-Rudman among legal experts and many economists go much deeper. The measure, by granting special authority over the budget process to the White House, will li kely be challenged on constitutional grounds. There is evidence that it is based on faulty economic assumptions. And most seriously, adoption of such a regimented package might make it harder, rather than easier, for Washington to deal with changing economic circumstances.
The economy continues to expand, although modestly. And many investors, if measured by Monday's upward gain in the stock market, appear to have concluded that interest rates will stay low, thus producing an optimistic climate for the economy's immediate future. Whether current growth will be sustained, however, is questionable. Much of the expansion's durability has been based on consumer spending -- particularly a willingness by Americans to take on added debt. But consumers now have little additional leverage for new debt.
Finally, on the issue of defense: The need for the current Pentagon budget might well look quite different after the US-Soviet summit meeting.
In short, while it is essential that lawmakers take energetic steps to reduce federal deficits, they should retain as much flexibility as possible in doing so, rather than lock themselves into a rigid proposal as dubious as Gramm-Rudman.