Reagan faces batch of domestic issues: taxes, budget, farm bill, etc. Meanwhile, the 1987 budget battle is looming just over the horizon

It's decision time for Ronald Reagan. Back in Washington after a postsummit rest at his California ranch, the President faces a passel of domestic issues.

Can he find a way around the Gramm-Rudman deficit-reduction measure that does not erode his budget priorities, above all his military buildup? The White House is lobbying hard to modify an amendment that would allocate spending cuts across the board in both defense and domestic programs.

Should he endorse the tax-reform bill adopted by the Democratic-led House Ways and Means Committee at the risk of alienating House Republicans and with the hope that the Senate will improve on it? Or should he refuse to support the House measure and virtually kill off reform under his administration?

Can he prevail on Congress to rework the farm bill so he does not have to veto it and damage the Republican Party?

Meeting with congressional GOP leaders yesterday, the President said he wanted to keep the tax-reform process alive. He also said he would not make a decision on the House committee bill until he sees economic-impact studies by his Council on Economic Advisers and the Treasury Department.

On the Gramm-Rudman matter, Mr. Reagan urged Senate majority leader Robert Dole (R) of Kansas and other Republican leaders not to take away his flexibility in how to apply automatic cuts to the defense budget. The White House is not eager to have spending cuts come equally from defense and domestic programs, but it indicates it may be prepared to accept the 50-50 split, provided it can retain flexibility in how to cut the Pentagon budget itself.

Other issues coming up for presidential decision soon are a Superfund bill for toxic-waste cleanup, which the President has threatened to veto, and the agricultural credit bill, which he also may veto. Then there is the continuing budget resolution, which includes a cigarette tax Mr. Reagan does not like and which he threatens to veto if there is ``excessive spending'' in any one area. The textile bill due on his desk soon is also headed for a veto.

Political experts suggest that the President may be able to use his popularity, bolstered by superpower summitry, to sustain any vetoes. But it is not Reagan's style to use the veto heavily.

``A strategy of vetoing bills does not mean that you will be seen as a winner,'' says Norman Ornstein, a congressional expert at the American Enterprise Institute. ``He'll veto a few things, but the question now is whether he can work some issues around so he does not have to veto them.''

Also crowding the President's agenda is the budget for fiscal 1987, which must be presented to Congress early next year. Under the Senate version of Gramm-Rudman, the budget would have a deficit target of no more than $144 billion, a target the administration says it will meet. This will require steep reductions, which will be difficult to achieve because social security and defense cuts are ruled out, and the huge interest payments on the national debt cannot be touched. Moreover, the President is stic king by his pledge not to raise taxes.

Administration officials say the President will submit a draconian budget. ``It [deficit reduction] can be done,'' says a key White House aide, ``but that's not saying the public has a will to do it.''

Having put himself on the line in support of the Gramm-Rudman concept -- to the distress of some within his administration -- the President is now pulling out all stops to get a version of the measure acceptable to him.

Before the presidential meeting with GOP leaders, White House chief of staff Donald T. Regan and other high aides met Senate leaders on Capitol Hill. Mr. Regan voiced concern that the measure might ``cripple'' the nation's defense, especially when arms negotiations are under way with Moscow.

In both the House and Senate versions of Gramm-Rudman, there would be automatic, across-the-board spending cuts if Congress and the president failed to meet the annual ceilings on the budget deficits.

Despite the heap of difficult issues before Reagan, White House officials scoff at the idea that the President will concentrate more and more on foreign policy in the rest of his second term, with less attention paid to domestic problems. They insist he is committed to his primary objective of reducing domestic spending and is ``raring to go'' in the next round of skirmishing with Congress.

``This President will keep pushing for tax reform and many other issues -- and he has a good chance of getting them,'' one aide says.

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