Can the budget be balanced without milking sacred cows?
Washington — Can President Reagan balance the federal budget by 1984 without cutting even more deeply in future years into social programs that benefit low-income Americans?
White House officials say yes -- if Congress passes the Reagan economic program largely intact and if the economy performs as they expect.
Critics, raising questions both of equity and feasibility, express doubt.
So far talk in Washington centers on budget-cutting. But the President in fact is leaving largely untouched some of the fastest-growing government programs -- notably social security, medicare, veterans' benefits, and defense.
If these programs gobble up more and more of the government pie, how can the White House make the additional spending cuts it says must be made: $29 billion in fiscal 1983 and $44 billion in 1984?
Reductions on this scale must be made, budget chief David A. Stockman told reporters at breakfast, if the Reagan goal of cutting the growth rate of government spending to 6 percent yearly is to be reached.
Recently, said Mr. Stockman, director of the Office of Management and Budget, federal outlays have leaped ahead from 12 to 16 percent each year.
A congressional consensus exists to give the President substantially the amount of spending cuts he wants, though not necessarily in the exact form he proposes.
What divides the Reagan-Stockman team from its critics are the economic assumptions on which White House policy is based.
Mr. Reagan's fiscal 1982 budget anticipates lower inflation, lower interest rates, and lower unemployment than had been forecast in the earlier 1982 budget submitted to Congress by President Carter.
The Reagan assumptions include, for example, a consumer price index rise of 11.1 percent this year and 8.3 percent in 1982, dropping to 6.2 percent in 1983 and 5.5 percent in 1984, the year of the presumptive balanced budget.
When social security payments to more than 35 million Americans are adjusted on july 1, the Reagan White House foresees an 11.6 percent hike in benefits, compared with 12.3 percent in the Carter budget. Comparable projections for 1982 are 9.2 percent (Reagan) and 11.3 percent (Carter).
As the consumer price index moves down, says Stockman, annual boosts in social security payments are less and, as a result, this and other indexed programs eat up less of the budget pie.
But, critics say, the converse also is true. If the price index climbs -- or does not decline as quickly as the White House expects -- payments for all indexed programs will swell, throwing the Reagan budget calculations out of whack.
"If the administration's economic scenario is not attained," says Alice M. Rivlin, director of the Congressional Budget Office, "The consequences for the budget are troubling. Higher inflation, higher interest rates, and higher unemployment would all work to produce more federal spending and larger budget deficits."
On the question of equity, critics claim that the major untouched budget itmes, notably social security and medicare, benefit primarily middle-class Americans because there is no means test. Age is the criterion, not income.
On the other hand, they say, some of the slashed programs -- food stamps, child nutrition programs, and the like -- are designed to help poor people, and cuts will correspondingly hurt them.
Stockman takes issue with this view. "Without social security payments," he says, "a large part of the elderly would be poor. So it is a no-win proposition to say that these programs benefit primarily the middle class."
The White House also claim that many social programs have grown beyond their original purposes. Proposed budget cuts, according to White House officials, are designed to restore these programs to their original scope, by removing from the rolls those people not truly needy.
Two examples often cited by Reagan aides are middle-class college students who receive food stamps, and schoolchildren of upper-income families who are automatically eligible for subsidized school lunches.
The Reagan assumptions call for a downward movement of interest rates, resulting in less budge money going to finance the national debt. But if the Federal Reserve Board tightens credit to combat higher-than-expected inflation, interest charges paid by the US Treasury would climb.
What emerges from all this is a picture of troubled Democrats in Congress, many of them anxious to accommodate President Reagan where possible but doubtful about his economic assumptions.
Stockman concedes that the aministration package is not so much an "econometric forecast" (based on computer projections), as a "policy forecast."
By this he appears to mean that Mr. Reagan and his aides believe Americans will react in particular ways to the kinds of tax and spending cuts the White House proposes, and that the economy will respond accordingly.