Reagan on economy: frankness, hint of compromise

The big question in this city seems to be: Is President Reagan beginning to lose the initiative - is his dominance over Congress beginning to crumble a bit? Observers here see signs that Mr. Reagan is being forced to move toward accommodations with Congress that, if continued, could amount to retreat:

* Reports out of Congress indicate that the President has given in to pressure from congressional leaders and agreed to accept less than half the $13 billion in new budget cuts he has proposed.

At the same time, those sources say Reagan will take a budget cut of $3 billion in defense - up to $1 billion more than he earlier had agreed to.

Also, it is understood that Reagan will go along with some $7 billion to $8 billion in new revenues, as opposed to the $3 billion he had asked.

But the White House denies that Reagan has ''agreed'' to all this.

''The President has only said that he would listen to an alternative package when it is brought over to him by congressional leaders,'' this White House aide says. ''He's still standing firm on his earlier proposals.''

* His opposition in Congress contends it still has the President beaten on his proposal to send AWACS planes to Saudi Arabia.

The House vote and the Senate Foreign Relations Committee vote already have gone against Reagan on AWACS.

Here the President cites what's at stake as he sees it: Whether he is going to be able to shape foreign policy.

But, beyond that, the White House concedes that what happens to the AWACS sale could have a decisive effect on presidential momentum and on Mr. Reagan's ability get his new proposed budget cuts approved by Congress.

Here again, the White House contends that the President is gaining additional Senate support for AWACS every day and that by the time the vote is taken next week, he will have another triumph - plus the maintenance of his position as the main driving force in the federal government.

Elsewhere, observers see signs of a Reagan retreat in his acknowledgment, for the first time, that the US economy is in a recession.

He called it a ''slight recession,'' adding, ''and I hope a short recession.''

Murray L. Weidenbaum, chairman of the President's Council of Economic Advisers, also said the economy was in a recession.

The White House is aware of receding public support for Reagan economics plus a lessening of public trust in Reagan's ability to turn the economy around.

At the same time Reagan people point out that Reagan's standing in the polls is still relatively high, in the neighborhood of 56 percent. This is down, however, from a few weeks ago.

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