The 1983 budget: Reagan hews to economic program, charts largest peacetime military buildup in US history
Washington — At the heart of President Reagan's 1983 budget lies an apparently undiminished faith that huge tax and spending cuts will pave the road to US prosperity.
Far from yielding to urgent pleas that he raise taxes to reduce record deficits, the President expresses his ''firm resolve and unwavering adherence'' to a fiscal policy built around three successive years of tax cuts and spending trims.
Defense outlays are boosted sharply in his budget. But Mr. Reagan asks Congress to cut additional billions of dollars from health, welfare, and some other nonmilitary programs, which took the brunt of spending trims in 1982.
For example, the President proposes nearly $13 billion in cuts in welfare, food stamps, and other benefit programs. Social security would not be touched, however.
And despite 8.5 percent unemployment and a recession-wracked job market, Mr. Reagan asks for a $2.6 billion cut in federal job and training programs. He also proposes reductions in the amount the federal government pays toward the cost of medicaid. This would be accomplished by asking recipients to pay more of the cost of their medical treatment.
If Congress gives him all he wants, the President affirms, the deficit for 1983 can be held to $91.5 billion, somewhat lower than the $98.6 billion now forecast for 1982.
If Congress refuses to cooperate, White House officials warn, the deficit could balloon well above $100 billion in 1983 and succeeding years.
The President, by raising the specter of runaway deficits, seeks to pin on Congress the responsibility for making deep cuts in social programs in an election year.
Mr. Reagan's long budget message does not conclude that his own policy of reducing US Treasury revenues through massive tax cuts may contribute to rising deficits.
Instead, the President lists three major reasons why he no longer will be able to balance the budget in 1984, as he had hoped:
* The current recession will cause tax receipts to fall by $31 billion and outlays to rise by $8 billion in 1982. ''This factor alone,'' the budget message says, ''accounts for nearly all of the difference between the $45 billion 1982 deficit we projected last year and our current estimate of $98.6 billion.''
* Interest payments on the national debt ''will exceed our original projections by $18 billion in 1982,'' because interest rates have remained higher than the White House expected.
* Success in controlling inflation, while welcome, has had the effect of reducing Treasury tax revenues more than had been anticipated.
All this is true. Many critics would add another factor - that doubts about the wisdom of the Reagan tax cuts, especially among Wall Street investors, contributed to keeping interest rates high and deepened the recession.
To allay such doubts, most of Mr. Reagan's top advisers urged him - unsuccessfully, as the new budget shows - to change course and propose higher taxes.
Embedded in the $757.6 billion budget is what Alice M. Rivlin, director of the Congressional Budget Office (CBO), calls a ''real downside risk'' that things will not work out as the President hopes.
If they do not, the nation may experience soaring interest rates, growing budget deficits, and recurrent bouts of recession, accompanied by high unemployment.
The CBO and White House, in forecasts issued almost simultaneously, agree that recovery could begin in the last half of 1982 and be accompanied by declining inflation and - to some extent - by lower unemployment.
Beyond near term, however, the forecasts diverge. The White House expects recovery to stimulate extra tax revenues, permitting future year deficits to be whittled down.
The CBO forecast, by contrast, says that - without additional spending cuts or tax increases - government outlays will rise much faster than government income.
Historically, says Dr. Rivlin, deficits go down in a period of recovery, because tax receipts swell and government spending declines. The ''dramatic thing'' about CBO's new forecast, she says, is that revenues will slow down while spending grows.
Tax revenues - now about 21 percent of the Gross National Product (GNP) - will sink to 18 percent under current law. Outlays, by contrast, remain constant at about 23 percent of GNP.
As a result, the budget deficit - about 2 percent of GNP in fiscal 1981 - will widen to roughly 5 percent by 1987.
Tax cuts enacted last year, under the President's prodding, will reduce revenues by an estimated $39 billion in fiscal 1982, rising rapidly to a revenue loss of $294 billion in 1987.
CBO's forecast is based on a ''current policy budget'' - that is, what would happen if no tax or spending changes take place. The President's 1983 budget proposes a variety of spending changes, notably more for defense and less for civilian programs.
Based on the expectation that Congress will enact his new budget requests, Mr. Reagan foresees the deficit dropping from $91.5 billion in fiscal 1983, to $ 83 billion the following year, down to $72 billion in 1985.
CBO forecasts that in the unlikely event there are no tax or spending changes , the deficit would grow to $157 billion in 1983, rising to $188 billion the next year, and to $208 billion in 1985.
Initial reaction to the President's budget indicates that Congress may give Mr. Reagan only part of what he seeks. This would put budget deficits somewhere between the White House and CBO forecasts.