Searching for compromise on '83 budget
Washington — All over Washington the search goes on for a way to persuade President Reagan to propose - or at least to accept - major changes in his economic plan.
A blueprint of what those changes should include is widely agreed upon by experts in both political parties and by some key White House officials, informed sources say.
The immediate aim of those who want change is to fashion a fiscal 1983 budget that would begin to whittle down the horrendous deficits that lie ahead.
The White House projects a $71.9 billion deficit in fiscal 1985. But experts in Congress and the private sector claim that - without changes in Mr. Reagan's budget - the 1985 shortfall might top $200 billion.
At the most optimistic, these experts agree, the deficit will be much larger than the White House expects. Meanwhile, interest rates - the bane of the housing, auto, and a host of other industries - hang high, as uncertain lenders try to probe a murky future.
''What we need,'' says a seasoned budget expert, ''is to trim $150 billion out of that deficit by 1985 - some of it in 1983, the rest in '84 and '85.''
Trimming that much from the deficits would trample all over some of Reagan's most cherished beliefs and pledges to the American people.
He insists that his three-year, 25-percent income tax cut proceed as planned, with no deferral of the third year 10 percent reduction due July 1, 1983.
Some of his top aides, bolstered by expert opinion in Congress and on Wall Street, urge him to defer that cut, both for the revenue it would bring into the Treasury and for the signal it might send to the business world that future deficits would shrink.
The President rebuffs this advice, clinging to his conviction that his tax cuts will generate so much savings, investment, and productivity that overall tax revenue will climb.
''We will not go back on our (tax-cut) policies,'' Treasury Secretary Donald T. Regan told the House Budget Committee this week. ''Those policies will prove productive.''
Many experts say a realistic attack on budget deficits should include, in addition to tax-cut deferral, a smaller defense increase and some kind of cap on payments under social security and other entitlement programs.
Neither Congress nor the White House wants to tackle that political hot potato this election year. Later this year, a bipartisan commission chaired by economist Alan Greenspan will report its findings on how to bolster the social security system. This would appear to postpone beyond the November election any painful decision by lawmakers and the White House.
As for defense, Reagan opposes any significant trim in the multi-year military buildup he foresees. Defense Secretary Caspar W. Weinberger and other conservatives support him in this position.
The unknown quantity in all this is how much, if any, give there may be in the President's thinking, especially on tax cuts and defense spending. Aides march into the Oval Office to voice their compromise views and march out again, crestfallen.
''No one,'' said a top Republican privately, ''knows what the President is thinking. There is no sign of a change on his part.''
The fact that White House chief of staff James A. Baker III has been authorized to discuss budget strategy with key congressional Democrats does not, in itself, indicate that Reagan is ready to compromise. Mr. Baker's writ runs to discussion only, aides make clear, not to offering compromise views on the President's behalf.
Reagan policies already in effect under the 1982 budget, meanwhile, in various ways appear to hurt poor people, including the ''working poor'' who earn money in addition to getting welfare.
''The welfare cuts of 1982,'' says Rudolph G. Penner of the American Enterprise Institute, ''focused on the working poor. This applies to rental subsidies, food stamps, and so on. The net effect is to reduce the economic incentive to work.''
Among those most affected are working mothers, whose lowered income eligibility may throw them off welfare rolls. Their inclination, therefore, may be to stop work in order to restore eligibility. This, critics say, is exactly the opposite of what Reagan intended.
In a New York speech March 23 the President said he was ''bothered'' by accusations that he was ''trying to destroy government's commitment to compassion and to the needy. I'm doing everything I can to save it . . . so that enough resources will be left to meet the requirements of the truly needy.''