The tight leash of monetary policy will keep the economy from bounding ahead in the coming months.
So says the Brookings Institution in its 13th annual budget report, ''Setting National Priorities.'' The report, released April 20, reemphasizes one of the most durable criticisms of Reaganomics--that the Fed's monetary policy and the administration's fiscal policy are pulling the economy in different directions.
Brookings recommends the government change its policy mix, loosening up a bit on money and pulling in on fiscal policy, by cutting defense and ''entitlement'' spending and raising taxes. Such a policy, now sought by many congressmen, would get output and employment moving again, Brookings says--but only at a walking pace.
''There is no way of reducing inflation without keeping a rein on the economy ,'' says Joseph A. Pechman, editor of the study. ''The proposals we're making are not going to promote a very high rate of growth over the next several years.''
The report's authors, at a press conference releasing their annual effort, say the economics profession still knows of no way to reduce inflation without squeezing the economy. Traditional fiscal conservatives, such as Herbert Stein, former Council of Economic Advisers chairman for President Nixon, have been painting much the same scenario.
Less traditional economists don't see it quite the same way.
''Brookings, in perpetuating this 'conventional wisdom,' is doing the economics profession a great disservice,'' says Dr. Robert Genetski, chief economist at Harris Bank.
''Setting National Priorities'' provides yet another set of numbers for Washington's latest arcane entertainment: figuring what the deficits will be in '82 and beyond. Guesses for '82 now range from the official $99 billion of the administration to the gloomy $180 billion of Sen. Pete V. Domenici (R) of New Mexico. Brookings estimates are middle-of-the-road. Even if President Reagan's budget passes, the study says, the deficit could ring in at $108 billion in '82, rising to almost $145 billion by 1985.
''Even complete enactment of the administration's program will still leave excessive deficits in fiscal years 1983 to '85,'' it says.
And further budget cuts might not be enough to start an economy stalled, at least partly, by the high cost of money.
''Some decrease in interest rates would be provided with lower deficits, but probably not enough to keep the recovery going,'' says Charles L. Schultze, co-author of the Brookings study.
Brookings says deficit reduction must be matched by easier monetary policy, especially after 1982. Otherwise, tight money will keep the economy from moving anywhere.
And in the short run, budget cuts without more money flow could just deepen the recession by reducing total demand for goods and services.
''There is a problem of phasing in deficit reduction measures without clobbering the economy,'' Mr. Schultze says.
Brookings, in making this recommendation, seems to be using an approach tinged with more Keynesianism than is currently popular. Only a few on Capitol Hill are in favor of loosening the Fed's taps. ''There seems to be no interest in adjusting monetary policy,'' admits economist Barry Bosworth, another study co-author.
But several other parts of the study seem sure to receive close congressional scrutiny:
* Defense spending cuts. ''Realistically,'' the report says, ''defense outlays in the President's budget could be reduced by $11 billion in 1983, $28 billion in 1984, and $29 billion in 1985. The report lists specific cuts, from cancellation of the B-1 bomber to reductions in MX funding, compiled by William Kaufmann, an adviser to defense secretaries for two decades (see related story, Page 1).
* Tax increases. Delaying the scheduled July 1983 income tax cut and postponing tax bracket indexation could save $54 billion in 1985, Brookings estimates. An alternative might be a 12 percent surcharge levied on all taxpayers. A 4 percent value-added tax could raise $50 billion in 1985; a $5 -a-barrel oil import fee, $15 billion.
Mr. Pechman indicated his personal preference would be to close tax preferences through such moves as disallowing deductions for interest on consumer borrowing and full taxation of unemployment benefits for those with other income of $20,000.
* Entitlements and other nondefense spending. The report recommends adjusting automatic cost-of-living increases for entitlement programs such as social security, a budget option much mentioned in Congress.
The report points out that nondefense, non-entitlement spending is taking more than its share of the knife.
''As a share of GNP, outlays for the non-entitlement programs--covering such diverse activities as support for housing, education, health, highways, and law enforcement--would fall to levels below any reached in the last 40 years,'' says the report.
''In this situation, defense, social security, and other entitlement programs cannot remain immune from budget cuts,'' it says.