A Washington holiday carol

The Christmas season has started in Washington, without waiting for mighty political decisions on the budget, social security, and defense to be resolved.

On schedule, cascades of lights on enormous fir trees have been flipped on in rotundas and along the White House ellipse.

Despite the recession at home and lingering hassles abroad, the mood in the capital is scarcely grim, acrimonious, or defeatist.

But there is a clear locus of tension in the nation's capital, and it is the White House.

The tension was underscored by Rep. Trent Lott (R) of Mississippi, who said during the weekend that the President would have been better off not convening the lame-duck session. The President called the session chiefly for Congress to finish its budget work. Now, observers say, the major product of the session - jobs legislation - faces a presidential veto. A veto could set the tone for Reagan's second two years. The more liberal, independent makeup of the 98th Congress may leave the veto - in contrast with the positive initiatives of his past two years - as the most potent weapon at Reagan's disposal to work his will on Capitol Hill.

Not only does the policy logjam remain unbroken as the Christmas recess looms , but the White House's major political decision - whether President Reagan will run for reelection in 1984 - remains unmade. Uncertainty about the President's plans prompts GOP chieftains to move more boldly toward a potential power vacuum. The tougher the reelection prospects for Reagan appear - with economic recovery forecasts scaled back monthly - the more Republicans assume Reagan will be less likely to run. ''Others will be jumping into the fray if Reagan hesitates,'' says one administration official.

Yet the worse things are, and the more people say his programs are a disaster , the more apt Mr. Reagan is to run again, says another Reagan loyalist who knows him well. ''He will want to finish what he's started. It's an anomaly.''

Like the business community generally, the administration is scaling back its own recovery forecasts for next year, from close to 4 percent real growth to less than 3 percent. It concedes its target of a $25 billion cut in non- defense discretionary spending has slipped out of range.

In the budget to surface after the first of the year, the administration's deficit projection for fiscal 1984 will not be held to $155 billion but will creep toward $180 billion, say outside analysts. The White House may have to seek $10 billion or more in tax hikes or try to unload other federal outlays to the states. On defense, the administration may yield a little ground by stressing its 7 percent arms buildup plan but allowing a trim for gains against inflation.

The strains of solving the practical budget problem on the White House are great. But the political equation is no easier. Reagan's biggest single drop in public approval came early this year just after he released the fiscal '83 budget, aides pointedly note.

During the budget deliberations, some White House staffers are floating the image of a more accommodating Reagan. They have been deeply worried by recent accounts of Reagan's decisionmaking by publications regarded as friendly to the Reagan camp, which portray him as out of touch, stubborn, and not readily open to new evidence.

But the overall assessment is that Reagan will hew to his fundamental goals anyway, calling for steep cuts in non-defense spending.

Meanwhile, some key Reagan team members seem to sense they may not be around for the next White House tree-lighting ceremony.

To White House watchers, the internal budget debate is often followed in terms of two factions, with presidential counselor Edwin Meese III and budget chief David A. Stockman on the Reagan fundamentalist side, and chief-of-staff James Baker III and Michael K. Deaver pressing for pragmatic alternatives.

''So far, all the signs point to a Stockman/Meese budget,'' says one Reaganite. ''They're just as tough and unrelenting as a year, two years ago.''

''Morale is low,'' says one administration official of the White House policy struggle. ''I suspect Jim Baker won't be there in six months - of his own choosing. His tolerance level will go down. He will get frustrated with the whole thing.

Says the official, a Baker backer, ''The administration will be going in a different direction than the one Baker will want to go.''

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