Bipartisanship: How much will Congress buy?; Reaganomics remains intact
Washington — President Reagan's latest economic proposals reflect a man troubled by what is happening to the US economy, but determined to stick as closely as possible to the goals that he brought into office with him.
This can be seen by analyzing the aspects of his State of the Union message that dealt with tax policy and a freeze on spending.
His standby tax increase package for fiscal 1986 was accompanied by the President's insistence that already scheduled tax reduction programs remain in place.
Despite his call for bipartisan cooperation, Mr. Reagan said he wants no tampering with the 10 percent, across-the-board income tax cut scheduled to begin July 1. The President also insisted on indexing income taxes to inflation in 1985.
These tax measures, in the view of many economists, are a major reason that deficits threaten to climb, because they shrink the tax base from which the government draws money to pay its bills.
The President's call for a spending freeze in fiscal 1984 in fact would allow defense outlays to grow by about 9 percent in real terms, while imposing a 3 percent cut on nonmilitary domestic programs.
By this combination Mr. Reagan hopes to hold overall spending growth in fiscal 1984 to no more than the inflation rate, estimated at 5 percent.
This formula perpetuates the spending priorities that characterized the President's earlier budgets - rapid growth in defense outlays coupled with cuts in a variety of programs affecting lower-income Americans.
A number of Republican leaders, including Senate Finance Committee chairman Robert Dole (R) of Kansas, say that social programs - sharply reduced in Reagan's '82 and '83 budgets - should be exempt from further drastic cuts.
Some analysts say that the President, both in his State of the Union message and the 1984 budget due next Monday, may be staking out forward positions, from which eventually he will retreat to a compromise.
This was the case with social security changes recommended by the Alan Greenspan commission. Both Mr. Reagan and Speaker of the House Thomas P. O'Neill (D) of Massachusetts finally accepted proposals which at first they had opposed.
Indeed, the President referred to the social security plan as an example of the ''bipartisan spirit'' that he urged on Congress.
Many observers saw in his speech a possible readiness by the President, as the legislative process unfolds, to cooperate with Congress on programs to spur recovery.
Among proposals unveiled in the State of the Union address, however, none bend out of shape the basic framework of his established program.
Mr. Reagan still adheres to the efficacy of major tax cuts, huge boosts in defense spending, and sharp trims in other domestic programs. This was his original recipe for closing a budget gap which, by White House admission, may total more than $200 billion in fiscal 1983, which ends Sept. 30. This is roughly 6 percent of the gross national product (GNP).
Details of the President's main proposals include the following:
* A package of standby taxes to go into effect Oct. 1, 1985, if the federal deficit for fiscal 1986 is projected to exceed 2.5 percent of GNP, or about $100 billion.
The taxes would include a 1 percent surcharge on individual and corporate incomes and an excise tax on oil of about $5 a barrel. This might raise gasoline and home heating oil prices by 10 to 12 cents a gallon.
* Federal civilian and military pay to be frozen for one year. The annual cost-of-living adjustment of benefits paid under social security and other government-related retirement programs to be delayed six months.
* Congress will be asked to legislate new controls on the growth of entitlement programs like food stamps, which rise automatically under current law.
* The growth of defense spending would be trimmed by $55 billion over five years. Details were not provided.