Budget cuts: handle with care
THE fiscal year 1986 budget-planning sessions under way within the highest reaches of the Reagan administration cannot be altogether happy occasions for the President. Mr. Reagan is now confronted with difficult economic choices as evidence mounts that forthcoming federal budget deficits will be larger - not smaller - than anticipated.
For fiscal year 1985, which ends next Sept. 30, the deficit is expected to close out at around $205 billion. That is $33 billion more than the $172 billion shortfall projected in August - attributed, in large part, to the slowing of the recovery. And administration officials now believe that deficits for fiscal years 1986 through 1989 will be more than $190 billion annually - without signficant changes in budget and tax policies. The administration had recently been forecasting a deficit in fiscal year 1986 of around $174 billion.
Because of such forecasts, some top administration officials are now urging Mr. Reagan to seek deep and broad-based cuts in federal programs - whether or not Congress approves the cuts. These aides feel such a scenario puts the President in a comfortable political position. If Congress accepts the cuts - as it did in the initial round of budget-slashing back in 1981 - the President comes out a winner for having proposed ''bold'' action. If Congress balks, so this argument goes, the President also comes out on top, in the sense that the onus for rising deficits can be passed along to Congress.
There seems little doubt that federal spending will have to be held down, what with increasing deficits. That will either mean cuts in specific programs or, alternatively, a freeze of some type. The question, therefore, is which programs should be cut and by how much.
Savings are surely possible in many programs - especially the so-called ''entitlement'' programs aimed at the middle class. These include farm-support programs, veterans programs, federal pensions, and federal credit-and-loan programs. Further, a bipartisan - rather than confrontational - approach will be necessary to gain a meaningful budget-reduction, tax-increase program.
There is another area that warrants special attention: defense. Congress seems determined to slow the rate of growth in military spending this year. Would it not be better for both sides - Congress and the White House - to agree on a modest rate of increase for the Pentagon at the outset, say in the 5 percent range, rather than go through another legislative session of politics-as-usual posturing on the defense budget?
One final point on budget cutting: Support programs for the needy have already been pruned back about as far as seems politically and economically acceptable. So, in that regard, one can only be perplexed to read that White House aides are apparently drawing up a multi-year plan for further slashes in such programs as school aid nutrition, health care, and other support programs.
Surely, Congress and the American people would welcome a comprehensive program to slow the rate in federal spending to contain runaway deficits. But such a program will have to be credible. The ball is now in the administration's court.