Into a Daunting New Year

When they reach the age of 75, even the most resilient of men and women are tempted to settle back and reflect on the past with a mixture of pride and wistfulness. Ronald Reagan does not have that luxury or, in fact, that temperament. As he rings in the sixth year of his presidency at the Palm Springs estate of Publisher Walter Annenberg this week and looks forward to his 75th birthday a month later, he faces a year that may be critical for his principal goals: scaling back the role of Government and improving the prospects for peace and security.

The Administration, along with a Congress preoccupied with November elections, will face challenges that in some ways are more difficult (and certainly more gnarled with complexities) than when Reagan launched his bold programs in 1981. The crisis-prone budget process has been burdened with an unpredictable new element that seems certain to create still more crises. The President's plan to reform and simplify the tax code was passed (just barely) by the House, which watered down the reforms, abandoned the simplicity, then tossed it to the Senate. Reagan's long-standing desire to speak directly to the Soviet people will be realized on New Year's Day, when he and Party Leader Mikhail Gorbachev give reciprocal radio and television addresses to each other's nations; but when they sit down for their second summit later in the year, a world yearning for progress on arms control will be looking for more than hopeful words and handshakes. All in all, predicts New York's Democratic Senator Daniel Moynihan, 1986 is shaping up as "crisis-ridden and tumultuous."

Most difficult of all will be navigating the murky waters of the Gramm-Rudman Act, the jerry-built scheme adopted last month that mandates automatic reductions in federal spending if necessary to reach specific deficit-cutting targets. The tumult caused by this unprecedented measure, whose constitutionality is under challenge, will begin almost immediately. On Jan. 10, budget officials in the White House and Congress will kick the law into force by producing an estimate of the current fiscal year's looming deficit, probably about $200 billion. To limit the shortfall this year, Reagan will be forced by Gramm-Rudman to order cuts totaling some $11.7 billion, half from defense and half from civilian spending that has not been specifically exempted. These reductions, known in federalese as sequestrations, will take effect March 1. Says Senate Budget Committee Chairman Pete Domenici: "It's going to come as a shock to a lot of people who voted for this that there will be sequestering in March."

Those shocks will be mild compared with the ones that will follow when the Administration presents its budget proposal for fiscal 1987, which begins next October. That document, due in February, will have to pare planned spending by more than $50 billion to comply with Gramm-Rudman, and leaks and protests are already flowing copiously from dismayed officials and special-interest groups. Since Reagan hopes to protect defense spending, his proposals will focus on domestic programs. Among probable goals: total elimination of the Small Business Administration and Job Corps, sale of the Federal Housing Administration and certain federally operated power facilities, and reductions in funds for student loans and child-nutrition programs.