Down with the Deficits

Reagan begins to ease his stance on taxes and arms cuts

If Hollywood were to make a movie of the budget drama now being enacted inside the White House, it might well be titled Reagan Faces Reality. Reluctantly, imperfectly and very belatedly, to be sure. Nonetheless, the key decisions taken last week in an eleventh-hour overhaul of the budget that goes to Congress on Jan. 31 seem likely to meet a modest but all-important goal: enabling Ronald Reagan to present a set of deficit projections for fiscal 1984 and later years that will serve as a starting point for a serious effort to stem the tide of red ink before it drowns prospects for a lasting economic recovery.

To accomplish even that much, the President had to back away from some of his most cherished beliefs about military spending and taxes. He denied stoutly that he was doing any such thing and, in fact, seemed to be largely unaware of the economic and political stakes. Nettled by charges in the press that his Administration was "in disarray" and losing its direction, Reagan charged at his Friday meeting with newsmen that the disarray was in the minds of reporters who were printing tentative budget proposals as hard-and-fast decisions. He added, "I do not believe that, philosophically, I have changed at all."

But it was difficult to read any other meaning into last week's three major decisions. They were:

1) To reduce planned military spending by $8 billion in fiscal 1984, lowering it to $239 billion. About half the cut would result from a decline in inflation, especially an expected continuing drop in the cost of buying fuel for ships, tanks and planes. The rest would come from cancellation of a 7.6% pay increase for 2.1 million soldiers, sailors and airmen that had been scheduled for Oct. 1 and miscellaneous "program changes," probably including such items as less steaming time for Navy vessels and postponements in building of military housing.

The military cuts pleased no one. Congressmen and Senators stormed that the reductions would be both too small (military outlays would still rise by more than 14% above the current fiscal year) and wrongly focused. Hawks and doves joined in the worry that scrapping the pay increase would endanger the ability of the military forces to persuade skilled people to reenlist. They contended that the Administration might do better to cancel or delay some expensive weapons-buying programs. Even the Joint Chiefs of Staff, who were not consulted on the reductions, took that line. Air Force Chief of Staff General Charles Gabriel grumbled to reporters that the Chiefs would prefer to buy fewer weapons rather than cancel the pay boost.

The decision marked a sharp turn in White House thinking. Though Reagan had always insisted that military spending must be exempt from budgetary restraints, he is now proposing a reduction for the sole purpose of shrinking the deficit. Secretary of Defense Caspar Weinberger, who fought against the cuts and lost, made that reasoning explicit. Ashen-faced and biting off his words, Weinberger declared, "If it were not for the deficit, we would not have any suggestion that we not carry out the full program."