Nation: Conservative Conservatism

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A BALANCED BUDGET. Though his spending cuts would not even come close to matching his tax reductions dollar-for-dollar, Reagan's advisers insist that he can nonetheless make revenues equal expenditures, possibly as early as 1983. The rationale: the Senate Budget Committee, a reasonably neutral source, has predicted that if no change were made in tax laws, federal revenues would more than double in the next five years to a staggering $1 trillion, given even modest economic growth, generating more income to be taxed. Reagan, the advisers contend, could whack away at tax rates to make the increase much smaller, and the revenues pouring in would still be enough to pay for spending that would be rising much less swiftly under a Republican Administration. Says Reagan of balancing the budget: "We can do it. We must do it. And I intend that we will do it."

REDUCED REGULATION. Says Reagan: "Government regulation, like fire, makes a good servant but a bad master." In company with many nonpartisan economists, he believes that excessive regulation is strangling business investment and worker productivity. He appointed Murray Weidenbaum, head of the Center for the Study of American Business at Washington University in St. Louis and a member of TIME's Board of Economists, to head a task force that will recommend just which regulations to scrap or modify. Weidenbaum says that he will look especially closely at the Environmental Protection Agency's ever-expanding mass of stringent antipollution rules.

The end result, in Reagan's view: businessmen freed of heavyhanded regulation will invest more; workers, released from oppressive taxation, will labor harder and save more; the economy will grow, producing more jobs and less inflation.

Reagan's grand plan jettisoned some of his old favorites. No longer does he muse about returning the U.S. to the gold standard, an idea that startled economists because it would make the monetary system too inflexible. Reagan has dropped proposals to abolish gift and inheritance taxes, which would increase the drain of his tax cuts on the Treasury.

More important, Reagan has abandoned the far-out idea that deep tax cuts would come close to paying for themselves, even without spending reductions, by stimulating so much economic growth that the Government would collect about as much revenue with lower taxes as it would with the existing high rates. That notion was pressed by U.S.C. Professor Arthur Laffer, Economic Consultant Jude Wanniski and New York Congressman Jack Kemp, a trio that Wanniski proudly characterized as "the wild men" of the Reagan entourage. Under their influence, Reagan sometimes talked as if tax cuts were a kind of economic cureall.