The Zesty Forecast for '85

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Defense Secretary Caspar Weinberger has argued that the Pentagon needs all its funds to counter heavy Soviet spending on weapons. But Schultze pointed out that in the past two years the Central Intelligence Agency has revised its estimates on the growth of Soviet military expenditures sharply downward. "To some extent," said Schultze, "the U.S. defense buildup has been based on a myth that we were falling behind the Soviets in most areas." He also complained that the Pentagon is building too many duplicative weapons designed to carry out the same mission. The Air Force, for example, has five major development programs under way to improve its ability to penetrate Soviet air defenses: an upgrade of the B-52 bomber, two new bombers and two cruise missiles.

TIME's economists were divided on the prospects that Congress will take decisive action against the budget deficit. Heller said he was optimistic because "there is a deep fear and loathing of deficits on Capitol Hill." Feldstein agreed: "Congressmen fear that if the economy goes bad in 1986, and they haven't done anything about the deficit, they are going to be blamed." Greenspan was more skeptical. Said he: "There is a vast, overwhelming philosophical commitment to cut the budget, but when you get to specific votes on specific programs, it is going to be very difficult."

The economists unanimously agreed that a meaningful deficit-reduction program would act as a supercharger for the U.S. economy. It would lower interest rates, boost business confidence and eventually bring down the dollar's value and the trade deficit.