Pie in The Sky

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The other $22 billion would come in part from gimmicks that the White House used to call revenue enhancements. One proposed strategy is the sale of Government-owned assets to private investors. Among items that could make it to the auction block are the Amtrak rail system and several regional power- marketing administrations, which sell electricity to local utilities. Reagan is putting forward a plan in which the Government would sell $8 billion worth of the loans it has made to students, small businesses and other debtors. Private investment companies would buy the loans and then collect the interest and principal payments.

Many of these ideas have been floated before -- and sunk -- on Capitol Hill. So opposed has Congress been to the sale of regional power-marketing administrations that the lawmakers last year passed a bill forbidding the White House even to study the subject. Critics contend that the Government is not really bolstering its revenues through sales of assets, since the transactions result in the loss of future income like interest payments on loans. Says Rudolph Penner, head of the Congressional Budget Office: "It's a one-shot deal that doesn't mean a long-run cut in the deficit."

One of the touchiest budget issues may be military spending. Most Democrats do not want to appear soft on defense, which could be politically damaging. Still, many Democrats, along with a number of Republicans, remain convinced that the U.S. cannot afford as much of an arms buildup as Reagan has proposed. Says a Capitol Hill staffer: "If there were a way to provide 3% real growth for defense, you can bet that the Democrats would do it. But the cupboard is bare. There's nothing there."

An even more politically explosive topic is farm aid. U.S. farmers, who are still mired in a deep depression, enjoy perennial clout on Capitol Hill, but Reagan wants to cut the farm budget by several billion during the next five years. The Administration seeks to cut target farm prices, which determine the size of subsidies, by 10% a year. It would also like to toughen up the rules on maximum payments to ensure that the bulk of the aid goes to farmers who need it most. Says OMB Chief Miller, alluding to the movie Country: "A lot of money goes to people who are not Jessica Lange on the farm."

Leading the congressional efforts to deal with the deficit will be the chairmen of the two budget committees. On the Senate side, the budget panel will have a new chief, Democrat Lawton Chiles of Florida. Chiles is no stranger to the budget wars. In years past he worked so closely with the former Republican budget chairman, Pete Domenici of New Mexico, that the two men became known as the Bobbsey Twins. In the process, Chiles earned a reputation as a sincere and often effective budget cutter.

The House Budget Committee will be led for the third year by William Gray of Pennsylvania. Gray has been willing to stand up to the White House in the budget debate, and this year he seems more determined than ever to challenge Reagan's priorities. Says Gray: "What Congress is saying, Mr. President, is if you want to spend more money for the Pentagon and foreign aid, you've got to pay for it out of new revenues and not out of decimating education, health care for the elderly and nutrition for children."