Reagan push: austerity at home, leverage abroad
Millions of Americans are likely to get less money from their federal government than past experience has led them to expect. Not only will this be hard on the people affected, but it poses some tough economic choices for President Reagan, as the glitter of his inauguration begins to fade.
In two respects, sources agree, the new President's job presents a challenge:
* Mr. Reagan must try, together with his Cabinet, to spread the inevitable budget cuts as fairly as possible among various citizen groups.
* Having done that, he must persuade Congress -- which has the final word on federal spending -- to go along.
This latter task will not be easy, for the heart of his program may involve whittling people off welfare rolls and trimming back the growth of future benefit payments to others.
The hour is fast approaching when President Reagan and his youthful budget director, David Stockman, must unveil just how and when they plan to provide the "jolt to the economy" which Mr. Stockman predicts.
This will involve much more than decontrolling the price of oil and natural gas, rolling back the tide of government regulations, and clamping a lid on federal hiring.
Somehow a paring knife, if not an ax, must carve into the vast array of "entitlement" programs, which transfer many billions of dollars from one group of Americans (taxpayers) to another group (recipients, some of whom, of course, also pay taxes).
Clustered among the millions of recipients are elderly, poor, disabled, unemployed, and other disadvantaged Americans, which puts a human face in the grim prospect of cutting benefits.
"In principle and in general," said a top-ranking congressional source, "everyone up here agrees that the transfer programs have to be cut.
"Yet," the source said, "when I talk specifics to real congressmen and real senators, they shy away."
"At least," the source continued, "the Domenici-Dole-Hatfield chairmanship of key committees in the Senate should work together better than the Muskie-Long- Magnuson trio. Magnuson never liked the budget process, Long undercut it, and he and Muskie feuded."
The new Republican chairmen -- Pete V. Domenici of New Mexico (Budget), Robert Dole of Kansas (Finance), and Mark O. Hatfield of Oregon (Appropriations) -- all favor the budget process, the source said, and all three want to see Reagan succeed.
This contrasts, in the source's view, with the divided counsels voiced by the Democratic chairmen of these key Senate committees in the last Congress -- Russell B. Long of Louisiana (Finance), and former Sens. Edmund S. Muskie (Budget) and Warren G. Magnuson (Appropriations).
In the House, where the Democrats retain control, the outlook for President Reagan's economic package is cloudy, some experts believe.
Aware of this, Reagan on his second full day in office invited Democratic chairmen of House committees dealing with the budget and economy to confer with him at the White House.
On the Republican side, unanimity prevails on the need to slash government spending. But some lawmakers doubt that personal income taxes should be cut by 10 percent, retroactive to Jan. 1, as Reagan has said he would do.
Such a tax cut would balloon the 1981 budget deficit, already estimated at $ 60 billion, to perhaps the largest shortfall in history -- hardly the message the new President wants to get across.
Those who prefer a July 1 date for tax cuts get strong support from former Federal Reserve Board Chairman Arthur F. Burns, who urged the Senate Budget Committee to put budget cuts ahead of tax cuts in priority.
This accords with the thinking of Senator Domenici, who believes that business tax cuts should begin right away, but not those for individuals.
He also warns that, unless Congress agrees to real trims in government spending, "there may not be room for a tax cut."