Debate on budget figures heats up -- and Reagan slips a bit in polls
Beneath the euphoria surrounding the selling of the Reagan budget on Capitol Hill are signs of polarizing public opinion on the Reagan rule. The Gallup Organization reports a surprising 24 percent disapprovalm rating for President Reagan -- more than double that of any recent President after two months in office -- and a somewhat lower approvalm rating -- 59 percent, compared with 75 percent approval of President Carter at the same juncture -- despite general broad support for Mr. Reagan's economic proposals.
The White House was nettled, if not stung, this week when the Congressional Budget Office (CBO) joined many private forecasters in saying the Reagan economic plan misreads basic federal spending, jobless, inflation, and interest trends. It suggested federal spending would run $25 billion higher in fiscal 1982 than the Reagan budget team figured.
President Reagan himself called the CBO estimate "phony" -- a remark he later tempered to "false."
At stake are the fate of the CBO and its director, Alice Rivlin, and the risk of alienation between the Reagan and establishment economists, whose disapproval could further erode public confidence in the White House Plan.
Also at stake in the war of numbers is the credibility of the President's program itself. Ironically, the Reagan campaign had used CBO economic data last September as a neutral data base when it sought to convince voters its package of budget and tax cuts was a moderate plan, not "voodoo economics."
Technically, the $25 billion gap between the Reagan and CBO spending estimates stems from differing assumptions about how the Reagan plan will affect the economy, and how quickly items like defense spending will rise. The difference between the administration's 9.3 percent Treasury bill interest rate and the CBO's 13.7 percent rate alone means about $16 billion in added federal costs for fiscal 1982, economists say.
The CBO's full analysis of the Reagan program will be released in the next two weeks.
Politically, the $25 billion differences may lead to pressures on the White House to Raise its $695 billion budget target for next year, despite current White House assurances the $695 billion is "very firm." It could urge the Republican-controlled Senate to hold fast at $695 billion, while the Democratic-led House could respond with a $710 or $715 billion target, setting the stage for compromise.
So far, the White House is resisting efforts to delay this year's hike in social security payments from July to October, saving some $3 billion. It is dismissing suggestions -- traced to the CBO -- that only tampering with programs indexed to inflation, like social security, will save the government from escalating deficits in coming years.
The administration does not want to back off from its campaign pledge to leave middle class-supported programs like social security untouched.
"Clearly, to leave the indexed programs alone means outlays are going to go up if you're wrong on inflation," says CBO budget analyst james Blum. "The same will happen on the defense budget."
The "assumptions" standoff between the White House Office of Management and Budget and the CBO reflects a basic tug of war that could intensify, leading to an even greater "politicizing" of economic data than during past administrations , some economists warn.
In this dispute, the administration is partly right that the assumptions of the congressional budget professionals reflect more traditional views, based on econometric models that tend to underestimate inflation swings up or down, outside economists say.
But the White House's reaction appears to go beyond technical differences, reflecting a deeper antogonism against the CBO and mainstream economic forecasters, both Capitol Hill and private experts say.
"I think this latest $25 billion is [CBO director] Alice Rivlin's last hurrah ," says one Capitol Hill source. "She serves at the pleasure of either house, and if they asked her to go, she'd leave."
Mrs. Rivlin has said recently, however, that she will not leave soon. Her post was created in 1974 when Congress redesigned its budget process to give it more leverage against the White House. The CBO director's current your-year term expires in February 1983. The speaker of the House and President pro tem of the Senate, jointly, after consultation with the budget committees of both houses, appoint the CBO director.
"This isn't the first time the budget numbers have been politicized," a congressional budget source says. "Under President Carter, the budget process the last two fiscal years underestimated spending by $50 billion. When Congress went through its flurry to balance the budget, everybody knew they weren't going to do it."
"But in this case the politicizing is entirely one-sided," a Capitol Hill observer says. "The CBO has bent over backwards in its assumptions to give the administration a break. The politicizing is entirely from downtown [the administration].
"The CBO can't supinely agree with any sort of assumptions coming from the administration, or they might as well go out of business."