When economists such as Herbert Stein, Rudolph Penner, and Alan Greenspan speak out against the dangers of continuing high budget deficits, they can be described as engaging in a ''friendly'' (but still very real) disagreement with the Reagan administration. They are, after all, Republicans - and considered in a broad political spectrum, conservatives. Their views, which to a considerable extent parallel those of Martin Feldstein, Mr. Reagan's chief economic adviser, also represent an important element of the Wall Street financial community - a constituency important to a Reagan reelection bid in terms of campaign contributions.
So as the administration now goes about the process of preparing the fiscal year 1985 budget for submission to Congress early next year, it would seem important that it give heed to the concerns of friendly critics. As these economists are making quite clear, continuing deficits threaten the recovery. The concern is that starting in 1985, and going beyond, the government's need to finance the deficits will crowd out private borrowing.
Mr. Penner, for his part, joins a group of economists testifying before the Senate Finance Committee this week on ways to trim the deficit. The hearings, conducted by Finance Committee chairman Robert Dole, may represent one of the more important efforts to get a handle on the deficit problem between now and the time Congress resumes late in January.
Is the administration itself slowly coming around to the need to reduce the deficits? Interestingly, administration officials are now saying that the new budget (of around $918 billion ) will include a contingency tax increase. At the same time, the Pentagon is already trimming a preliminary plan calling for a 22 percent increase in military spending (17 percent to 18 percent in real terms, adjusted for inflation).
Might the Republican Senate and the administration yet get together on some practical steps for easing the deficits? In political terms, the administration would seem to have a strong case for doing something about the deficits. A Democratic Senate and House might be inclined to take a far more sweeping approach than would be acceptable to Mr. Reagan, were he to be reelected.
The case against the deficits, as pointed out by the Stein-Greenspan-Penner group, goes to the issue of economic growth. Deficits, they argue, crowd out private investment, which is needed to finance new plant and equipment.Mr. Stein estimates that a budget deficit of 1 percent of GNP would reduce the US growth rate by three-tenths of 1 percent. (The deficit is now around 5 percent.) So, as Mr. Stein argued in a recent analysis for the American Enterprise Institute, ''if the growth rate would have been 4 percent with a balanced budget, it would be 3.7 percent with a deficit equal to 1 percent of GNP. If the budget deficit is 4 percent of GNP, real GNP at the end of ten years would be about 11 percent lower than it would have been with a balanced budget.''
Considered in terms of US economic growth - one of the major objectives of the Reagan administration - continuing annual budget deficits on the order of 4 or 5 percent of GNP must be considered unthinkable.