Reagan's Budget Blitz Rolls On

By Ed Magnuson

But Democrats demand more details and less "jelly bean talk "

The President was elated. "Two to one?" he asked incredulously at a White House staff meeting last week. "Really? That's great!" His aides had just brought him the results of the first poll of national sentiment since he disclosed his dramatic plan to slash federal spending and taxes. Actually, the Washington Post-ABC News poll found that the margin of public approval for his economic recovery program was by more than 3 to 1; 2 to 1 was the ratio by which Americans expect Reagan's shrinking of Government to bring inflation down quickly. That particular optimism is not shared even by some of Reagan's economists.

Some of the President's aides were growing a shade cocky over the heady prospects of steamrolling the economic package through Congress. When Senators and Congressmen asked Reagan's aides how much of his program the President really insists on getting, they replied solemnly, "He has said he will settle for 97%." Noted one aide: "They don't even blink at us." Even among Democrats on Capitol Hill there is no willingness to oppose the Reagan drive broadly, since they agree with its aims, have no comprehensive alternatives to offer and fear that opposition would be political suicide. So far, the main tactic of resistance has been to support budget and tax cuts in general, while criticizing highly specific points in the Administration's still unfolding plans.

The President did his part last week to keep the sales pressure on. He invited key members of Congress into the Oval Office for 20-minute pep talks, held a cocktail party for a dozen legislators and their wives and spoke with 25 Republicans he is counting on heavily to push his bills. Reagan also threw a party, including a condensed version of the leggy Broadway hit A Chorus Line, for the nation's Governors and their wives. Thirty-one of the Governors are Democrats, and more than one-third of the budget cuts announced so far by the Administration for fiscal 1982 will curtail state and local programs that have benefited from federal money. Nonetheless, the National Governors' Conference passed a resolution declaring that the states were prepared to accept budget cuts, but only if they are given time to adjust to the new austerity, that poor people are protected against unfair treatment and that there is no massive shift in tax burdens from Washington to states and cities. The Governors, moreover, said they wanted Washington to assume greater, rather than less responsibility for welfare and Medicaid costs. Overall, however, the Governors were willing to swap tighter-funding limits for greater control over how they spend the money.

If Democratic opposition to the program grows, Reagan's strategists have ready a second-stage sales offensive. That is to target members of Congress who try to block the economic package and to light fires against them in their home districts, coordinated by Lyn Nofziger, Assistant to the President for political affairs. This drive will use mailing lists compiled by the Republican National Committee and by such friendly lobbies as the U.S. Chamber of Commerce and the National Association of Manufacturers. Sympathetic constituents will be urged to protest any foot dragging by their Congressmen and Senators.

Some Democrats feel that this grassroots pressure, whether inspired by the White House or not, is already being unfairly applied. House Speaker Tip O'Neill cited some 1,000 pro-Reagan letters he had received, noting that about 100 were from Clearwater, Fla., another 100 from Compton, Calif, a third 100 from Houston. He protested that "perhaps 90% of this mail has been generated" rather than being spontaneous. O'Neill complained that the pressure is premature, since Reagan has not yet fully detailed either his final spending or tax cuts.

O'Neill has a point. The briefing books that accompanied Reagan's Feb. 18 speech listed 83 programs out of which the President hopes to save $34.7 billion from what Jimmy Carter had planned to spend in fiscal 1982 and a projected $467 billion in lowered spending over the next five years. But Reagan also said that he intended to propose another $6.5 billion in 1982 cuts by March 10. Last week David Stockman. Director of the Office of Management and Budget, gave Reagan some bad news: OMB had underestimated the cost of spending programs that are tied to inflation or otherwise must increase under current laws. A restudy showed they will grow by over $3 billion more than expected. Reagan ordered that another $5 billion be cut from the 1982 budget. That means more than $11 billion still must be pared. Before they are harassed for moving slowly, the Democrats claim, they should be given all the details of the Reagan budget-cutting program.

Congressional leaders in both parties want more guidance on Reagan's tax plans. He has urged a reduction of roughly 10% a year in individual income tax rates over three years. The President also said that he intends to introduce a tax reform bill later, to reduce some inequities in the tax laws, such as the so-called marriage penalty under which unwed working couples pay less tax than working husbands and wives. Reagan strategists contend that it is necessary to quickly pass a clean tax bill free of more detailed reforms; some legislators argue they cannot coordinate budget and tax bills until they know how much the eventual reform provisions would cost. Stockman has estimated that the Government might lose another $10 billion in revenues from this second tax bill.

Nonetheless, Senate Majority Leader Howard Baker rosily estimated last week that the Senate could complete action on the budget cuts "in less than a month." Few of his colleagues agreed. More realistically, committee hearings might be finished in that time, with Senate action completed in May. House leaders, however, doubt that their chamber can work out a package and then settle its differences with the Senate until the August congressional recess. Privately, Stockman has conceded that the Administration could live with an August deadline.

The House Ways and Means Committee opened hearings into Reagan's tax plans last week on a sour note. Democrats assailed the President's argument that his proposed individual tax cuts would inspire people to save or invest rather than to simply consume more and increase inflation. Texas Democrat J.J. Pickle scoffed at this approach as "jelly bean talk." New York Democrat Thomas Downey acidly told Treasury Secretary Donald Regan: "I do believe a lot of your assumptions are hallucinogenic." Replied a shaken Regan: "I resent that. To call the Treasury Secretary of America . . ." Downey interrupted: "You cannot cite one statistic, one report, one shred of evidence."

The budget cuts also came under initial assault at a hearing of the Joint Economic Committee Senator Edward Kennedy waved a copy of a 1977 press release in which Stockman, then a Congressman, assailed the $3 billion Clinch River Breeder Reactor project in Tennessee as "totally incompatible with our free market approach to energy policy." Kennedy wondered why Stockman was not urging that this project be killed. Democrats suspect it was saved to keep Tennessee's Senator Baker happy, but Reagan is on record as favoring development of breeder reactors as a means of making nuclear plants more efficient.

Wisconsin Democratic Congressman Henry Reuss similarly badgered Stockman for not proposing an end to the tobacco subsidies (even some White House aides admit these were protected partly not to rile conservative Senator Jesse Helms of North Carolina), interest deductions for vacation homes, and the oil depletion allowance. Reuss even asked about a $37 million program for roads in national parks and wilderness areas. Replied Stockman in a revealing aside about the scale of Government spending: "That may be an item we missed. The computers at OMB are programmed to round off at $50 million."

The budget and tax battles will heat up as the Administration digs deeper in its search for yet more cuts. Speaker O'Neill, for one, was willing to await the full Reagan program before shifting the House into high gear. He announced that the House would not even meet this week, explaining blandly: "We don't want to be transgressing on the programs of the President." But the President, and the people, might well harass O'Neill's House if it tarries too long.

--By Ed Magnuson.

Reported by Douglas Brew and Johanna McGeary/Washington

With reporting by Douglas Brew, Johanna McGeary

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