Rolling Back on Defense

By GEORGE J. CHURCH

Not even the plans for military spending are sacrosanct

It was the kind of political theater that Americans had watched before, but the mood of the drama was subtly different. Last week, Ronald Reagan and his aides staged a series of intra-Administration debates and consultations with worried congressional leaders, fanning speculation about just what new budget cuts the President plans to advocate in a major pronouncement later this week. The script was reminiscent of the buildup to Reagan's unveiling of his first round of spending slashes last February; this time, however, there was no expectation in the White House that the results of all the decision-making caucuses would be seen by anyone as an Administration victory.

The President's problem is painfully real: how to convince a sudden rash of skeptics that he can balance the budget by fiscal 1984 as he has promised, thus avoiding both ruinous inflationary deficits and a continuation of the towering interest rates that threaten a new recession (see ECONOMY AND BUSINESS). Moreover, the now apparent inadequacy of the first series of budget cuts addressed to that goal has forced the Administration into an agonizing internal debate: how to reconcile the budget-balancing pledge with Reagan's equally heartfelt promise to launch a gargantuan military buildup.

At week's end the President made his decision. According to the White House, a relatively mild cut of $11 billion will be made from the $554.5 billion in military-spending authorizations originally planned for fiscal 1983 and 1984. That will be preceded by a minor reduction of about $2 billion in the $221.3 billion already requested for fiscal 1982, which starts Oct. 1, mostly by delaying some unspecified weapons-procurement programs.

Those cuts are small in percentage terms, and would leave the military budget growing more rapidly than Jimmy Carter had planned. But they contradict the Administration's previous ringing vows that it would spend anything that might be required to counter what it sees as a menacing Soviet buildup. Congressional hawks are already asking whether the additional cuts will allow the U.S. to back up a tough foreign policy with the requisite military muscle.

What is more, the question of just what to cut is bound to be embarrassing to Reagan. About the only certainty is that the reductions in planned increases will not affect the President's long-delayed decisions to go ahead with production of B-1 bombers and to settle on a basing method for the MX missile. One White House aide spells out the likely consequences of the spending reduction: "The savings will come from stretchouts and slowdowns in [weapons] purchasing, reduced training exercises and scaling down the number of ships the Pentagon would like to build." Those are exactly the sorts of actions for which Candidate Reagan lambasted President Carter.

As one top White House adviser puts it: "You have a President who, by God, wants to put every penny into defense that he can." That Reagan has apparently decided to increase defense spending less than he originally planned represents something of a victory for David Stockman, Director of the Office of Management and Budget and the Administration's budget-cutting powerhouse. At the start of August, when Reagan was still exulting over his victories in Congress on taxes and budgets, Stockman gloomily informed the President that the nation still faced huge deficits unless Reagan proposed either further reductions in spending or an increase in excise (sales) taxes. The President instantly ruled out any kind of tax boost. Over the next few weeks, Stockman, with the powerful assistance of White House Chief of Staff James Baker, convinced Reagan that Congress could not be persuaded to legislate still deeper cuts in Government social programs if the Pentagon remained untouched. By late August, the White House had directed the Pentagon to come up with a "reverse wish list" of what cuts it would make to stay within specified budget levels.

Secretary of Defense Caspar Weinberger and his top assistant, Frank Carlucci, initially replied in typical Pentagon fashion: they produced a list that, according to congressional sources, suggested the abolition of one of the Army's 16 divisions and the scrapping of two tactical air wings, among other things. The list sounded like an example of what Pentagon Spokesman Henry Catto had meant when he warned the public to doubt any statements from the armed services "that would lead you to believe they're going to be deprived of uniforms if they don't get everything they asked for."

Stockman kept up the pressure last week in a series of meetings between Reagan and his Cabinet and economic advisers. By Wednesday afternoon, when he and Weinberger squared off for a 2 1/2-hour showdown session with Reagan in the Cabinet Room of the White House, the budget boss seemed to have the Defense Secretary outflanked. Reagan sat with Vice President George Bush on his right and Secretary of State Alexander Haig on his left; Weinberger sat across the table in a chair with wide spaces on either side. At a picture-taking session before the meeting, a reporter asked the Defense Secretary if he felt lonely. Replied Weinberger: "They never promised me a rose garden."

After reporters were shooed away, Stockman argued for 45 minutes in favor of a $30 billion reduction in 1983-84 defense authorizations. Weinberger, strongly supported by Haig, argued for a following 45 minutes that any rollback beyond about $7 billion or $8 billion would undermine the Administration's foreign policy commitments. Both men made liberal use of charts to back up their points; Stockman's were mostly numbers, but Weinberger's were illustrated with drawings of weapons such as tanks. Under questioning from Reagan, Stockman, whose presentation was the smoother of the two, came down to a $26 billion cut, and Weinberger stood firm at $7 billion or $8 billion. Reagan ordered them to "split the difference" and produce a compromise figure; at week's end they had a one-hour meeting with Reagan and agreed on the $11 billion figure.

In Congress, some hawks voiced outrage at the thought of any reductions in planned defense spending. Texas Republican John Tower, chairman of the Senate Armed Services Committee, fumed that the Pentagon will have "less in the way of defense capability than even Jimmy Carter projected." That was clearly not true, but other legislators voiced valid worries about how the defense cutback would mesh with Reagan's foreign policy. Said Republican Senator William Cohen of Maine: "You can't tell the Soviets you will outspend them in an arms race if they won't negotiate, then propose defense reductions and still believe Moscow will sit down to bargain anyway."

Where the ax will fall is another question seriously troubling defense-minded Congressmen. Some fear that the Administration will primarily reduce scheduled increases in the Operations and Maintenance account, which covers spare parts, ammunition and training. In contrast to slowdowns in weapons procurement, which take years to be reflected in actual outlays, an O. and M. slash would reduce Pentagon spending quickly, but also crimp efforts to solve what many defense specialists regard as the nation's worst military deficiency: the inability of many units to get ready to fight immediately.

Says Colorado Democrat Gary Hart, one of the Senate's leading defense experts: "It is vital not to cut the level of readiness.

There is no sense in cutting ammunition and training in order to build an MX missile. That would be a real fight."

The Administration also faces unpalatable civilian choices. After Reagan's previous budget surgery, only about $170 billion of the $705 billion in federal spending now planned for fiscal 1982 consists of expenditures funded on an annual basis; the rest is earmarked for defense, interest on the national debt or "entitlement" programs such as Social Security and Medicaid. Though some entitlement programs were cut on the first budget go-round, Reagan decided last week not to take another whack out of them now.

So, if it is to meet its budget goals, the Administration will have to reduce the remaining programs something like 10% across the board; that means painful slices into programs that have already been slashed deeply, including federal aid to education and health. Such anguished decisions might have been avoided if the Administration had not pushed Congress into enacting such a deep cut in taxes. But that die has been cast, and there is no way now to balance the budget without pain and uproar . --By George J. Church. Reported by Douglas Brew and Johanna McGeary/Washington

With reporting by Douglas Brew, Johanna McGeary/Washington

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