Congress vs. the White House: a debate over 'phony' numbers

Congress and the White House are pelting each other with conflicting budget numbers, and a great deal hangs on which set is right. The latest barrage comes from the Congressional Budget Office (CBO), a collection of experts who analyze economic issues for Congress much as the Office of Management and Budget (OMB) does for the White House.

CBO analysts believe that, "in the light of historical experience," the economic assumptions on which President Reagan bases his tax and spending programs are too optimistic.

A just-issued CBO study indicates that the budget deficit in fiscal 1982 may be much higher than the $45 billion forecast by the White House and that a balanced budget by 1984 may be out of reach.

President Reagan, stung by the CBO assessments when they began to circulate, first labeled their numbers "phony," then amended that to say they were based on expectations and assumptions that differed from his own.

This is the nub of the problem, according to congressional Democratic leaders , who on the basis of the CBO and other analyses express doubt that Reagan's policies would have the impact he expects.

If White House officials "overpromise," said Rep. James R. Jones (D) of Oklahoma in an interview, "they will undermine public confidence and lose the chance to get control of the economy."

Critics say a backlash might develop if Americans, perceiving little or no improvement down the road, were to conclude that high inflation was here to stay.

The CBO study foresees higher inflation, higher unemployment, higher interest rates, and slower economic growth than the White House forecasts. If borne out, this combination of circumstances would swell government spending and widen yearly deficits in the budget.

"If things don't work out as they [White House officials] expect," says Mr. Jones, chairman of the House Budget Committee, "then you have in place a mechanism for growing budget deficits."

Jones agrees with the President that inflationary expectations must be broken , "but on a foundation of stone, not on a foundation of sand."

This kind of criticism troubles Mr. Reagan and his advisers, who insist that doubters are leaving out of their equations a groundswell of trust among Americans that the Reagan policies indeed will work.

This trust, Reagan aides claim, will influence both businessmen and families to save and invest, if they see even the beginning of progress against inflation.

Treasury Secretary Donald T. Regan, budget chief David A. Stockman, and other Reagan aides deride the "historical experience" on which the CBO and other studies are based as inadequate to measure the public mood.

"It is unwise to rely on forecasters," Mr. Reagan recently told reporters, "because the statistics they use are terribly inaccurate."

Democratic leaders are pressing the White House for more information about the economic assumptions underlying the Reagan program, so that congressional committees can more intelligently do their work.

"If the administration gives us the basic information that undergirds the Reagan program," says Jones, "we can make the agreed-upon timetable."

White House and Congress are agreed on a July deadline for wrapping up details of this year's tax cut, as well as spending levels and priorities for fiscal 1982.

Using its own economic assumptions, the CBO study expects the economy to grow 2.5 percent in calendar 1982, compared to 4.2 percent for the Reagan estimate.

Other 1982 figures include a consumer price index rise of 9.5 percent foreseen by the CBO, 8.3 percent by the White House; unemployment 7.9 percent (CBO), compared to 7.2 percent (White House); and an anticipated average interest rate on 91-day Treasury bills of 13.7 percent (CBO), 8.9 percent (White House).

If the CBO forecasts are in the ballpark, government spending on interest to finance the national debt would be greater than Reagan estimates. So would unemployment compensation outlays.

A higher inflation rate would trigger larger benefit payments to social security recipients and other citizens entitled to benefits pegged to the consumer price index.

"CBO's repricing of the [Reagan] budget," the study says, "indicates that, if all of the administration's spending proposals were approved by the Congress, outlays could be over $6 billion higher in 1981, over $25 billion higher in 1982 , and $45-$50 billion higher in 1984 than projected by the administration."

This could add up to a deficit in the range of $65 billion in fiscal 1982, compared with Reagan's $45 billion goal, and a large deficit in 1984, instead of the balanced budget for which the President aims.

The CBO study, Jones told reporters March 25, is a "realistic, nonpartisan, expert analysis," not "phony" or "cynical." Earlier, House Speaker Thomas P. O'Neill Jr. (D) of Massachusetts defended the forecasting record of the CBO.

CBO director Alice M. Rivlin cautioned that forecasts of the economic effects of the administration's budget proposals, including the one issued by her office , are subject to a "large margin of error."

Several factors, she noted, could make the next five years turn out to be worse than historical experience would suggest, including the possibility that world prices for oil and food might rise more rapidly than now assumed.

Also in the category of uncertainty are "secondary effects" of budget cuts, such as increased claims on welfare benefits by Americans losing other benefits under the spending reductions.