'82 budget: Carter's final statement on US priorities

Congress this week gets President Carter's last fling at trying to put his personal stamp on America's future -- his proposed budget for fiscal 1982. "This," said a top White House aide, "is an honest budget, Carter's statement of principle on where he thinks the country should be going."

In fact, this budget will be torn apart by President-elect Reagan's budget officials. On the basis of what they have said so far, they plan to change radically Mr. Carter's tax and spending priorities in an effort to erase billions of dollars from fiscal 1982 outlays.

"I wish them luck," says a senior White House official, a veteran at watching Carter- shaped budgets go down the drain from the combined effects of inflation and recession.

Soaring interest rates, said a top Carter budget official, have added $13 billion to the interest the US Treasury must pay to borrow money to finance the federal deficit.

These and other factors have led to a flood of red ink in the current 1981 budget: an estimated $60 billion, higher than last year's $59 billion and second only to the $65.6 billion shortfall chalked up by President Gerald Ford's 1976 budget.

"Suppose," this official said, "unemployment climbs just one-tent of 1 percent in 1982. The cost to the US Treasury would be from $2.5 to $2.8 billion."

Higher unemployment hits the budget in two ways. Fewer taxes are collected, while compensation payments to jobless workers swell. The result is a bigger deficit.

"If," the official said, "unemployment should increase by 1 percent, federal spending would grow by $5 to $6 billion and Treasury receipts would be reduced by $20 to $22 billion."

The jobless rate, now 7.4 percent, may climb to about 8 percent this year, many experts believe, an increase large enough to throw Reagan's revised 1982 budget out of kilter.

(Fiscal 1981, which began last Oct. 1, ends Sept. 30, 1981. Fiscal 1982 runs from Oct. 1, 1981, to Sept. 30, 1982.)

Because fiscal 1981 is less than half over, and because the economy continues to suffer from stagnation and high inflation, the budget deficit may swell beyond the now-estimated $60 billion.

Some experts talk of looming budget shortfalls of $100 billion, if inflation and government spending are not controlled. Deficits of this magnitude would be greater than any single federal budget until 1966, when total spending broke through the $100 billion ceiling because of the Vietnam war.

Sources say that a curious mood prevailed in Carter's Office of Management and Budget (OMB), headed by James T. McIntyre Jr. while the fiscal 1982 budget was being shaped.

There was the temptation to say: "What's the use? We'll all be out of office long before Congress and Reagan finish ripping up this budget."

Many of OMB'S top men also were eager to scout for new jobs in the private sector. Yet, an official said, there was also the professional determination to put one's signature on a responsible document, just as though it really counted.

Carter officials insist that they resisted the temptation to cut the budget irresponsibly, to make it tougher for Reagan's budget team to carry out its pledge to trim Carter's 1982 budget by billions of dollars.

"That could cut both ways," said an OMB official, "making us look foolish."

Is the budget, details of which will be unveiled Jan. 15, exactly as it would have been if Carter had been re-elected?

"Obviously," said a top official, "more new programs would have been proposed. Otherwise, it's an honest budget."