Reagan's 'lean' budget: now it's up to Congress

Now the nation's lawmakers know the full scope of the President's economic package, and during this spring and summer Ronald Reagan will learn how much of it Congress will give him.

Millions of Americans will be directly affected, one way or the other, by the shape of the package that finally is enacted into law.

Many Democrats, and possibly some Republicans, will try to shift the center of gravity of the Reagan proposals to ease what they claim are burdens on the poor caused by the White House program. They also would favor more tax relief to middle-income Americans.

This foreshadows a collission of priorities, with both White House and lawmakers insisting that they have the nation's good at heart.

To begin with, everyone underestimated how much money the government would have to spend in fiscal 1982 (beginning Oct. 1, 1981), to meet its obligations under law.

On Feb. 18 Mr. Reagan told the nation that he would cut $41.4 billion from the fiscal 1982 budget, to hold the deficit to $45 billion and total spending to

Since that time, estimated outlays have leaped by $6.8 billion because of what the White House calls "differing inflation rates, unemployment, and other conditions."

So the Office Management and Budget (OMB), obeying the President's dictum that outlays must be offset, dollar-for-dollar, by additional program cuts, came up with another $7.1 billion worth of trims.

This means that Reagan plans to cut $48.6 billion from the 1982 budget, which the outgoing Carter administration characterized as lean when it was presented to Congress in January.

Some of these reductions -- including parts of the most recent $7.1 billion -- cut deeply into programs designed to help the poor. The White House insists the cuts actually will remove people from the programs who don't need help, rather than the poor.

Examples of some reductions: Appalachian Regional Development programs, down by $100 million; food stamps, a $2.304 billion cut; child nutrition and special milk programs, $1.333 billion; education programs, over $1.6 billion; and large-scale elimination of public service employment programs (CETA), more than

This partial list, which does not include $7.424 billion of savings in Department of Health and Human Services programs, compares to a boost of nearly

White House officials say that the nation's "social safety net," comprising "an agreedupon core of protection for the elderly, the unemployed, and the poor" -- plus programs for "people who fought for this country in times of war" -- is preserved intact.

Indeed, the President says, spending for these programs (such as social security and medicare) will increase, as a percentage of total federal outlays, from 36.8 percent in 1981 to 40.1 percent in 1984.

Much of the savings in social programs such as food stamps, according to the Reagan plan, comes from trimming "people with middle to upper income" from the rolls.

Nonetheless, many members of Congress are expected to argue that a great many disadvantaged Americans would suffer hardship from the Reagan spending cuts.

Even so, the President's budgetary program may come in for less rough treatment than will be accorded parts of his tax proposals, especially his insistence on a three-year, 30 percent personal income tax cut, across the board.

Democratic leaders in the House of Representatives say flatly that Congress will not commit itself and the nation to three years of such cuts and that, even for a shorter haul, the tax package should be adjusted

Democrats generally would give Reagan the business tax benefits he favors -- as do most members of Congress -- to stimulate investment in new plants and equipment. Essentially, this legislation would allow corporations to write off more quickly their investment in buildings (10 years), equipment and machinery ( 5 years), and vehicles (3 years).

But the Reagan income tax proposals are faulted by a number of legislators and economists on two grounds:

* Walter W. Heller, a leading economist, says that historically most Americans spend nine-tenths of any tax savings they receive and save only one-tenth. He concludes that the President's hopes for massive new savings and investment by taxpayers -- even upper-income citizens -- are overly optimistic, and that the kind of tax cut Reagan proposes could spark more inflation.

* On grounds of equity, some Democratic lawmakers complain that the President's tax cut program favors the rich. They propose a limited income tax cut this year, aimed primarily at offsetting the increased social security taxes that A mericans pay in 1981.