Reaganomics sold, but not yet through check-out

Ronald Reagan's first 100 days on the economic front are like the proverbial glass of water -- half full or half empty, depending on the point of view. No laws have been passed to implement President Reagan's vision of how to revitalize the United States economy. But the Reagan presence in the White House, backed by widespread public demand that his programs be given a chance, have galvanized Congress onto what is called here a "fast track."

By mid-July, if the schedule holds, a 1982 budget and possibly a tax cut -- centerpieces of the Reagan economic program --will be in place.

Americans will know how faithfully Congress may, or may not, have mirrored the outline which the President sketched as the path to economic salvation.

The Reagan program contains four parts:

* A 30 percent, across-the-board personal income tax cut over three years, accompanied by lower taxes for business.

* Spending cuts for the next three years, designed to balance the federal budget by fiscal 1984 and to reduce the annual growth rate of government outlays from 16 to 6 percent.

* Demolition of at least part of the complex structure of government regulation, with the aim of easing the economic burden on business and shrinking government's intrusion into the private sector.

Already the administration has terminated or temporarily blocked 36 new regulations, while reviewing another 27 major existing ones. Changes are expected in most.

* Cooperation with the Federal Reserve Board to make the nation's money supply grow more slowly than it did last year. Already the Fed, with White House approval, has set growth targets 0.5 percent below 1980 goals.

All this sounds straightforward enough. Why, then, is Reagan's program sometimes called "voodoo" economics by his critics? This is an extreme expression of a view held by many orthodox economists, that Reagan and his "supply side" advisers base their conclusions on faulty economic assumptions.

Key categories in this regard are inflation, unemployment, economic growth, and interest rates. These make up a large part of how the economy performs.

In all cases the White House is more optimistic than the Congressional Budget Office (CBO) and a number of leading private forecasters.

The differences, moreover, widen in the "out years" -- fiscal 1982 and beyond -- with the Reagan administration expecting lower inflation, unemployment, and interest rates, and faster economic growth than its critics.

No one can be sure who is right. But if inflation and unemployment are higher than the President expects, government spending necessarily will balloon, implying large deficits in the years ahead.

Awaiting action by the House are two versions of the 1982 budget -- the conservative Gramm-Latta effort, which Mr. Reagan calls "bipartisan," and a budget fashioned by the House Budget Committee.

The President notes that the Budget Committee's version "projects spending $ 141 billion more" over the next three years than the "bipartisan" budget, which he supports.

This is true. But not because committee chairman James Jones (D) of Oklahoma and his colleagues want to be spendthrift with the taxpayers' money. Indeed, Mr. Jones agrees with the President that government outlays must be drastically trimmed.

The difference lies mainly in the economic assumptions on which the rival budgets are based. Representative Jones and a majority of his colleagues believe their assumptions are more realistic -- that inflation, interest rates, and unemployment will be higher than the White House projects.

On the tax side, the President believes that assurance of three years of tax cuts will give families and businessmen the sense of predictability they need to plan savings and investment programs ahead.

The result, administration officials believe, will be plant modernization, more jobs, higher productivity, and lower inflation.

This supply-side economics requires, as its adherents admit, a "leap of faith" that large tax cuts indeed will work out this way, rather than add to inflationary pressures by simply stimulating consumer spending.