Crucial choices await returning President

Some of the toughest decisions Ronald Reagan yet has faced await the President's return to Washington, with the future of his presidency perhaps hanging in the balance.

Figuratively, at least, Mr. Reagan's top aides are lined up at the Oval Office door to confront him with hard choices that must be made.

Topping the list is the need to find -- and to persuade Congress to accept -- enough new cuts in government spending to put the budget back on the track toward being balanced in 1984.

That goal, or pledge, by Mr. Reagan has become a touchstone of credibility, as money managers, businessmen, and Americans in general wait to see whether the controversial Reagan policies will work.

Experts acknowledge that it is too early to expect concrete results from the President's massive package of tax and budget cuts.

That package, heralded as a spectacular presidential victory for Reagan, consists of $130.6 billion in spending cuts over three years and $749 billion in tax cuts over five years.

Additional features are White House support for the Federal Reserve Board's tight reins on the money supply and a vigorous effort to "unshackle" the US economy from excess government regulation.

Finally, Reagan -- prior to his month-long vacation in California -- promised unspecified additional budget cuts totaling $30 billion in fiscal 1983 and $44 billion the following year.

All this was eventually to produce a balanced budget in 1984, lower interest rates, inflation, and unemployment, and a strong spurt of growth for the economy.

Now the President leaves the cool hills above Santa Barbara to learn that, in the prevailing view, his budget deficits are apt to soar over the next few years.

That conviction sends the stock and bond markets tumbling, pegs interest rates high, and depresses the economy into low or no growth. Inflation still sparks along at nearly a 10 percent annual rate.

No one expected the Reagan policies to begin to bear fruit this soon. But neither, in the administration view, should there have been so sharply negative results, especially the alarming upward trend in government spending.

Reagan, his advisers agree, must act fast to shore up his crumbling credibility on economic policy. Where to start?

For two reasons, the once-sacrosanct defense budget is due for major cuts, perhaps up to $15 billion in fiscal 1982 and another $30 billions in the next two years:

* The White House simply cannot cut enough dollars from nondefense portions of the budget to hold the 1982 deficit to $42.5 billion -- first step along Reagan's budget-balancing path.

* Cutting military spending may make it easier to persuade the Democratic-controlled House to go along with further trims in social spending.

Then the President must turn his attention to reform of the social security system -- at least to the extent of tiding it over the next few years.

By the end of 1982 or early in 1983 the largest of the three social security trust funds -- Old Age and Survivors Insurance (OASI) -- is expected to run out of money.

Congress and the White House share responsibility for making sure that more than 35 million monthly checks go out to elderly and disabled citizens.

Two ways exist to handle social security. One is to undertake thoroughgoing reform, which probably would mean lowering benefits for future retirees and perhaps raising payroll taxes for Americans contributing to the system.

This path is strewn with political risk. Some analysts believe both White House and Congress will agree, at least tacitly, to postpone fundamental reforms until after the 1982 congressional elections.

An alternative is to tinker with the system. OASI, for example, might be allowed to borrow from the more robust trust funds, Hospital Insurance (HI) and Disability Insurance (DI). The share of social security taxes allocated to OASI also might be enlarged.

Changes, such as these, helping social security over the bumps of the years just ahead, would have the political advantage of not lowering benefits or raising taxes.

Defense cuts and social security reform bring Reagan face to face with large and politically potent groups whom the President has been careful to shield in the past.

One is the military and its conservative supporters. The second is a vast number of elderly Americans, who depend largely -- in many cases completely -- on social security to maintain a dignified old age.