'Bloated' government: '83 budget won't reduce it much

The Reagan administration has long described the federal government as a bloated monolith to be pried off people's backs.

But President Reagan's controversial new budget paints a slightly different picture. Instead of a single entity, the government for budget purposes is split into parts -- entitlement programs, defense, interest payments on the federal debt, and everything else. Entitlements and defense are escaping unscathed. Interest on the national debt is a fixed cost. So reducing bloat means slashing at the 38 percent of the government that falls under ''everything else.''

The result, writes the President in his budget message, would be an ''asymmetrical pattern of growth'' with some programs growing while others are held constant or cut back -- as much ''a reordering of fiscal policy'' as a reduction in overall size.

And it isn't only the size that's annoying Mr. Reagan. So are federal regulations. Even liberals say an explosion of regulations has made Washington too nosy. Both the new budget and Reagan's economic report go to great lengths to document what they call ''reduction of federal intrusion.''

''Some of this rebellion has nothing to do with government's size,'' says economist Walter Heller, Council of Economic Advisers chairman from 1961-64. ''The pervasiveness of government's presence is not necessarily related to expenditures.''

Despite talk about ''slash'' and ''cut,'' the US government is not getting much smaller. If the President's budget passes, Washington would spend $32 billion more in FY '83 than it did in 1982. What is being cut is the rate of growth. In 1980, the budget increased 17.4 percent. Under the new budget, it would grow 4.5 percent in '83.

''That is below the expected inflation rate, which means that in real terms, federal spending is declining,'' said Mr. Stockman in a congressional appearance.

But in the new budget, defense spending increases 15 percent and entitlements stay roughly equal. All restraint falls on the budget slice labeled ''other nondefense.'' It is this reordering of priorites, as much as the actual size of the cuts, that has sparked the heated debate about Reagan's '83 budget.

''I find it appalling that we think we can't afford decent employment for the poor. It's parsimony. It's not economy,'' says Walter Heller. And, he argues, ''bloated'' is a relative term when applied to the size of the government in relation to the economy.

''Some European countries have as much as 60 percent (of their GNP) in the public sector, and they're just as prosperous as we are,'' says James Sundquist, a senior fellow at Brookings Institute.

The phrase ''get government off the backs of the people'' means more than a reduction in size. Most economists and specialists in government agree the burden of government regulation is too heavy.

''Government, for a variety of good motives, has gotten more intrusive than it needs to,'' says Austin Ranney, a scholar at the American Enterprise Institute.

Reagan's budget claims progress in slowing what it calls the ''regulatory juggernaut.'' It claims a one-time savings of $3 billion from review, modification, or elimination of regulations. In addition, says the budget, $2 billion a year will be saved because of regulations that aren't written.

''No significant regulatory statutes were enacted and few major new regulations were imposed,'' says the budget. ''Additions to the Federal Register declined by 23,000 pages.''

And all major rules are now subject to cost-benefit analysis - an attitude Mr. Heller says he tried to ''pound into regulator's heads'' when he was CEA chairman. But critics of this approach, such as attorney Jay Angoff of the Tax Reform Research Group, fear ''cost-benefit'' analysis really means just ''cost'' analysis.

The budget also has a section of miscellaneous items it says reduce federal intrusion.

Federal employment, says the section proudly, has been greatly reduced. The Department of Health and Human Services, for instance, has lost 16,800 employees. The Federal Trade Commission -- one of the front-line regulatory agencies -- is having its budget cut 14 percent. Federal paperwork is expected to be reduced 1.33 billion hours by the end of 1982.

Has the monster of the government been caged? Is it a monster, at all? ''The more government wants to do - whether it be tougher defense, or making sure people don't starve -- is intrusion,'' says Ranney. ''What is the right balance? That's not by any means an easy line to draw.''