Reagan tests strategy for congressional budget battle

The battle of the budget now begins in earnest. President Reagan's nationwide television address Wednesday night (8 p.m. Eastern time) on the budget deficit could stir Congress into action -- or trigger a partisan fray that could rumble on for months.

The battle lines are clear. The President, facing a $177.4 billion deficit in 1986 according to his budget office, will ask sacrifices from everyone. The deficit must be cut without raising taxes, he will contend.

But the opposing army is large. Everyone with a program to protect will be lined up with fixed bayonets. By the end of summer, Capitol Hill may look more like Capitol Mountain to the Reagan forces. And the king of the mountain may be House Speaker Thomas P. O'Neill Jr.

The White House estimates that there will be 30 to 40 key votes in Congress in the next week on budget issues. There's little doubt that the President considers this a crucial moment. (Assessing economy, Page 3.)

``In the second term, we have the opportunity to set our country on a course for a decade of unparalleled prosperity,'' he told a national convention of Realtors here. ``We should use this opportunity to trim programs that are wasteful, ineffective, and unnecessary, many of which never should have been funded with federal tax dollars in the first place.''

He particularly singled out two areas -- Amtrak and the Jobs Corps -- for criticism. To keep pouring money into such programs, he said, would be a ``travesty.''

The Jobs Corps, for example, costs taxpayers $15,200 for each person helped, Mr. Reagan said. ``For that kind of money, we could be sending them to Harvard for a year.''

As for Amtrak: ``When Amtrak leaves the station, [it's] being fueled by $35 in subsidies for every passenger. . . . But it's you, the people, who are getting railroaded.''

Much of the debate in Congress during the coming days will center on a Reagan compromise budget that would reduce the 1986 deficit by $52 billion. The compromise eliminates 17 federal programs, reduces cost-of-living increases for social security, and slows the growth in defense spending.

In his speech to the National Association of Realtors, Reagan appeared to be trying out the strategy that he will use on TV tonight. His argument consisted of several parts.

First, he noted the failures of the past. Previous ``collectivist schemes,'' he said, ``emphasized control, consumption, and redistribution.'' The nation's new goals are ``investment, production, and growth.'' These new programs have already ``turned a crisis situation around.''

The next major hurdle is the deficit, he indicated. But to those who want to solve that problem by raising taxes, he says: ``We hear a lot about the deficit. But what really is being talked about is deficit spending, and the way to reduce that is to reduce spending.''

How should that be done? Reagan vigorously rejected budget freezes, or across-the-board cuts. ``A freeze is a decision not to make a decision, a retreat in the face of special-interest pressure.'' Instead, he wants pinpointed targeting for the savings -- some of them clearly controversial.

Besides eliminating Amtrak subsidies and the Job Corps, he would strike out all spending for the Small Business Administration, federal crop insurance, the Rural Electrification Administration, urban-development action grants, rural housing, several postal subsidies, and the direct-loan program of the Export-Import Bank.

Major savings over the next three years would also be made in agriculture subsidies ($14 billion) and medicare ($18 billion).

Two of the most sensitive areas are military spending and social security. Military spending would be held to a 3 percent rise after inflation, a savings in the vicinity of $100 billion over three years, compared with earlier proposals. Cost-of-living increases for social security recipients would be held somewhat below the inflation rate, for an estimated $21 billion savings over three years.

Republicans realize that if Reagan is to win this struggle, he must go directly to the people. He must, as he did here Tuesday, encourage citizens to write and telephone Congress. And he must appear to be the hero of this political drama, which one wag called ``President Reagan Battles the Spending Monster.''

Democrats, of course, would probably title it ``President Reagan Against the People.''