Capital gingerly picks up President's economic gauntlet; Analysts begin to probe plan for potential weak spots

President Reagan's economic program has provoked a Babel of rebuttle and reaction. From committee hearing rooms on Capitol Hill to the special interests' board rooms and the inner sanctums of Washington public policy research groups, the detail and thrust of Mr. Reagan's economic text -- an inch-thick volume of tables, charts, and lists -- are provoking pronouncements.

But so far, these pronouncements are tentative. No clear lines of response have taken hold, and it may be weeks before they do, Washington observers say.

The early momentum is definitely with the Reagan team, and the administration intends to remain the center of attention this week with a series of press conferences with Cabinet officials.

Vulnerable points have begun to emerge. The Democrats are testing themes: that the program favors the "upper" over the "under" class, the West and rural areas over the East and urban America.

Democrats also seek to delay action on the tax cuts, partly playing to public fears that such cuts would be inflationary and making themselves out as the more prudent.

But the fact is, the Democrats are still in the instinctive phase of response , testing issues to see which will take hold spontaneously and work for their side.

Sen. Daniel P. Moynihan (D) of New York ridiculed Reagan's objection to using tax revenues "to bring about social change."

"It was taxes, and Eastern taxes at that, which brought about the greatest social change in the West since the receding of the Ice Age," Senator Moynihan says, referring to federal water and irrigation projects in the 17 Western states and the Imperial Valley in California.

Who will pay for the West's water projects and highway programs if cities, such as New York, are brought to a halt for lack of federal mass transit support , he asks?

Such rhetorical flourishes might prove politically useful in the long run if the Reagan package as enacted delivers less relief from inflation than promised or at a higher cost, say political observers. But they add that such rhetoric is likely to be less useful as leverage in the early fight over enactment.

More neutral analysts are having trouble with some of the Reagan plan, too.

"In the main outline it is well conceived," says William Fellner, a Yale emeritus economist. But he and other economists see the plan's money supply targets at odds with its economic growth projections. Demand for money to finance the growth could drive up interest rates and frustrate the hoped for gains against inflation.

Otto Eckstein, head of Economist Data Resources Inc., explains why Democrats hope to split off the tax cut from the President's fourfold package of tax, spending, regulatory, and monetary actions.

"The tax cuts deprive the government of the resources to stay on the old spending track," Eckstein says. "The deficits of 1983 and thereafter [under the Reagan plan] would be so enormous, following the large tax reductions, that the Congress will be forced by dire necessity to take a tough approach to spending."

Democrats like Sen. Gary Hart of Colorado, one of three congressmen chosen by his party to rebut the White House plan, want to delay, stretch out, or cut the tax trims into one-year installments for approval. Agreeing to the tax cuts would box them in on the spending curbs that have caught most of the fire.

Eckstein calls the President's program "a strong and reasonable response to the situation he faces, and it stands a good prospect of partial success."

However, Eckstein -- a respected "mainstream" economic forecaster -- discounts the Reagan team's claims for quick success. He sees real economic growth at 3.0 percent next year, compared with the Reagan scenario's 5.0 percent. He sees inflation at a near double-digit 9.6 percent, as opposed to the Reagan estimate at 6.2 percent. Unemployment stays above 7 percent in Eckstein's view, compared with 6.6 percent in Reagan's. And Eckstein forecasts interest rates at 14.2 percent as measured by Treasury bills in 1962, almost double Reagan's 7.8 percent.

Amitai Etzioni, director of George Washington University's Center for Policy Research, calls the Reagan plan "slightly more imaginative" than similar economic strategies set out by each of the last several presidents. But he finds its assumptions "extremely implausible" -- particularly the administration's hope to divert more of the gross national product into capital goods by 1984.

The plan relies too much on the "glue of expectations," Mr. Etzioni says. The public is seeing prices for college tuition and fuel climb. Until the price pattern changes, inflationary expectations are likely to persist, he says.