Economist sees smaller deficit for '86 than does Reagan team

Congress may find cutting next fiscal year's budget less and less of a problem. At least that's what Richard F. Hokenson, an economist with the brokerage house of Donaldson, Lufkin & Jenrette Securities Corporation, says.

Mr. Hokenson has looked at federal revenues and expenditures for the first four months of the fiscal year, which started last Oct. 1. Then, making some assumptions about the economy, interest rates, and spending levels during the balance of fiscal 1986, he concludes that the deficit this year will come in around $14 billion less than the $202.8 billion the Reagan administration forecast in its FY 1987 budget.

Some budget experts might challenge some of Hokenson's assumptions -- for instance, that the economy will grow at a 4 to 5 percent rate this year rather than the 3.4 percent rate the government assumes.

However, for the past two years Hokenson has about this time of year made considerably more optimistic deficit forecasts than the administration. Each time he proved approximately half right: When the final numbers came out late in the calendar year, the deficit was midway between his forecast and the winter forecast of the administration.

One key factor behind Hokenson's current optimism is the drop in interest rates. The Reagan budget assumed Treasury bills would pay an average 7.3 percent and 10-year bonds 8.9 percent. The current rates are around 6.7 percent and 7.8 percent, respectively. That difference appears modest but becomes significant when applied to a portion of the $2.1 trillion in outstanding federal debt. It should reduce debt-service charges by $7 billion to $8 billion, says Hokenson.

He also anticipates revenues will be about $6 billion more than forecast. And he counts on spending on the farm program and defense, both well above budget in the first four months, to drop to lower levels as the current fiscal year rolls forward.

``Defense spending has a kind of bumpy nature,'' he comments.

Whether Hokenson's relative optimism proves justified, the experts in general now regard the deficit as less threatening.

``Despite a chorus of pessimism from congressional leaders, the deficit shortfall is narrowing, and the legislative probability of budget restraint is rising,'' says Lawrence A. Kudlow, chief economist of the Office of Management and Budget during President Reagan's first term and now an economic consultant in Washington.