Reagan Budget to Ask $974 Billion : Will Seek $29-Billion Hike in Defense Spending, $39 Billion in Domestic Cuts

President Reagan will send Congress a proposed budget of just under $974 billion for next year, White House officials said Friday, calling for an increase of $29 billion for the Pentagon and cuts of $39 billion in domestic programs.

The spending plan, which comes after nearly three months of dire warnings from the Administration and Congress about the dangers of mounting federal budget deficits, falls short of reaching Reagan’s original goal of reducing the deficit to $168 billion, projecting instead a gap between spending and revenues of $180 billion in the 1986 fiscal year beginning Oct. 1.

And rather than cutting the deficit to less than $100 billion by fiscal 1988, as the White House once anticipated, the new budget projects a deficit of $144 billion in that year.

Latest Projections

The magnitude of the task involved in stemming the flow of red ink is underscored by the latest economic projections of the Congressional Budget Office. Congressional sources said the CBO now forecasts that if budget policies remain unchanged, federal deficits will soar from $215 billion next year to $248 billion in 1988 and $296 billion in 1990.

The White House contends that unless Congress makes the requested trims in next year’s spending, the deficit will hit $230 billion.

Under the proposed budget for fiscal 1986, which begins Oct. 1, Reagan will recommend a cap on overall spending, excluding interest payments, at this year’s level of $805 billion. But the total budget will rise 1.5%, from this year’s $959 billion, because of projected growth in interest payments on the public debt from $154 billion to about $169 billion.

“It’s a programmatic freeze, a freeze on program outlays,” White House spokesman Larry Speakes explained. And as Reagan vowed, the budget contains no call for a tax increase.

The budget, which will be unveiled formally on Monday, is expected to face tough sledding on Capitol Hill, where Senate Republicans have already launched their own effort to hold down Reagan’s defense buildup and to lessen the impact of some of his proposed spending cuts. Those Republicans, divided among themselves over how deeply to cut Pentagon spending, say they can garner widespread support for many of Reagan’s domestic spending cuts only if they are linked with a further slowdown in defense spending.

So far, Democrats--who control the House--have generally avoided any confrontation with Reagan, preferring to let the Republicans fight over budget priorities among themselves.

$51 Billion in Savings

The Administration’s proposed budget, if adopted in full, would save about $51 billion from the projection of 1986 federal outlays, which was made in this year’s budget: $39 billion in domestic spending, $9 billion less for defense than the Administration said a year ago that it would seek, and $3 billion in lower interest costs as a result of less borrowing. The domestic cuts would be partly offset by $10 billion in increases caused by a growing number of persons eligible for Social Security and other programs.

The Administration says its savings would mount to $83 billion in 1987 and $105 billion in 1988. Over three years, the budget would slash $180.5 billion from domestic programs while curtailing the Pentagon buildup by about $28 billion.

Under the White House plan, Pentagon spending would rise from an estimated total of $247 billion this year to $277.5 billion in 1986, $312 billion in 1987 and $349 billion in 1988.

In an unusual departure from past practice, the Administration has disclosed in advance nearly all the details of its budget proposals, attempting to marshal support for its spending cuts by stressing the massive deficits that would result if the budget is not slashed.

As a result, officials have already given out lists of program cuts that Reagan will recommend, including such actions as higher monthly payments for Medicare patients; sharp reductions in student loans and farm price supports; cancellation of revenue sharing with states and local governments; the demise of the Small Business Administration; a 5% pay cut for federal civilian workers, and an end to federal subsidies for Amtrak and mass transit.

Freezes in Aid for Poor

In addition, the budget will call for freezes or cutbacks on several programs aimed at low-income groups. But Reagan has backed away from several earlier suggestions by Budget Director David A. Stockman, deciding to make no changes in the food stamp program or in Supplemental Security Income, which provides assistance to the elderly and disabled poor.

The President also backed Defense Secretary Caspar W. Weinberger over nearly all his other top officials by rejecting a proposed limitation on the Pentagon’s budget that would have held the defense spending increase next year to less than $20 billion.

In the last week, Administration officials have launched a strong lobbying effort for their defense proposals--particularly plans for the MX missile--contending that any restraint would weaken their position in arms control negotiations.

No Changes in Benefits

Reagan, as he promised in last fall’s election campaign, will propose no changes in Social Security. He recently acknowledged, however, that he would consider skipping a cost-of-living increase scheduled next year if a bipartisan consensus in Congress asked for it.

Meanwhile, Sen. Tom Harkin (D-Iowa) on Friday shattered the general Democratic silence on the budget, accusing the Administration of indiscriminate attacks on government programs. According to Harkin, Stockman “attacked urban mass transit, he attacked urban development programs, he attacked Conrail, he attacked weatherization programs and heating for the elderly.”

Harkin asserted that the budget director, at a meeting with senators on the farm crisis, “was saying that everybody comes in here wanting their own little special interest, and he said, ‘We’ve got to cut everybody off at the knees,’ to use his own language.”

A Stockman spokesman said the budget director actually said, “We’ve got to cut the special-interest groups at their knees.”