Regan Indicates President Might Accept Some Cuts

Times Washington Bureau Chief

White House Chief of Staff Donald T. Regan says that President Reagan, who has staunchly opposed reductions in his defense budget, "would have to" consider any cuts approved by Congress.

Regan's comment in an interview with The Times, the first indication that the President might accept defense cuts if approved by a bipartisan congressional majority, may be the "wink" that Republican senators say they need from the White House before voting on a budget package that would include further defense cuts.

Among other Republican leaders, Senate Finance Committee Chairman Bob Packwood (R-Ore.) has said that Congress will not accept the President's recommended cuts in domestic spending unless he compromises on his defense buildup.

Packwood earlier told reporters that Congress needs the kind of "wink" on defense spending that Reagan gave when he indicated publicly that he would not oppose a congressionally imposed limit on the growth of Social Security benefits. When informed of Regan's comment, Packwood said: "If a full wink isn't forthcoming, a raised eyebrow might be enough."

Indeed, the Senate Budget Committee, with substantial Republican support, on Tuesday approved a cut of more than $12 billion from the defense outlays that Reagan is seeking for fiscal 1986. The Administration proposes a fiscal 1986 defense budget of $286 billion, up from $254 billion in 1985--an increase of 6% beyond inflation.

No Public Acknowledgement

Regan suggested in the Monday interview that the President would not publicly acknowledge that he might accept additional defense spending reductions. When asked whether the President would consider a $10-billion cut if approved by a bipartisan majority, Regan said: "I suppose he'd take a look at it. He would have to."

When reminded that the President has never said that he would consider accepting such reductions, Regan replied: "No. And I don't think you'll ever get him to say he would, either."

Other Administration officials have said that Reagan remains adamant--at least for the present--in opposing any more cuts.

"I don't see any diminishing of the President's stand on that," Max Friedersdorf, the White House congressional liaison chief, said in an interview. "He remains very, very firm on defense. You can't expect a wink on defense--that would be a last resort."

Won't Give a Wink

Another White House adviser on congressional relations, who asked not to be identified, said: "It would help the process if the President himself would give a wink on defense, but he won't do it."

However, this adviser predicted that a bipartisan majority ultimately "will approve a program including more defense cuts, and the President will acknowledge it kicking, screaming, moaning and bitching. He can't embrace it, he will shout his grave disappointment, but he will have to accept it."

Regan, in the interview, also doggedly defended his tax reform proposal, which has been under heavy attack from business, charities and other interest groups since he announced it more than three months ago.

Demands 'Proof'

At meetings with critics of his proposal, he said, he has demanded that they produce "proof" to support their contentions that they would be hurt by his proposal. So far, he said, he has seen no proof.

35% Maximum Rate

The Regan proposal, which provides for a 35% maximum individual income tax rate, would mean smaller tax bills for 56% of the nation's individual taxpayers but higher taxes for business.

Despite the widespread criticism, Regan said he still stands behind all provisions of his proposal and expects the Administration to introduce some version of it soon. He predicted that Congress will pass the tax reform measure this year.

But he conceded that it will be "tough" to get the measure through Packwood's Finance Committee as long as it includes a provision to tax employee fringe benefits. Packwood has said that his opposition to that provision is non-negotiable, and there is strong opposition to it elsewhere in Congress.

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