Reagan OKs Deep Cuts to Meet ’87 Deficit Limit

White House Chief of Staff Donald T. Regan said Friday that President Reagan has approved spending cuts deep enough to meet Congress’ deficit reduction ceiling for the next fiscal year.

But budget officers in the bureaucracy predicted that many of the reported cuts--such as elimination of such politically popular agencies as the Small Business Administration and the Economic Development Administration--will be rejected by Congress. As a consequence, they said, automatic across-the-board spending cuts will probably go into effect to force the deficit down to the congressionally imposed ceiling of $144 billion.

“And that will be devastating to programs and devastating to the people who benefit from the programs,” one budget officer said.

Budget Cuts Likely

Across-the-board cuts will almost surely be necessary in the current fiscal year, which began Oct. 1. Administration budget officials said that the estimated deficit for fiscal 1986, the current year, is greater than the $171.9-billion ceiling imposed in the Gramm-Rudman balanced budget law, which Reagan signed two weeks ago.

Administration officials, who asked not to be identified, said that they have no plans to propose spending cuts sufficient to eliminate the gap, and Reagan has ruled out a tax increase. Therefore, across-the-board spending cuts aimed at saving $11.7 billion in fiscal 1986 will automatically take effect next March 1.

The Administration is putting 1986 behind it and concentrating its attention on cutting the fiscal 1987 budget, which Reagan is scheduled to propose to Congress in February. Fiscal 1987 begins next Oct. 1.

Regan, speaking to reporters after the President departed for a one-week vacation in California, said that Reagan has already made most of the decisions necessary to hold the 1987 deficit to $144 billion. Without cuts, the deficit for that year would be about $50 billion greater.

White House spokesman Albert R. Brashear said that Cabinet officers have made fewer than the usual number of appeals to Reagan to spare their programs from budget cuts. He credited a recognition that it was futile to resist the drive to stay within the $144-billion deficit ceiling.

3% Defense Growth

The Administration has officially refused to identify any of the cuts that Reagan will recommend, although it has said that the President will seek defense growth of 3% beyond an inflation rate expected to be about 4%.

However, other sources said that the Administration will reoffer many of the proposals that Congress has rejected in the past, such as termination of the Small Business Administration and Economic Development Administration. The SBA spent about $700 million last year to assist small businesses, and the development agency spent about $250 million in grants and loans for local economic development projects.

Reagan’s budget would also require higher insurance premiums for elderly Medicare beneficiaries, trim the Medicaid program for the poor, scale back veterans’ health care benefits, cut the National Institutes of Health budget and terminate federal support for agricultural extension agents.

Unpalatable Cuts

But Administration budget officials admit that those proposals will probably be no more politically palatable to Congress than were the deep domestic spending cuts that Reagan proposed for 1985 and 1986.

If Congress fails to stay within the $144-billion deficit ceiling, across-the-board spending cuts effective next Oct. 1 will do the job for it. Exempt from the cuts, which are to fall half on defense and half on non-defense programs, are Social Security and seven benefit programs for the poor.