Reagan Budget $15 Billion Too High, Analysts Claim

President Reagan’s proposed fiscal 1987 budget, which he claimed would meet the targets of recently enacted balanced-budget legislation, actually would overshoot the law’s deficit target by $15.7 billion, the Congressional Budget Office said Wednesday.

Congress’ nonpartisan budget analysts said that the discrepancy resulted mainly because the White House underestimated by $14 billion the amount the Pentagon would spend to keep up with Reagan’s new military commitments.

In another development, Federal Reserve Chairman Paul A. Volcker suggested to the House Budget Committee that Congress should be content to take significant steps to trim the deficit this year, even if it fails to achieve the precise targets of the Gramm-Rudman budget-balancing law. The law sets annual budget ceilings declining from $144 billion in 1987 to zero in 1991.

Concerned About Cuts

Volcker expressed concern about the extensive automatic spending cuts that would be imposed by the law if Congress fails to come within at least $10 billion of its deficit ceiling. “I assume we would all agree that the best way to approach this is not just to . . . go to the (automatic cut) procedure, instead of an informed judgment by Congress as to the areas that it wants to cut,” Volcker said.

Volcker’s words, which are watched closely by the financial community, have had great weight in congressional budget debates of recent years. Last year, for example, the budget debate was framed around his pronouncement that $50 billion in deficit reduction was the minimum needed to assure a continuing economic recovery.

And, in a further indication of the problems that Reagan’s budget proposal faces in Congress, Senate Budget Committee Chairman Pete V. Domenici (R-N.M.) told the Senate Appropriations Committee that preliminary reports from other committees show stiff resistance to the spending cuts, user fees and asset sales suggested in the White House plan.

“The response has been very weak,” Domenici told reporters after the meeting. “I’m sure it’s the weakest by far,” compared to previous years.

Upbeat Assessment

However, Domenici expressed optimism that Congress will be able to develop a budget that meets the Gramm-Rudman guidelines. He based his upbeat assessment on recent reports that an improving economy is cutting into the deficit by boosting tax revenues and trimming welfare spending.

The CBO’s report added still another element of controversy to the fight over the fiscal 1987 budget. Most significantly, the CBO disagreed with the Administration’s estimate of how quickly the Defense Department will spend funds that Congress has made available over the last several years.

The CBO said it based its estimate on the experience of recent years, while the Administration “believes that historical defense spending patterns will not apply in the future.”

For 1991, when the Reagan Administration projects the balanced budget required by the Gramm-Rudman law, the CBO said the Administration’s budget proposals would leave a deficit of $40 billion.