Budget Chief Studying U.S. Loan Changes

Budget Director James C. Miller III said today that he is eyeing a complete overhaul of federal lending programs and sharp cutbacks in farm crop subsidies as he shapes a proposed budget for the next fiscal year.

Miller also told a conference sponsored by Citizens for a Sound Economy that President Reagan will propose major changes in the budget process to Congress.

The budget director said he personally favors “an overall limitation on spending and perhaps on taxes as well in addition to a limitation on the deficit.”

Miller reiterated the Administration’s intention of submitting a budget early next year that will meet the $108-billion deficit target of the Gramm-Rudman budget-balancing law--and said Reagan will oppose any efforts by Congress to relax the targets.

Would Sell Loans

On the subject of government loans, Miller said he favors a new system under which agencies would immediately sell loans to the private sector as soon as they were made.

In addition, Miller proposed that federal agencies be required to buy insurance to protect the government against defaults under loan guarantees. While some loans would be exempt, such as foreign aid, most government lending would be covered by such a new system, Miller said.

The budget director also took aim at crop subsidies under the farm bill enacted by Congress in 1985. Such direct government aid mushroomed to $25.5 billion in the fiscal year that ended Sept. 30.

“I have grave reservations about the political survivability of the present farm program,” Miller told his audience. “It has cost more than we expected and doesn’t seem to be effective.”

Studying Farm Program Cuts

He did not say what kind of cutbacks in the farm program may find their way into the President’s budget but said he is “taking a look to see what kind of changes we can propose.”

Miller also said sales of government assets, unsuccessfully sought by the President in last year’s budget, are also likely candidates for recycling in the new budget proposal.

Miller emphasized that the Administration will continue its policy of opposing any general tax increase.

“There are those on Capitol Hill who are going to say it’s impossible to get down to $108 billion and try to force the President’s hand to raise taxes. He won’t do it. You can take it to the bank, he won’t do it,” Miller said.