Reagan Sends Congress $1.09-Trillion Budget

President Reagan today sent Congress a $1.09-trillion conciliatory, election-year budget combining his most restrained military request ever with proposals for more spending on education, science and the fight against AIDS.

“In presenting this budget, I am keeping my end of the bargain. I call upon Congress to uphold its end,” Reagan said in the eighth, and for practical purposes, final budget of his presidency.

Unlike earlier Reagan budgets, the new document embodies an agreement on spending priorities already reached with Congress.

Reagan’s 1989 budget calls for reducing the federal deficit from $150.2 billion last year and the $146.7 billion estimated for 1988 to $129.5 billion in the fiscal year that will begin next Oct. 1.

That’s even below the target of $136 billion called for in the Gramm-Rudman deficit-reduction law. When Reagan took office in 1981 with a promise to balance the budget within three years, the annual deficit stood at $78 billion.

No Tax Increase

At a White House photo session with congressional leaders, Reagan extolled the budget for not increasing taxes while increasing spending to battle illicit drugs and AIDS.

With a pile of blue budget documents stacked before him on the table, Reagan said he hopes that the White House and Congress “can work together through this budget process this year, sticking to our agreement and completing the appropriation process before the end of this fiscal year.”

The new Reagan budget contends that the “economy has shown few signs of serious damage” from last October’s stock market plunge, and that the recent boom in exports holds out the promise of continued economic expansion.

In fact, the new Reagan budget assumes a declining rate of inflation, falling interest rates and economic growth of 2.4% this year and 3.5% next year. This projection is more optimistic than forecasts by congressional budget analysts and private forecasters but closer to their predictions than in previous years.

However, if growth is even one percentage point less than Reagan’s forecast, the deficit would rise an additional $6.3 billion in 1989 and $18 billion in 1990, the budget report conceded.

Smallest Defense Hike Ever

Reagan’s new budget proposes military spending authority of $299.5 billion in fiscal 1989 and actual outlays for the year of $294 billion--up from $291.4 billion in 1988 in budget authority and $285.4 billion in outlays.

That increase, which doesn’t even keep pace with last year’s 4.4% increase in inflation, represents the smallest military spending increase ever sent to Congress by Reagan. It is likely to result in reductions in some of the military forces and weapons programs that have grown substantially since he became President.

Reagan also laced his 1989 request with a number of items certain to be politically palatable--including nearly $2 billion in spending authority to combat “the scourge of AIDS,” a 38% increase over 1988 levels.

In addition, Reagan--who last year caused congressional consternation by proposing sharp cuts in education spending--proposed a $1.5-billion increase in education outlays, a rise of 8%, well over inflation.