Reagan Blames ‘Iron Triangle’ for Nation’s Ills

In a contentious defense of his eight years in office, President Reagan denied responsibility Tuesday for today’s huge budget deficits and castigated Congress, the news media and “special interests” as a powerful “iron triangle” that has eroded the President’s ability to influence budget and foreign policy.

“When I came into office, I found the presidency a weakened institution . . . “ he told Administration officials and business leaders in a speech in Constitution Hall. “I found a Washington colony that, through the iron triangle, was attempting to rule the nation according to its interests and desires more than the nation’s.”

Reagan, who leaves office Jan. 20, hailed his record on domestic policy, including a record peacetime expansion of the economy, an effective war on illegal drugs, improved education and high-quality appointments to the federal judiciary. He is expected to similarly defend his foreign policies in a speech Friday.

Urgent Defense

His speech was notable for its urgent defense of his policies and for its insistence that the deficit was the fault of forces outside his Administration--a view challenged strenuously by former congressional budget officials. The annual deficit, which exceeded $200 billion three times during Reagan’s tenure, is expected to be about $150 billion this fiscal year.

The hemorrhaging red ink, which is regarded as the No. 1 problem facing President-elect George Bush, will weigh against major increases in federal spending for years to come.

Reagan found one reason to take heart from the deficit. “Most liberals are now afraid to discuss new spending,” he said.

But the deficit also threatens to dominate evaluations of Reagan’s presidency, and that is a legacy he does not want. “One of my great disappointments as I leave office,” he said in his speech, “is that the federal budget itself is not yet balanced.”

Reagan asserted that the “iron triangle”--special interests and sympathetic listeners in Congress and the news media--is able to gain enactment of spending programs that benefit small segments of society but that endanger the nation’s fiscal health.

“Special interest groups focus all their resources and members on this line or that in the budget,” he said. “And members of Congress, particularly liberal members with their dependence on special-interest campaign financing and their fear of bucking any group that is strongly committed to a spending program, take up the banner and join the charge.”

Professing “the greatest respect for the media and the role they play in our system,” the President said “it is also clear that too many members of the media approach issues like federal spending from a superficial perspective. Our positions are reported in caricature; special interest charges are reported uncritically and the public’s understanding suffers.

“Shouldn’t we expect better,” the President asked, “of those who act in the name of the public’s right to know?” The question drew sustained cheers.

“In the long run,” Reagan insisted, “the situation we have now isn’t good for anyone--even the members of the iron triangle. Fundamentally, the American people know what’s up, and they don’t like it. They may reelect their congressmen, but they trust Congress itself less and less.

“They may watch or read the media, but they stop believing it and they show more and more dislike for special-interest influence. The only question is, when will they say once and for all that they’ve had enough.”

Reagan traced the rise in deficits to the 1974 Congressional Budget Act, which, he argued, “in essence” rewrote the Constitution and curtailed the President’s ability to limit spending. He asserted that “the really big deficits started coming immediately after the act was passed, and they’ve kept right on rolling ever since.”

The deficit, only $6 billion in fiscal 1974, jumped to $53 billion in 1975 and $74 billion in 1976--then a record--but most economists held the 1974-1975 recession responsible because it depressed tax revenues and forced up social welfare spending.

Reagan, suggesting that the Budget Act limited the President’s ability to impound unnecessary funds voted by Congress, pointed out that no company head is “forced to spend every dime” that is available to him.

“But that’s the situation the President is in now,” he said. “If Congress appropriates it, the President has to spend it whether he needs all the money to do the job or not.”

In fact, however, the Budget Act gave the President what a series of federal courts had recently denied to President Richard M. Nixon--a limited power to impound funds voted by Congress. Under the act, the President may defer spending for up to a year and, through a new legislative process, ask Congress to cancel expenditures that it has already approved.

Former budget officials disputed Reagan’s view of the origins of today’s massive deficits.

Rudolph G. Penner, currently a senior fellow at the Urban Institute and the director of the Congressional Budget Office from 1983 to 1987, said: “The very large deficits today are largely the result of actions taken in the early 1980s.”

Penner said that Reagan moved to slash tax rates and increase defense spending without proposing enough offsetting domestic spending cuts. “The President’s plan was inherently flawed,” he said.

“You can blame the Congress for adopting Reagan’s recommendations so uncritically,” he said. During the early years of Reagan’s presidency, he said, there was “a desire to suspend disbelief.”

Disputed Reagan’s Claim

Alice M. Rivlin, who directed the Congressional Budget Office from 1975 to 1983 and now is a senior fellow at the Brookings Institution, took issue with Reagan’s claim that a President could restrain spending substantially if he had authority to veto individual items in spending bills without throwing out the entire legislation.

“A President who is against spending might use the item veto to cut spending a little bit,” she said. But she said an item veto would be ineffective against the government’s massive benefit programs, such as Social Security and Medicare.