Rose-Colored Data

The Reagan Administration’s final budget uses high hopes to project a lower deficit. The new budget is based in part on relatively optimistic assumptions about the economy during the next federal fiscal year beginning Oct. 1. It will include more than $30 billion in spending reductions, most of which have been rejected by Congress in the past and are not likely to be accepted now. It includes 2% real growth in defense spending even though President-elect George Bush has indicated that he plans to hold military outlays to current levels.

Past Reagan budgets have been declared dead on arrival in Congress. This one is moribund before Congress even meets. It will, at best, serve as a starting point for the Bush Administration in its budget negotiations with Congress.

The Reagan budget would draw down the annual budget deficit by about $70 billion, compared with the present level of red ink, to about $92.5 billion. The Gramm-Rudman deficit goal for next year is $100 billion.

Getting the deficit down to $92.5 billion depends on the economy doing better than most economists now expect that it will. The budget projects economic growth at 3.5% and a lowering of interest rates by two percentage points during the budget year. These factors are important, because they help determine how much revenue the government collects and how much money it has to spend to service the federal debt--which now is nearly $3 trillion.

President Reagan’s budget chief described the document as reasonable, responsible and conservative. But in recent years the Reagan budgets have been unrealistic political statements rather than sound spending plans. Perhaps George Bush can restore some meaning to the budget process once he gets over his imprudent campaign promise to never raise taxes.