Carter administration officials, in what is likely to become a major theme of the presidential election campaign, yesterday attacked as unworkable the economic proposals made by Republican presidential candidate Ronald Reagan.
"They just simply do not add up," a key official said of the tax and spending measures endorsed by Reagan.
Administration sources indicated yesterday that the attack on the Reagan plan is likely to become a major theme of the Carter campaign this fall. James McIntyre, director of the Office of Management and Budget, will devote the main part of a speech he is making tonight to the National Business League in Detroit to the issue, sources said.
By 1985, according to administration calculations, Reagan's tax proposals would cut federal revenues by $285 billion compared with present law. If he is to balance the budget, stick to his commitments on defense spending, leave imtact the present Social Security system and keep up interest payments on federal debt, then there would be only $12 billion left for all other federal spending, White House sources estimate. His total spending would have to be within $732 billion to balance the budget, they said.
It will cost $15 billion just to keep up the Congress, the courts, the prisons and some basic law enforcement in the Justice Department, sources added. So there would be no money left, for example, to spend on education, housing or the environment, they said.
Reagan has argued that the economy will grow so much faster as a result of his proposed tax cuts that extra revenues will be generated to make up for those lost through the original cuts.
But administration officials said yesterday that it was "highly improbable" the economy could grow fast enough to offset the revenue loss. Growth in GNP would have to accelerate from a projected 11 percent or 12 percent a year in nominal terms to about 16 percent, they estimate. This would involve extraordinarily rapid increases in productivity, employment or investment, the sources said.
In contrast, Carter's economic policy outlined last week would lead to only a modest loss of revenue by 1985. Officials estimate that over the next five years there probably would have to be tax cuts in addition to those spelled out by Carter last week, just to offset the increased tax burden because of inflation. With the President's proposal, which is estimated to cost $55 billion by 1985, they figure that taxes would probably be cut by $100 billion overall by the mid-1980s compared with the present law.
In a detailed analysis of how the administration's budget would differ from Reagan's by 1985, officials estimate that Reagan would have to cut total spending by about a quarter below the administration's. Nondefense spending would have to be cut by an astonishing 40 percent, the sources said.
Carter already has accused his Republican opponent of advocating inconsistent proposals that would slash federal revenues and make drastic spending cuts necessary to balance the budget. In a speech on the West Coast prior to the Democratic convention, he used the figure of $280 billion for the revenue loss from the Reagan tax proposals.
The sources said yesterday they had made conservative estimates of the likely cost of the REAGAN PROPOSALS. nevertheless, there are "problems with how you get there from here," they said.
They have looked at the Reagan proposals, one highly placed administration official said yesterday, because -- "although I hate to call them serious" -- the measures have been suggested by people running for office and their effect on the Federal budget should be known.
Administration economists have looked at various ways in which the 7 1/2 percent real growth in GNP -- which they believe would be necessary to offset Reagan's proposed tax cuts -- could be achieved.
The economists estimate that if employment continues to grow at its recent rapid rate, then productivity growth would have to average 5.3 percent a year over the next five years. The average for the best five-year period since World War II was only 3.4 percent.
If, on the other hand, productivity grows more in line with recent experience, then employment would have to increase by 6.4 percent on average between now and 1985. By then 90 percent of the population between the ages of 18 and 64 would have to be at work. If this were to continue, by 1987 some people would have to be employed in two jobs.
It is neither "economically plausible" nor physically feasible" for investment to rise sufficiently to generate the productivity growth, the administration sources argued.