President Reagan will send a fiscal 1983 budget to Congress calling for a deficit below the record certain to be set for fiscal 1982, Economic Council Chairman Murray L. Weidenbaum said in an interview yesterday.
And while a balanced budget for fiscal 1984--originally President Reagan's goal--is out of reach, the deficit for that year will be less than the red-ink total for fiscal 1983, Weidenbaum said.
"Exactly how much smaller" the deficit will be is up to the president, Weidenbaum was quick to add. And he said that the president had not yet made a final decision on whether to boost some excise taxes as a way of slimming the deficits over the next few years.
Other administration sources said that Reagan had had second thoughts about approving an excise tax package even before a widely publicized meeting on Thursday with officials from the Chamber of Commerce, after which White House officials indicated that the president's decision had been delayed.
Richard Rahn, chief economist for the chamber, said that the business executives at the meeting had urged the president to stick to his program, and that some had argued that the fight over excise taxes "was spilling a lot of blood for little benefit." Unofficial estimates are that higher gasoline, liquor and tobacco excise taxes might yield only between $20 billion and $25 billion over two years, against a deficit total that could run 10 times that much.
While the meeting with the business executives may have supported the president's intuitive view, "There was too much of a cause-and-effect relationship in the news accounts," one official said. "The president's own instincts are to stay with his original program and, after sleeping on it, he changed his mind."
But this official would not promise that the president's current opposition would be his final position.
Originally, the Reagan administration forecast a 1982 deficit of only $43 billion, a figure that ballooned to estimates of $100 billion and more last fall as the recession deepened and double-digit interest rates added to the cost of financing the national debt. Without further budget cuts or steep new increases in taxes, the administration's economists forecast budget deficits of $109 billion for fiscal 1982 and $152 billion for fiscal 1983.
Weidenbaum, who has been pressing for additional budget cuts to reduce the deficit, said "the key thing is economic growth" in assuring a downward trend in federal deficits.
He predicted a sharp economic upturn this year after the 5.4 percent drop in real activity in the last quarter of 1981. His predictions are for a 2.0 percent drop in the first quarter of this year, a zero to fractional increase in the second quarter, and a surge averaging more than 5 percent in the final two quarters.
Consumers spending will lead the upturn, helped by expansion in capital spending, he predicted. Asked why business expansion had not contributed more to the economy, even though the 10-5-3 depreciation advantages were on the books retroactive to Jan. 1, 1981, Weidenbaum said that capital expansion is always a lagging indicator.
He refused to be drawn into a controversy over the Federal Reserve Board's monetary policy, although President Reagan had said at last week's press conference that the Fed was sending the "wrong signal" to the financial markets by allowing the money supply to grow above the Fed's targets.
When asked if the Fed could revise its procedures, as urged by the Treasury, to meet its money growth targets, Weidenbaum said: "I'm not sure. Certainly some of my colleagues in the administration have suggested a movement to contemporaneous reserve accounting, which may assist them in that objective." Weidenbaum said he "would not presume" to say publicly more than "they should seriously consider such a move."