President Reagan's former chief economist said yesterday that federal spending may be little, if any, lower under Reagan than it was projected to be in President Carter's last budget, once inflation is taken into account.
The reason, said Murray L. Weidenbaum, who until August was chairman of the Council of Economic Advisers, is that rapidly rising defense spending has offset non-defense program cuts. He criticized the Office of Management and Budget for using procedures that allow the administration to "take credit for its cuts in civilian outlays while ignoring the increases in military outlays."
In a speech in St. Louis, Weidenbaum said, "Official projections of future military outlays, in real terms, have risen successively during the last two years from 5 percent to 7 percent to 9 percent or more per annum. There seems to be little justification offered of the economic feasibility of this sharply upward movement.
"Without prejudging the results, intensive analysis should be given to the military budget, comparable to the tough-minded attitude quite properly taken toward many civilian spending activities of the federal government," he declared.
Weidenbaum said a simple comparison of the numbers in the Carter and Reagan budgets shows a much slower growth in civilian spending under Reagan that more than offsets the increases in defense spending. (The difference, however, is only about one-half the size of the revenue lost from the 1981 tax cuts, one reason the budget is so deeply in the red.)
But a substantial share of that slower growth in non-defense spending is the direct result of lower inflation. When the numbers in the budgets are compared after adjustment for the rates of inflation assumed when the spending estimates were made, Weidenbaum said, most of the apparent slowdown in spending disappears.
If the numbers for the five years 1982-'86 are adjusted using the two administration's respective estimates of inflation as measured by the gross national product deflator, Weidenbaum found, total outlays under Reagan are projected to be only 1.3 percent than under Carter.
If the respective forecasts of increases in consumer prices are used to adjust the figures, then the Reagan spending total for the five years is actually about 0.6 percent higher, not lower, than the Carter total.
"It does seem clear that, especially in relation to the 1981 tax cuts, the net spending reductions in the 20 months seem to be quite modest," Weidenbaum said.
In addition to close examination of defense spending, the former CEA chairman also urged reductions in the cost-of-living adjustment formulas for Social Security and other so-called entitlement programs, including veterans' benefits and government employes' retirement benefits.
Earlier this week, when the Treasury Department announced that the federal budget deficit reached a record $110.7 billion for fiscal 1982, which ended Sept. 30, the National Taxpayers Union also issued a statement challenging whether spending has been reduced once the decline in inflation is considered.
"Although the administration has boasted of reducing the rate of spending growth dramatically, these budget results show otherwise," the NTU, an organization devoted to holding down spending and taxes, said.
"After adjusting for inflation, federal spending increased by 4.2 percent in 1982, compared with 3.5 percent in 1981. The average real growth in federal spending during the past four years has been exactly 4.2 percent. This shows that the Reagan administration has made no progress at all in reducing the rate of federal spending growth," the statement argued.