Secretary of Commerce Malcolm Baldrige yesterday said that the federal budget deficit this year might hit $200 billion, and that no department, including Defense, therefore should be spared from cost-cutting efforts.
But Baldrige, who made his comments on ABC-TV's "Good Morning America," said later in an interview that he did not endorse Treasury Secretary Donald T. Regan's suggestion of a tax increase to reduce the deficit.
One news agency report after the TV appearance had attributed to Baldrige a statement favoring a tax increase. Baldrige said that is not correct, and does not reflect his views.
"The president doesn't want to throw any more tax increases at the people," Baldrige said. "I hope we can get the deficits down by spending reductions and avoid a tax increase."
On Monday, a Treasury spokesman had confirmed a published report that Regan is studying the need for further tax increases as one way to bring down the swollen federal budget deficits that are projected for years ahead.
On "Good Morning America," Baldrige predicted that federal deficits will be in the range of $150 billion to $200 billion a year for the next several years unless the administration and Congress "show the political will to bring them down." But he carefully avoided backing up Regan's suggestion for raising taxes, he told The Post.
Failure to reduce the deficits could choke off a recovery, however, the Commerce secretary continued. He said that modest increases in housing starts and automobile sales are paving the way for an economic recovery, and that the gross national product will be increasing by about 4 percent by the end of 1983 if government spending is held down.
The White House has been non-committal on Regan's apparent support for another tax increase. The president himself warned: "Don't believe everything you read in the papers." Baldrige said in the telephone interview that Regan hadn't discussed the tax idea with him.
Business officials and economists in close touch with the White House said they doubted that the administration has settled on its tax and budget policies for fiscal 1984. But one noted, "They've got one hell of a problem: There's not much room to cut nondefense spending, and their revenue estimates are hurting because lower oil prices have dragged the take from the windfall [oil] tax down."
Regan was quoted by the Treasury aide as being concerned that, without a reduction in the deficits, financial markets will be upset, resulting in a reversal of the downward trend in interest rates.
"No one dislikes raising taxes more than Don Regan, but he has to be a realist," spokesman Marlin Fitzwater said Monday. Just a few weeks ago, Regan had advocated advancing to January the 10 percent tax reduction due to come into effect at mid-year.
Baldrige was the first Cabinet officer to say publicly that the federal deficit could hit $200 billion, although President Reagan's top economic forecaster, Martin S. Feldstein, said earlier that the deficit in the financial year that ends next September could range from $150 billion to $200 billion.
"I think we must go through that budget with a fine tooth comb" in an effort to reduce the deficits, Baldrige said. But according to an administration adviser who insisted on remaining anonymous, "We're not going to get much out of that fine tooth comb."