After two years with President Reagan in the White House, is "Reaganomics" dead?

Many believe it is. Radical economist Robert Lekachman commented last month at the annual meetings of the American Economic Association that Reaganomics had been the shortest-lived economic plan within memory. Many others agree that the president's economic policy has already been proved a failure--after all, the economy is in its worst recession since the 1930s.

But it isn't so easy to pronounce Reaganomics dead. The president has yet to make the final decisions on the fiscal 1984 budget, the administration's next comprehensive policy document. And so far, he has been unwilling to compromise on the two elements of his original plan that are dearest to his heart: lower taxes and higher defense spending. While others in the administration would like to push policy back towards a more conventional conservative Republican program, the president is still a holdout.

Even if Reagan does agree in the coming days to increases in taxes and a lower path for defense spending in the fiscal 1984 budget, it's likely that his economic program still will have made major changes in the shape and size of the federal budget and revenues.

It has always been difficult to define Reaganomics because key parts of the president's original economic plan were inherently contradictory. But the unusual mix of large budget deficits and tight monetary policy, which has characterized economic policy in the past two years, is perhaps the most obvious feature of Reaganomics in practice, even if it was unintended.

The Federal Reserve Board began to ease monetary policy last year in the face of growing financial strains at home and overseas, and the still weak economy. This has helped interest rates decline substantially in the last six or seven months.

However, the cost of money is still very high when compared with today's inflation rate. And it is largely because forecasters expect continued high interest rates that they foresee only a slow recovery from the recession this year.

Most officials still believe inflation-fighting is a top priority, one source said recently, despite the impressive gains made against inflation and the price paid for these in terms of lost jobs. Several outside economists want the Fed to ease policy further to boost the economy. But the White House will likely continue its support for a monetary policy aimed at a gradual, sustained deceleration in monetary growth and inflation, sources say.

In successive rounds of budget-making, the president has had to confront the realities that he cannot have higher defense spending, tax cuts and a balanced budget without far larger cuts in domestic spending than Congress will accept or than he is willing to propose.

Reagan's rhetoric in favor of balanced budgets hasn't dimmed much despite this conflict. But as he has pressed ahead with tax cuts and increased military spending, his fiscal policy has led to the largest deficits in history, and put federal borrowing on a sharply rising path for the foreseeable future. In the past, projections of a growing economy combined with a continuation of existing budget policies always produced budget balance within the planning period of each budget. Officials admit that this will not be possible with the 1984 budget.

Some observers have taken the contrast between these projections and Reagan's campaign promise to balance the budget by 1984 as evidence that the president has abandoned Reaganomics. But as one top White House adviser said early on in Reagan's term, balancing the budget was never as high a priority for the president as boosting defense, halting the growth in non-defense spending and cutting taxes.

This adviser, who has since left the administration, laid out Reagan's budget goals and constraints and described writing the budget as working repeatedly through the options to balance the goals as well as possible. The top priority was to preserve the defense buildup, and the second was to keep to the tax cut program enacted in the summer of 1981. Balancing the budget came behind.

Reagan has largely held to this ranking as the deficit has widened. For a time last year, it seemed as though he might be shifting towards putting a higher priority on cutting the deficit. Before the fall congressional elections, White House officials predicted that the 1984 budget would show much smaller deficits than were proposed for 1983; the president embraced a balanced-budget constitutional amendment and signed off on a large tax increase, urged on him by congressional Republicans anxious about the deficit; and budget officials were aiming to produce a budget showing balance by 1988.

But in the past weeks of grueling budget review sessions, the dream of a balanced budget has again evaporated. The president's advisers have recently shown him deficit projections that soar over $250 billion by 1988. Faced with these numbers, Reagan may shift a little. At his news conference last week he stressed that he will "look at everything" on the table to shrink the deficit.

Some tax increases are likely this year, whether or not Reagan initially proposes them. He appears to have left most room for including Social Security tax increases in the budget, although the administration may just put in a target figure for Social Security savings with no details of how to reach it. A payroll tax increase is already scheduled for 1985, and one option for saving money on Social Security is to bring this rate increase forward to 1984.

Treasury Secretary Donald T. Regan has floated the idea of ending the mortgage interest deduction on second homes and limiting the interest deduction for consumer loans, excluding those for autos. The Council of Economic Advisers has also pushed a proposal to start taxing part of the benefits from employer-paid health insurance.

Reagan is most adamant that the final installment of his three-year income tax cut, due in July, should not be tampered with. Within Congress there may well be a push this year to repeal the tax indexing provision, which kicks in in 1985. This was part of the 1981 tax cut bill, and would mean that the tax brackets that determine tax rates would rise each year with inflation so that people are no longer pushed into higher tax brackets when their pay rises just to keep up with inflation.

Despite the focus on reducing budget deficits, there are also various proposals circulating in the administration for new tax cuts. The Commerce Department would like additional tax incentives for research and development, the CEA is examining sweetening the savings incentives already enacted in 1981 and is considering a tax credit to encourage firms to hire young and disadvantaged workers.

Just as Reaganomics has not led to the reduced federal deficits that its proponents first expected, neither has it led to the economic expansion that they promised. The president originally said it would be possible to bring down inflation and stimulate the economy at the same time.

The actual outcome--inflation quashed by squeezing the economy and raising unemployment--has been closer to traditional conservative policy. But the mechanism for holding down the economy has been the monetary policy of the Federal Reserve and not Reagan's fiscal policy.

Federal Reserve Board Chairman Paul A. Volcker's four-year term runs out in August and Reagan has a good opportunity to alter Fed policy when he picks Volcker's successor. As yet, the White House has not decided whether to ask Volcker to stay on, sources say. A leading candidate for the chairmanship if Volcker goes is Fed Vice Chairman Preston Martin. Martin, a former California businessman and financier and an acquaintance of the president's from his California days, was appointed by Reagan. But observers say Martin would be unlikely to shake up Fed policy.

Unless there are dramatic and unexpected policy changes, the nation is likely to continue on its present high deficit-tight money path, with restrained inflation but very high unemployment.