Reagan: "Before even the election day. . . I was openly saying that what we had thought on the basis of our plan could have brought a balanced budget, that was no longer possible."

Reagan maintained throughout the 1980 campaign that the budget would be balanced in 1983. In January 1981, Treasury Secretary-designate Donald T. Regan said balance would not be achieved until 1984, and a balanced budget was projected in the president's Economic Recovery Program presented in March 1981.

Reagan: " . . . we have seen a $21 billion reduction in the deficit from last year, based mainly on the increased revenues the government is getting without raising taxes."

In the fiscal 1985 budget, the administration estimated that the Tax Equity and Fiscal Responsibility Act of 1982, the Highway Revenue Act of 1982, the Social Security Amendments of 1983, and the Railroad Retirement Revenue Act of 1983 would raise federal tax receipts by a total of $45.9 billion in fiscal 1984.

The effect of all those tax increases was about $3.4 billion greater than the additional impact, in 1984, of all the 1981 tax cuts, according to the administration.

Reagan: "The interest rates have come down about nine or 10 points. . . . "

The commercial bank prime lending rate has come down from 21.5 percent in January 1981 to 12 3/4 percent currently, a drop of 8.3 points. However, three-month Treasury bill yields are about 10 percent, down 4 3/4 points. AAA corporate bonds are yielding 12.6 percent, down only a hair from 12.8 percent. Conventional new home mortgage yields are about 13.5 percent, up slightly from their early 1981 levels.

Reagan: " . . . the rate of increase in government spending . . . has come down from 17 to 6 percent. . . . "

Spending in fiscal 1981 was 17.5 percent higher than the year before. The increase in fiscal 1984 was about 6.1 percent. However, the administration estimates that spending in fiscal 1985, which began this month, will be up about 10 percent from last year. Reagan: "Actually, in constant dollars, in the domestic side of the budget there has been no spending increase in the four years that we have been here."

According to the Reagan budget for fiscal 1985, nondefense spending for 1984 was roughly 6 percent higher than in fiscal 1981. The latest administration estimates for spending and inflation indicate it will be about 8 percent higher in 1985 than in 1981.

Reagan: "As a matter of fact, the biggest single tax increase in our history took place in 1977. . . . "

The 1977 Social Security tax increases were not the largest in history if the increases from some other tax bills, such as the 1982 Tax Equity and Fiscal Responsibility Act, are calculated over the same number of years.

Reagan: " . . . the only 25 percent cut in Social Security benefits that I know of was accompanying that huge 1977 tax increase was a cut of 25 percent in the benefits for every American who was born after 1916."

Estimates made by the administration at the time were that its plan would cut Social Security outlays by $81.9 billion through 1986, a 9.1 percent reduction in what has been or is now estimated will be spent.

However, over the 75-year period used for assessments of the soundness of the system on an actuarial basis, the reductions would have reached 25 percent.

The cut to which Reagan referred was a step taken to eliminate for future retirees an unintended double indexation of benefits as a result of counting the effects of both wage increases and inflation. Reagan: "Our policy was not to cut housing subsidies. . . . We are today subsidizing housing for more than 10 million people."

According to the Urban Institute, budget authority for housing subsidies of all types was cut from $27 billion in fiscal 1980 to $13 billion in 1984, although with a far smaller impact on current outlays becuase of the long-term nature of housing subsi1340.

Reagan: "And no, I never proposed any $20 billion should come out of Medicare."

Over a five-year period, Reagan proposed Medicare cuts that would have totaled $37 billion, with just under $20 billion coming from reduced benefits and higher payments by beneficiaries. The remainder was to come from ceilings on hospital and doctor charges.

Reagan: "Yes, there has been an increase in poverty, but it is a lower rate of increase than it was in the preceding years, before we got here. It has begun to decline, but it is still going up. On the other hand, women heads of household -- single women heads of household -- have for the first time -- there's been a turndown in the rate of poverty for them. We have found in our studies that -- in this increase in poverty -- it all had to do with their private earnings. It had nothing to do with the transfer payments from government. . . . "

In the first two years of the Carter administration, the number of persons below the poverty level declined slightly. The rate then rose from 11.4 percent of the total population in 1978 to 13 percent in 1980, with 1.3 percentage points of that rise coming the last year. In the first two Reagan years, the rate rose 1 percentage point a year to reach 15 percent. In 1983, it went up to 15.2 percent.

The poverty rate for single women heads of households fell from 36.3 percent in 1982 to 36 percent in 1983, a decline too small to be statistically significant, according to Census Bureau statisticians. In any event, the rate fell from 33 percent in 1976 to 30.4 percent in 1979 before increasing again.

The Congressional Research Service, the Urban Institute and other research groups have concluded that cuts in money benefits under some government programs did contribute to the increase in the number of persons below the poverty line.

Reagan: "We have more people receiving food stamps than were ever receiving them before -- 2,300,000 more are receiving them -- even though we took 850,000 off the food-stamp rolls.. . . "

The Agriculture Department said that 20.7 million persons received food stamps in January 1981, and that 20.3 million got them in July 1984 -- a decline rather than an increase.

Reagan: " . . . there is no connection between the federal budget deficit and the level of interest rates ."

The relationship between budget deficits and interest rates is a matter of substantial debate among economists. A Treasury Department study concluded last year that there is no systematic connection. But few if any economists would argue that there is never any connection regardless of the stance of monetary policy or the level of economic activity. A number of economists have also challenged the validity of the Treasury study.

Reagan: "Social Security has nothing to do with the deficit. . . . If you reduce the outgo of Social Security, that money would not go into the general fund to reduce a deficit, it would go into the Social Security trust fund. So Social Security has nothing to do with balancing a budget or erasing or lowering the deficit."

Both Social Security receipts and outlays for benefits are in fact part of the unified federal budget. If outlays were reduced and nothing else changed, the overall budget deficit would be lower.

Reagan: " . . . two-thirds of the defense budget pays for pay and salary, or pay and pension. And then you add to that, food and wardrobe and all the other things, and you only have a small portion going for weapons."

The fiscal 1985 defense budget sought by Reagan this year called for spending $272 billion, of which only $67.3 billion, or 25 percent, was for military personnel and retirement costs. In addition, some portion of the $76.9 billion earmarked for operations and maintenance would go for items such as "food and wardrobe." On the other hand, military procurement of weapons, research and development and construction add up to more than $115 billion, and most of the operations and maintenance outlays are not related to personnel. CAPTION: Picture, RONALD REAGAN . . . "never proposed" $20 billion Medicare cut