Congressional Budget Director Rudolph G. Penner urged Congress yesterday to avoid setting its sights for deficit reduction so high that it will be tempted to abandon the cause if it falls short.
His warning, in testimony before the Senate Budget Committee, came as Senate Republican leaders were struggling to come up with specific spending cuts to reach their announced goal of cutting deficits by half, to $100 billion or less by fiscal 1988.
Success in that effort has eluded them so far.
While warning that continuing deficits of $200 billion or more threaten the American standard of living, Penner suggested, as an "example," a set of deficit-reduction targets that parallels those of President Reagan.
Senate Republicans want to improve upon Reagan's targets.
The important thing is that those targets would stabilize the ratio of government debt to the gross national product by 1988, even though they would leave a deficit of $145 billion in that year, said Penner.
The Senate Republicans are aiming for a declining ratio that would lead to a balanced budget by 1990.
Budget Committee Chairman Pete V. Domenici (R-N.M.) questioned whether the model cited by Penner would go far enough, asking him if he was keeping the target low to ensure that Congress doesn't get frustrated and quit.
That, responded Penner, would be a "disaster."
Undeterred, Domenici said his target remains to cut deficits to 2 percent of GNP by 1988, in contrast with Penner's example, which would bring deficits down to only 3 percent of GNP by that year.
Penner agreed that "more would be better," but continued to emphasize that even more modest reductions, such as the deficit-reduction "down payment" approved last year, serve a salutory purpose, including slowing the growth in costs of interest on the public debt.
"If you don't make a specific goal, you shouldn't interpret it as failure," said Penner after the hearing.
Although the economic and budget outlook that Penner presented to the committee yesterday was more in line with the administration's that is normally the case, there were some jarring notes.
If economic growth stalls, producing a recession on the order of the 1974-75 slowdown, deficits could grow to $425 billion, or 8.7 percent of GNP, by the end of the decade, Penner warned.
That, observed Domenici, would be about half the entire budget. It would be so overwhelming that "we could hardly get out of it," he added.
In addition to avoiding a defeatist approach to the enormity of the deficit problem, Penner urged speed in dealing with the issue.
"The costs of delay are very high," he observed, noting that interest costs alone would rise by $8 billion from a one-year delay in implementing the example he cited.
This is sufficient to finance the entire justice administration section of the budget, he said.