Even if President Reagan wins every penny of his proposed spending cuts, federal deficits will hover between $180 billion and $190 billion for the rest of the decade, the nonpartisan Congressional Budget Office predicted yesterday.
The CBO analysis of Reagan's fiscal 1986 budget challenges the administration's contention that its spending cuts will achieve gradually declining deficits, leading to a budget gap of less than $100 billion, or half the current level, by 1990.
Taking a less buoyant view of the country's economic future than the administration does, CBO figured the government would wind up the decade with more than twice the deficit that the administration anticipates: $187 billion as opposed to $82 billion.
There is little difference in their deficit projections under Reagan's budget for next year, with the administration forecasting $180 billion and CBO projecting $186 billion.
But, for future years, CBO anticipates higher interest rates, lower economic growth and a slightly higher inflation rate than the administration does -- a combination that leads to higher deficits. The administration forecasts steadily declining interest rates after next year, relying on an expectation of massive deficit reductions, while CBO declines to make such an assumption.
The difference in deficit projections from interest rates alone, which can mean billions of dollars to the government in servicing a rapidly rising national debt, amounts to $65 billion a year by the end of the decade.
CBO calculated that spending reductions proposed in the fiscal 1986 budget that Reagan submitted to Congress last month would total $364 billion over the next five years -- the net effect of cutting domestic programs by $363 billion while raising defense spending by $43 billion and saving $43 billion in interest costs.
But these deficit reductions are in considerable doubt. Senate Republicans, who are taking the lead in trying to nail down massive spending cuts for next year, remain stymied over the refusal by defense advocates in the administration and Congress to agree to a substantial reduction in Reagan's military buildup.
According to CBO numbers, Reagan's budget ax would fall hardest on domestic spending other than Social Security and Medicare.
For instance, discretionary domestic spending, which funds the general operations of government and was already heavily cut by Reagan's first four budgets, would be reduced by another 19 percent, CBO said. As a percentage of the gross national product, it would decline from 4.6 percent to 2.9 percent.
Defense spending would rise from $253 billion to $435 billion over the same period, from 6.6 percent to 7.8 percent of GNP, roughly where it was when the country was embarking on its massive Vietnam war buildup.
Federal grants to state and local governments would be cut by $105 billion over the period, with their share of the GNP dropping by half between 1980 and 1990.
Meanwhile, Office of Management and Budget Director David A. Stockman tangled with House Democrats over proposed funding for nutrition programs in light of a private panel's report Tuesday that hunger is growing because of cuts in federal food programs.
Stockman said he didn't doubt the existence of "pockets" of hunger but contended that, with spending of $19 billion on food programs, the administration has actually expanded services in some areas. Challenging his assertion, Rep. George Miller (D-Calif.) noted acerbically, "You're doing something, but you're not solving the problem."
Stockman and the Democrats also got in a partisan dust-up over the administration's proposal to continue $8 billion in funding for the synthetic fuels development program while cutting most other domestic spending.
The figure was based on a deal between the administration and Congress, said Stockman, who added that, as far as he was concerned, "even $8 billion is a waste."