THERE ARE two misleading aspects to the budget President Reagan sent to Congress yesterday. One has to do with the deficit, the other with the poor.
The fiscal sleight of hand is the more familiar. The president asserts that this budget will take the deficit down. Mr. Reagan is saying in his eighth year, undeterred, the same thing that he said in his first: you can, too, have your cake and eat it too. No matter that the national debt has doubled in the meantime as the numbers failed to add up. The claim is only slightly more modulated than in the past. "This budget shows that a gradual elimination of the deficit is possible without abandoning tax reform, without cutting into legitimate social programs, without devastating defense and without neglecting other national priorities," the president says.
In fact, the deficit goes down because of rosy economic assumptions and such games as asset sales. As the administration itself acknowledges, if the economy behaves instead as most economists and the Congressional Budget Office expect it to, and if there are no further tax increases or spending cuts, the deficit will go up next year. But by then the problem will be the next administration's.
As to the poor, the budget is fairly forthright about most of the changes that have occurred in the Reagan years. In real terms, meaning stripped of inflation, defense spending, interest on the debt and payments to the elderly and retired (mainly Social Security and Medicare) have all gone sharply up, while other domestic spending, including particularly grants to state and local governments, are sharply down. But then the budget document also says that "contrary to much popular discussion" spending on the poor has risen in this administration too.
In part that is true, but in larger part deceptive. In 1982 dollars, spending on the poor was $61.5 billion the year before Mr. Reagan came to office and $71.8 billion last fiscal year. But more than half that increase occurred in Medicaid, where the inflation rate was double that for the economy as a whole. What the budget presents as a real increase was extra inflation; Medicaid was in several ways cut in the Reagan years. The rest of the increase came mostly in spending on subsidized housing, and is largely the delayed effect of spending decisions made in the Carter years. The Reagan administration has sharply cut future spending authority in this area.
There are other problems with these figures, not least the fact that, had the administration had its way, they would have been cut much more. The Reagan administration has weakened the redistributive effect of government. In 1979 the combined effect of the federal tax code and spending programs for the poor was to reduce the poverty rate by 3 percentage points. In 1986 the same factors were reducing a higher poverty rate by only 1.5 points. The poverty population was 10 percent larger than it would have been had federal law been left alone. The fiscal deficit is one part of the Reagan legacy. A fairness deficit is another.