Former president Gerald Ford had sharp words today both for President Carter and for his old GOP rival, Ronald Reagan, whom he said was waging "a closet campaign" for President.

Ford said that Carter's proposed defense budget increases were inadequate, that his economic policies were "a disaster" and that his new proposed federal budget seriously under-estimated the federal deficit.

The former president chided Reagan for his Iowa campaign and repeated his prediction that the Republican presidential race would come down to "a horse race" at the national convention.

"Governor Reagan made a serious mistake by not being an active participant, by not joining in the debate in Iowa," Ford said. "It's obvious he's got to shop having a closet campaign for president."

But Ford declined to back George Bush, winner of the Republican caucuses in Iowa, or any other GOP candidate. Ford also said, as he put it, "for the millionth time" that he was not a candidate for the Republican presidential nomination.

Ford and his aides have made no secret of his own political strategy for 1980, which is to stand on the sidelines in hopes that no declared candidate can win a majority of GOP delegates.

Carter's popularity is high now, Ford said, because the American people have rallied around him as they rallied around Ford's own presidency after the Mayaguez incident.

"After the euphoria evaporates, the American voter looks at things realistically and that's what's going to happen to President Carter," Ford said.