The 1981 federal budget will have a $25 billion to $30 billion deficit instead of the $16.5 billion surplus estimated last March by President Carter, administration officials acknowledged yesterday.
The latest figures, to be included in the midyear budget update Carter is to send Congress on Monday, make no allowance for a 1981 tax cut even though the latest administration economic forecast shows unemployment could reach 9 percent by year's end, the officials said.
It is likely the president will ultimately propose cutting taxes by about $25 billion next year, an official said, but for now Carter "wants to slow down any push by the Republicans for an immediate tax cut."
The deficit for the 1980 fiscal year, which ends Sept. 30, has leaped to more than $60 billion from the $36.55 billion estimated in March when Carter last revised his budget, officials said.
Officials blamed the recession, faster-than-expected spending by the Defense Department, and Congress' decision to kill the president's oil import fee for the swelling deficits.
Only a few days ago, key Carter aides were saying the coming budget changes would include provision for a $25 billion tax cut. But when the president's economic advisers met with him Sunday afternoon at Jekyll Island, Ga., he rejected the options offered, which included acknowledging now that there would be a tax cut.
"That was not a change for him," said one official. "It was a change for us."
Carter regards the call by Republican Ronald Reagan and GOP members of Congress for an immediate tax cut as "ill-advised, inappropriate and unwise," an official declared. The president wants time to consult widely about the nature of the tax cut he will propose to make sure it will spur long-term economic growth and help reduce inflation, he added.
"He does not want people voting on a tax program prior to the election," the official said. "And he did not want his own deliberations caught up in this budget review."
At the same time, he continued, Carter is "concerned about the economic forecast" which will show the recession hitting bottom by the end of this year but with unemployment, now 7.7 percent, rising to as much as 9 percent probably early in 1981.
Some economists, such as Otto Eckstein of Data Resources Inc., have urged that taxes be reduced as soon as possible, warning that otherwise the slump could continue well into 1981.
Administration economists, however, are confident the recession will end without any new stimulus to the economy. Without a tax cut, they think the economy would grow by between 2.5 percent and 3 percent in 1981 after adjustment for inflation. A tax cut would be intended to speed that recovery.
Administration officials said the recession, which has proved much worse than they expected in March, will reduce tax receipts by about $10 billion below earlier estimates in fiscal 1980. And, $5 billion has been lost because Congress killed the oil import fee and deferred action on other Carter revenue-raising proposals.
Meanwhile, spending has jumped to about $580 billion from the $568.9 billion estimated in March. About $5 billion of the increase is a result of the recession, mostly because of higher outlays for unemployment benefits. In addition, defense spending is up $2.5 billion, to about $130 billion. Other outlays are up about $4 billion as a result of disaster aid for the area surrounding the Mount St. Helens volcano, support of the newly arrived Cuban refugees, and other programs.
The estimates for the 1981 budget deficit are up for the same reasons. The recession is expected to slash tax receipts by $17 billion or $18 billion, while recession-related outlays will be up by between $7 billion and $10 billion. And loss of the oil import fee will mean about $8 billion less in revenue.
Defense Department outlays now are estimated to be $6 billion higher in 1981 than previously calculated, reaching about $149 billion for military expenses. Other spending is expected to be up only about $500 million from the March estimates, officials said.
A $25 billion cut in 1981 tax liabilities for individuals and businesses, if enacted sometime early next year, probably would increase the 1981 deficit by $5 billion to $10 billion, since personal withholding schedules would not be changed until perhaps mid-year, officials explained.