Ronald Reagan's economic adviser plan to meet Wednesday with the president-elect to present him for the first time with their grim projections for huge budget deficits during his first term unless deep cuts are made in politically popular federal programs.
The meeting will draw Reagan into the strategy discussion that began a month ago between his aides and Senate Republican leaders, focused on the federal spending issue, which currently heads the list of political challenges in his first term.
The combination of the individual tax cuts Reagan has promised and his commitments to boost defense spending would push the budget deficits to between $60 billion and $100 billion in the next two fiscal years, dooming Reagan's pledge to balance the budget in three years, according to analysis by the Senate Budget Committee's Republican staff. Those projections compel the Reagan administration to make an unprecedented attempt to slow spending growth, both Reagan's aides and Senate Republicans have concluded.
Both groups are puhing to complete a list of policy options for consideration by Reagan and his Cabinet before the Jan. 20 inauguration, but, according to some Republicans, the process is behind schedule with a lot of ground to cover.
"I think things are going to move slower than they should," said Rep. Barber B. Conable Jr. (R-N.Y.), top-ranking Republican on the House Ways and Means Committee.
"Mr. Reagan himself seems somewhat disengaged," Conable added.
During the election campaign, Reagan repeatedly insisted that his goals for spending cuts could be achieved by eliminating "waste, fraud, abuse and mismanagement" from federal programs, and that no individuals would suffer hardship in the process.
In his only announced meeting on economic policy since the election, on Nov. 16 in Los Angeles, Reagan held to that view. The planned budget reductions are not aimed at "depriving people," he told reporters. We're still talking in the areas of extravagance."
But Senate Republicans have concluded that politically controversial budget cuts are inevitable, including new limits on some of the major federal assistance programs for individuals, and in federal construction and subsidy programs that have powerful constituencies.
This grim outlook is shared by Rep. David A. Stockman (R-Mich.), norminated by Reagan to head the Office of Management and Budget, Stockman and other Reagan economic advisers are reportedly intent on advising the president-elect that a painless approach to the budget process is not possible.
Although most members of the Republican Senate leadership agree on that general approach, there is no common strategy yet on where to cut the budget, said Sen. Pete V. Domenici (R-M..), the new chairman of the Senate Budget Committee.
His committee has assembled a 50-page list of 193 specific budget cuts that could save between $25 billion and $29.5 billion in the current fiscal year and twice that much in succeeding years. But this agenda has not been adopted either by the Republican Senate leadership or the Reagan economic transition staff, aides said.
This was evident at a meeting of Republican leaders, Stockman and Martin Anderson, Reagan's chief domestic policy advisers, Sunday at the home of Sen. Howard H. Baker (R-Tenn.), the Senate majority leader.
"We're still discussing things," Domenici said. "There isn't a precise, specific approach."
"There is a real unanimity that curtailment in the growth of the federal budget is a most. . . . There is an equal concern that we must have a multi-year tax cut program," Domenici said.
Stockman heads an economic policy task force on budget strategy that includes Donald T. Regan, Secretary of Treasury-designate; Anderson; Edwin Meese III, Reagan's chief White House counselor, and policy aides Darrell Trent and Ed Harper, while Regan directs another task force on economic policy.
Conable said he does not believe that Congress will be willing to give Reagan the kind of individual tax cut he wants, based on the so-called Kemp-Roth plan for a 10 percent reduction in individual rates for these years in a row. "I don't think for a minute that, if the president proposes a flat-rate cut, Congress will agree," Conable said. "Congressmen have other measures, the cost of which will be a trade-off against the rate cuts."
The proposal by Sen. William Roth (R-Del.) and Jack Kemp (R-N.Y.) remains a central part of Reagan's economic strategy, aides say, which relies on the individal tax cuts to encourage a big increase in productive work effort and greater savings and investment.
But the Kemp-Roth tax cuts, coupled with annual increases in defense spending of $20 billion to $25 billion, would combine to push the deficit to more than $100 billion in each of the 1983 and 1984 fiscal years.
This outlook has forced the Republicans to look at such programs as student loans, farm price supports, civilian and military retirement benefits, Medicaid and welfare benefits as potential sources of spending reductions.
Additionally, Stockman has urged the new administration to take a hard line on capital projects such as the synthetic fuels program, public works finding and shipbuilding subsidies.