IF THERE was ever any real doubt about it, it is now clear to all sides that if you want to stimulate growth through tax cuts, increase defense spending and control inflation, you have to make big cuts in other government spending. And these cuts -- whether reductions in actual spending or elimination of tax preferences -- are going to draw blood from a lot of politically potent groups. p
Sen. Dole said as much on "Face the Nation" last Sunday when he noted that making any inroad on the expected $60 billion deficit this year will require much tougher action than the $2 billion or so in cuts fought over in the recent budget reconciliation process.And, interestingly enough, the "Agenda for Progress" budget, unveiled last Friday by the conservative Heritage Foundation, makes the same point. There is no pretense in its budget that big savings can come from reducing fraud and abuse in social welfare programs. Nor are the proposed cuts concentrated on the poor and disadvantaged. Heavy assaults are made on the preserves of some very powerful interest groups -- veterans, farmers, the construction industry and state and local governments -- to name a few. And even so, the total savings projected for fiscal year 1982, after allowing for a hefty increase in defense spending, would be only about $25 billion, probably just a third of the federal deficit for that year with a modest tax cut and currently forecast economic conditions.
This doesn't mean that the fight to restrain government spending should be abandoned, or that certain areas of the budget terrain should be declared off-limits. But it does mean that Ronald Reagan's biggest job as president will be to wean many Americans from a set of benefits and expectations that government cannot afford to sustain.
As Robert Samuelson observed in Outlook last Sunday, the inflationary biases in our economy are very strong. They are built into very high-priced mortgage loan, every generous wage contract, every stepped-up purchase or pricing decision and every one of the government programs we have come to rely upon to protect us from job or income loss. And these vested interests in inflation are concentrated most heavily among the same middle classes that provided Mr. Reagan with his strongest political constituency.
It won't be easy to tell this same constituency that there is no magic cure for inflation, no easy way to get back the billions we have shipped abroad in return for oil or to restore our basic industries to health or to keep the elderly population from growing in size. But unless he can convince the public that long-term prosperity means building agreement on a fair way to distribute unavoidable losses and an efficient way to invest in future growth, Mr. Reagan will lose all chance for leadership and success.