THERE ARE two constituencies, the Reagan administration had decided, that it does not care to engage in the coming budget battle. They are both hotly emotional, fully organized and highly combative: the elderly people who get Social Security checks, and the veterans. Mr. Reagan has moved quickly and firmly to reassure them that their interests are entirely safe. That represents good, cautious political judgment. But as social and fiscal policy, it's not quite so encouraging.
There will be no cuts in the basic Social Security pensions, the White House says -- including the indexing formula that overcompensates them for inflation. There will similarly be no cuts in Medicare, with its health insurance for the elderly, or in the program that guarantees a minimum benefit for the elderly poor. The veterans' pensions are to be equally immune -- the most justified and the least justified alike. To those programs the president has added several much smaller ones that benefit the children of poor families, most of them in the inner cities. There you have the list of the untouchable seven -- the programs that, unlike the rest of the budget, can look forward to the coming year with serene confidence. r
The decision on Social Security threatens to make another increase in the payroll tax inevitable within the next several years. If the present indexing formula remains unchanged, the Social Security trust fund will begin to scrape bottom sometime within a couple of years. That point can be staved off, very temporarily, by trimming some of the marginal Social Security benefits. Mr. Reagan apparently intends to do away, for example, with the college benefits for recipients' children. Perhaps the Reagan administration will resort to borrowing among the various trust funds to postpone the evil moment a bit further, as the Carter administration had intended to do. But Mr. Reagan's retreat on the basic benefits constitutes a warning that, for all of the talk about income tax cuts, an increase in the payroll tax remains a very lively possibility.
As for the veterans' pensions, there was never any question about the benefits to people who were injured in military service. That commitment is beyond challenge. But what about those pensions to nearly two million veterans whose disabilities have nothing to do with military service? Those pensions go only to veterans who are poor, and often the disability is simply old age. It is, in effect, a separate welfare system. Because it overlaps with other welfare systems, there is no reason whatever to perpetuate it -- except, of course, that the veterans' organizations consider it their own, and are prepared to defend it vehemently whether it makes any sense or not.
All together, the seven untouchables constitute nearly one-third of the total federal budget. If you add the defense money, which can only increase, and the interest on the debt, you will discover that fully two-thirds of the budget is now immune to cutting, by either national or presidential declaration.
Mr. Reagan has now put himself in some danger of drifting toward the uncomfortable position of his last several predecessors, who watched the budget swell while they complained bitterly that it was uncontrollable. As Mr. Reagan and his colleagues have repeatedly told the country, a budget is uncontrollable only if presidents and Congresses consider it so. To sweat the promised $50 billion out of Mr. Carter's $739 billion budget for 1982 seemed at least possible. To get $50 billion out of a budget of $235 billion -- which is the residue, after defense, debt interest and untouchables -- is a less promising enterprise. As more elements of the budget are declared exempt from the scissors, the impact of the cuts will necessarily fall with greater force on the vulnerable remainder.