Upping the ante in the battle of the budget, President Reagan will call for federal spending cuts of at least $45 billion when he addresses a joint session of Congress next week, according to well-placed White House sources.
Earlier, Reagan had been considering a two-tier plan in which $26 billion of budget cuts would be announced next week and furhter cuts later. This has been scrapped in favor of making a stronger impact on the public and Congress in the Reagan speech scheduled for Feb. 18.
One source desribed the president as "very determined" to strengthen rather than weaken the impact of his budget proposals. There have been some reports that the administration might scale down its proposals, but this source said that some Cabinet officials have actually added reductions to those proposed by Office of Management and Budget Director David A. Stockman.
This source said that the total amount of the cuts could go as high as $50 billion, a figure previously considered unrealistically high. He said that all but about $10 billion of these reductions will be detailed in the Feb. 18 speech and that the remaining cuts will be spelled out in detail in a March 10 follow-up submission to Congress.
One possible proposal in the Reagan budget is a reduction in force of federal employes, which could eliminate as many as 60,000 jobs.
In addition, in an almost unprecedented effort to make regulatory policy through the budget process, the budget-cutters are proposing to eliminate over three years the entire bureau of competition, or antitrust arm, of the Federal Trade Commission, and to cut the budget of the Consumer Product Safety Commission by 30 percent. [Details, Page A2.]
There also were reports in housing circles that Reagan would propose significant cuts in federally assisted housing for the poor, which is the fastest-growing federal welfare program and which is projected in future years to become the second costliest, exceeded only by Medicaid.
Two agencies scheduled for cuts deeper than those proposed by Stockman are the Economic Development Administration and the Appalachian Regional Commission.
Sources said that Reagan has decided to eliminate all but $223 million of the $668 million EDA appropriation in the 1981 budget. Stockman had asked for $300 million to remain. The new cuts would leave EDA with just enough funds to meet present commitments and to preserve in reduced form a program that provides trade adjustment assistance to companies hard hit by imports.
The White House proposal for the Appalachian commission would leave $119 million in the 1981 budget, compared with the $223 million proposed by Stockman. This would leave the agency just enough money to close shop, with the highway functions of the commission being transferred to the Department of Transportation.
Though Reagan's intent if firm on the question of spending cuts, there are still divergent views within the administration on the touchy issue of "tax expenditures," special provisions in the tax code that lower the taxes of selected groups.
Elimination of such provisions is one way of insuring that the Reagan cuts will hurt rich people as well as poor, since they mainly benefit the better off. It is also a way of reducing the deficit.
But the issue was described as "unsettled" at this point. One proposal that was strongly considered but apparently has fallen into disfavor was elimination of the mortgage interest deduction on second and third homes. This was opposed on grounds that it would be taking money away from some of the same investment-minded people Reagan wants to encourage with the tax cuts that will accompany his budget-cutting proposals.
The president made a brief pitch for his plan yesterday, appearing unannounced in the White House briefing room to introduce Murray L. Weidenbaum, his designated chairman of the Council of Economic Advisers, and to tell reporters that his program must be adopted with "urgency."
"There can no longer be a business-as-usual approach," Reagan said in a repeat of the theme he sounded last week in a televised speech to the nation." "Inflation and unemployment are threatening the American way of life as never before, and without a change of policy these intolerable conditions with get even worse."
Weidenbaum's purpose was to explain the audit Reagan used last week in describing the United States as being in "the worst economic mess since the Depression." But he said little that Reagan hadn't said already, and he refused to give any of the numbers that the administration will use in its economic forecast upon which its budget is based.
Weidenbaum said during the briefing that it was "my personal hope" that the federal budget could be balanced by 1984, a year later than the administration's original intentions.
White House press secretary James S. Brady said yesterday that Reagan had finished going over the budget recommendations with his secretaries of labor, commerce and energy, bringing to six the number of departments which are completed.
Brady said that the president was making "some windage corrections" in recommendations, but that there was general agreement between Cabinet officials and Stockman.
Brady said that entrenched interests opposed to some of the cuts were "strong as horseradish" within the departments, but that these were not the view of the Reagan top echelon, which is in control of the budget-cutting process.