President Reagan today denied that his 1982 budget deficit will be larger than the earlier forecast of $42.5 billion, during a day spent considering how to reconcile two of his most cherished goals: a balanced budget and billions of dollars of new defense spending.
Reagan met with his top national security and budget advisers for more than three hours in what he called a preliminary attempt to identify federal spending cuts necessary in 1983 and 1984 to balance the budget while not retreating from his aim to increase real defense spending by about 7 percent annually.
Few details of the meeting were announced, but the budget picture was confused by seemingly contradictory statements from administration spokesmen.
White House communications director David Gergen told reporters in Washington that "There is an upward creep of perhaps a few billion, but the increase in the 1982 deficit will be less than double-digit."
White House deputy press secretary Larry Speakes joined Gergen in denying news reports that the deficit has grown by about $20 billion. "I doubt if it will be much in excess of our $42 billion figure," Speakes said.
Speakes insisted that he was not out of step with Gergen's remark about "upward creep." Reagan was even more firm than his spokesmen that the projected deficit will not grow.
"No, we're not changing our ideas about the 1982 deficit at all," he told reporters who were admitted for a few minutes to the meeting room on the penthouse floor of the Century Plaza Hotel.
In its effort to reshape the budget, the administration is being pulled in two directions. Some senior administration officials want to maintain pressure for more budget cuts by spreading word that the deficit is growing.
The price to be paid for creating such a climate, however, is that interest rates remain high in anticipation that the federal government will need to borrow more money. High interest rates keep the bond market flat and cripple important sectors of the economy, such as the housing industry.
Although some senior administration officials had been willing to pay this price to achieve more deep cuts, their first priority, Reagan's remarks today appear to mean that the administration will take whatever measures are necessary, including vetos of appropriations bills, not to exceed the $42.5 billion deficit figure.
Asked how he would find the money to pay for his promised defense increases while balancing the budget, Reagan said:
"Well, we sure can't go to Brazil." It was unclear what he meant.
As Speakes described today's meeting, Office of Management and Budget Director David A. Stockman made an initial presentation with charts and graphs indicating options for saving money in defense programs. Stockman spoke for about an hour.
One of the options Stockman reportedly presented would call for cuts of $10 billion to $20 billion from the defense budget as a way of avoiding extremely sharp cuts in social programs.
Defense Secretary Caspar W. Weinberger, Secretary of State Alexander M. Haig Jr., Treasury Secretary Donald T. Regan, White House counselor Edwin Meese III and White House Chief of Staff James A. Baker III then participated with the president in a general discussion of long-range budget planning.
"There can't be any hot news for you. These are just preliminary discussions," Reagan told reporters.
Speakes said the meeting reflected the president's determination to have a "strong national defense built on fiscal soundness." He said no consideration was given to abandoning the goal of a balanced budget in 1984.
The 1981 budget inherited by Reagan will produce a deficit estimated at $55.6 billion. The $42.5 billion deficit forecast for 1982 is down $2.5 billion from the March forecast because of an increase in estimated receipts resulting from congressional changes in the recently enacted tax bill.
Today's budget session was during Reagan's second and last day of meetings with top advisers this week.
He plans to underline his commitment to a strong defense Thursday by visiting the nuclear carrier USS Constellation at sea about 65 miles off the California coast.
Reagan is to return to his ranch in the mountains north of Santa Barbara to resume his vacation over the weekend.