Contrary to appearances, the latest struggle over "cuts in the defense budget" has neither been about cuts nor about specific defense programs. Instead this has been a fight about the signals the Reagan administration is trying to send to two very different sets of bears.
One set is Russian--the leaders of the Soviet Union, whom President Reagan is trying to intimidate with threats of an unbridled "arms race which they can't win."
The other bears are on Wall Street--investors who have reacted to congressional implementation of Reagan's "economic recovery program" not in the positive way the administration expected them to, but by driving stock prices sharply down and interest rates up.
As for the defense budget, it is growing at an unprecedented peacetime rate, and will continue to do so. The "cuts" that have so animated Defense Secretary Caspar W. Weinberger and budget director David A. Stockman are essentially symbolic reductions in still expansive spending plans for 1983 and 1984.
These reductions can be described as though they are very concrete, but in fact they are as vague as next week's weather, because of uncertainty over the rate of inflation, congressional sentiment and many other unpredictables.
The symbols involved in this struggle are significant. Despite the administration's ideological belief that it must restore low interest rates and a healthy long-term bond market if it is to succeed economically, the bond market is in shambles and interest rates are at record levels.
Congressional anxieties are rising, too. Stockman is anxious to find new ways to reassure the financial markets, and is said to regard cuts in the ambitious defense spending program as one of his few options for doing this.
According to reliable sources, Stockman has felt since early this year that he had to find a way to moderate the new administration's appetite for defense spending. Last winter, when the new team rushed to increase Jimmy Carter's last defense budgets by about $40 billion, and then proposed a $1.6 trillion five-year defense buildup, Stockman stood aside. He chose not to fight what he knew was a popular idea in the new administration.
But according to these sources, Stockman always felt he would have to do something to control defense outlays, particularly in the mid '80s, when Weinberger and others were planning rapidly rising defense budgets.
Stockman never spoke publicly about cutting defense; privately he told colleagues he knew this would cause political problems. But this summer, when new government forecasts for economic performance over the next few years came out less hopeful than the earlier estimates, Stockman apparently saw his chance.
For the budget director, this was an opportunity to signal Wall Street that he was truly serious about controlling government spending, and also to signal the Pentagon that it could not be immune from the pressures to control federal outlays. Until this summer, defense had been a sacred cow for the Reagan administration; Stockman wanted to spear that cow, as one of his colleagues put it.
Like any good herdsman, Weinberger quickly acted to protect his cow. Once Stockman made his move, the defense secretary had to respond on two different fronts. First he had to argue for his full budget inside the administration, particularly with President Reagan.
At the same time he had to keep faith with the congressional committees and military commanders to whom he had given a commitment on the five-year defense program.
Indeed, Weinberger had testified in Congress more than once that the administration would make good on its defense plans even if the weapons it wanted to buy became more expensive than now expected. In other words, it was ready to spend even more than $1.6 trillion if inflation exceeded its expectations. Stockman's initiative pointed in the opposite direction, implying a firm cap on defense spending regardless of inflation.
There has also been this unspoken dimension to the dispute: once the defense budget lost its status as a sacred cow, further assaults in the future could be expected, both inside the administration and on Capitol Hill.
The symbolic dialogue with the Soviets was another of Weinberger's concerns. If the president's policy was to threaten the Russians with an all-out arms race, wouldn't it be crippled by a sudden reversal now on defense spending plans? Would that threat retain any credibility if the administration began to retreat from it unilaterally so soon?
So Weinberger spoke out forcefully in defense of the full program--more forcefully than some of the senior aides in the White House expected.
Ironically, Weinberger was trying to preserve a level of defense spending that was greater than he initially asked for in the early weeks of the administration; the original big defense program was drafted in the White House, not the Pentagon.
Weinberger appears to have succeeded in tempering the announced reductions in future defense budgets, but Stockman has succeeded in destroying the Pentagon's sacred cow status. How the bears in Moscow or the bears on Wall Street will now respond is anybody's guess.
Meanwhile, the actual size of the American defense program will remain in doubt. Pentagon officials have already told Weinberger that increases of seven percent a year in real terms, after inflation, won't be enough to finance the Reagan program unveiled last winter--the real cost now would be 9 percent a year, the military says.
And the Pentagon's own figures show that inflation in the military procurement sector is currently running closer to 20 percent a year than the overall economy's 10 percent inflation rate. So by 1984 real costs may be much higher than now anticipated.
But 1984 will be a different symbolic season. By then, this tale of the two bears will be long forgotten.