President Reagan, gearing up for another and bloodier budget battle, told his Cabinet members yesterday they will have to cut up to $74 billion from domestic spending in 1983 and 1984, depending on how much he decides to reduce defense outlays and how the economy performs.
Each department was given a target of cutting between $500 million and $4 billion in each of the two years, White House communications director David Gergen said in describing yesterday's Cabinet meeting.
The president also told the Cabinet there would be further pro rata cuts proposed to Congress in domestic spending in 1982, except in such entitlement programs as Social Security and pensions, Gergen said. Gergen refused to disclose the percentage reduction Reagan wants, but other sources said it was close to 10 percent.
The biggest battle, between those trying to keep Reagan's economic promises and Defense Secretary Caspar W. Weinberger seeking to keep Reagan's promise to increase defense spending, has not been settled, although Reagan will make all his budget cuts public by next Thursday, according to White House officials.
Office of Management and Budget Director David A. Stockman wants to cut projected Pentagon outlays about $10 billion in 1983 and $22 billion to $25 billion in 1984. Weinberger suggested as recently as Tuesday that no cuts be made and Reagan has ordered a compromise, according to administration officials.
The president also has ordered Weinberger to agree to some reduction of the 1982 Pentagon spending level. Budget-cutters said yesterday they fear that Weinberger will make only a token concession.
Gergen appeared to confirm this when he told reporters that defense cuts will be a minimal part of the 1982 reduction necessitated by high interest rates and other pressures that have made it more difficult for Reagan to keep the likely deficit at his projected 1982 level of $42.5 billion.
In 1982, the entitlement programs will not be cut, Gergen said, but these former sacred cows face a less certain more distant future. "To achieve these cuts we're going to get some adjustments in entitlements," Gergen said of 1983 and 1984.
The so-called "social safety net" that the Reagan administration proclaimed last spring would be preserved to assist the "truly needy" while budget fat was trimmed, also appears likely to develop more holes. Gergen refused to guarantee the net will be preserved, saying only that "the president's general commitment is well known."
Stockman was the driving force at yesterday's one-hour-and-45-minute Cabinet meeting as he has been throughout the budget-cutting process. He distributed the range of cuts, with charts and graphs to Cabinet members, some of whom indicated that this round would be very difficult. The dimensions of their tasks cannot have been startling to the Cabinet members although this was their first formal look at what is being asked of them.
The administration has been speaking since March of the need to find $70 billion to $75 billion in cuts over 1983 and 1984.
Defense cuts have had to be thrown into the mix despite the president's initial reluctance because of continuing poor performance of the financial markets and a lack of economic growth.
Reagan told reporters yesterday that he is "upset" that although his economic program received enthusiastic support from Wall Street before it was passed "they don't seem to think it's worth anything." Reagan's cuts don't take effect until Oct. 1, but the administration hoped for a favorable psychological impact on the markets even before the reductions begin to be felt.
Reagan opened the Cabinet meeting by noting that "some people are frustrated because we don't see instant recovery."
"We can't be stampeded now by frustration or fear. We have to stay on a steady long-term course," he said.
"This is not going to be a happy meeting for you," he told the men who will have to find the programs to eliminate or reduce. "All of us came here because we knew the country couldn't go on the way it was going. So, it falls to us to take action. We have to ask ourselves 'If we do nothing, where does all this end?' Can anyone here say that if we can't do it, someone down the road can do it?"
Without the budget reductions he proposes, Reagan said, "all of us here know the economy would face an eventual collapse."
On the defense budget, the military wants to cut by reducing the force structure, trimming size rather than diminishing readiness. OMB is inclined toward more broadly based reductions, according to administration officials, that would slow the rate of improvement of readiness, sustainability and procurement.