President Reagan yesterday abandoned his promise to balance the budget by 1984, and left unclear whether he will accept the significant tax increases in 1983 and 1984 that many members of Congress want.
In the face of a worsening recession, Reagan said he would stick to the economic package he announced in September despite its hostile reception by Congress, and once again threatened to veto "budget-busting" appropriations bills. But he refused to designate any bill as certain to be vetoed.
After months of insisting in the face of widespread doubts that the budget would be balanced according to the timetable he drew up during the campaign, Reagan retreated in brief remarks to reporters and claimed he had never meant his budget promise to be taken literally.
"I've never said anything but that it was a goal. And the eventual goal, whether it comes then 1984 or whether it has to be delayed or not, is a balanced budget," Reagan said.
In an interview last May with the Republican National Committee magazine First Monday, Reagan said:
"As revenues continue to rise while we keep the brakes on federal spending, we can certainly balance the budget. In fact, we expect a small surplus in 1984."
In his campaign debate with independent candidate John B. Anderson Sept. 21, 1980, Reagan had been even more sanguine. "I believe the budget can be balanced by 1982 or 1983," he said.
Reagan promised during his campaign simultaneously to balance the budget, cut taxes and increase defense spending. Treasury Secretary Donald T. Regan followed up the president's retreat by making a scaled-down promise for 1984. The deficit that year will be less than former president Carter's 1981 deficit of $57.9 billion, Regan pledged.
The president threw in the towel on his effort to balance the budget by 1984 on a day he met with Republican Senate and House leaders to consider how to keep his economic program functioning in the face of a flood of bad news about the economy. That included yesterday's report that the unemployment rate for October rose to 8 percent.
In a victory for Regan over Budget Director David A. Stockman, the president ruled out seeking any new revenues in fiscal 1982 beyond the $3 billion package of measures he proposed Sept. 24.
Substantial tax increases are abhorent to Reagan because they would run counter to his belief that tax cuts will stimulate economic growth and break another of the central promises of his campaign.
"I am convinced that our basic policies are sound. I have submitted our program to Congress, and I do not intend to change that program. I do not wish to see any changes in the Reagan tax cut bill , nor do I wish to see any tax increases in fiscal 1982 other than the $3 billion that I proposed on Sept. 24," Reagan said, according to deputy press secretary Larry Speakes.
Last night, at a Republican fund-raising reception in New York City, the president promised: "Your tax reduction will not be rescinded. It will not be delayed, and it will not be reduced."
Reagan told the group that the administration is not going to be "pushing the panic button" and that he is disturbed by talk that he is thinking of changing his economic plans. He reiterated his faith in the economic doctrine that holds that tax cuts will stimulate the economy.
That program is just being born, Reagan said. "If you listen closely, you can hear the spank and then the cry," he said.
Senators and congressmen who met Reagan yesterday came away with differing accounts of his thinking on some type of tax increases in 1983 and 1984 to help balance the budget.
Senate Majority Leader Howard H. Baker Jr. (R-Tenn.) told reporters: "My impression is that the president is willing to consider significant revenue enhancements in 1983 and 1984."
Senate Budget Committee Chairman Pete V. Domenici (R-N.M.) said there was a growing feeling at the meeting that the White House must accede to Senate demands for tax increases in order to provide further cuts in social programs that Reagan wants in 1983 and 1984.
Two other Senate sources said a package of about $45 billion in tax increases was discussed with the president. That would be roughly half of the total called for in a Senate Budget Committee plan sent by Domenici to the White House several days ago.
House Republican Leader Robert H. Michel (Ill.) was less definite. He said discussions of such tax increases, which the White House prefers to call revenue enhancements, would have to come later.
Regan described the president as inclined to oppose any tax increases but said he "might be willing to talk about tax increases later on." The treasury secretary would not define "later on."
Speakes said the president "does not look with favor on tax increases in 1983 and 1984" but would be willing to listen.
The upshot of yesterday's meetings appeared to be that Reagan will make another of his celebrated, and so far successful, personal efforts to win congressional approval for a program that initially faces serious opposition.
"He's got a pretty good track record," Speakes told reporters who expressed skepticism that Reagan could win approval of the package of $13 billion in budget cuts he proposed in September.
Domenici said only $6 billion of the $13 billion is likely to win Senate approval--about $4 billion in nondefense reductions and Reagan's proposed $2 billion defense cut.
Regan was asked whether the president would consider deeper cuts in military spending. "The president is very reluctant to do any more," he replied.
By siding with Regan and others who adamantly opposed any tax increases now, the president forced himself to abandon the promise of a balanced budget in 1984 and the goal of a $43.5 billion deficit in fiscal 1982.
Baker and Domenici both spoke of an $80 billion 1982 deficit. Domenici said that would be the figure if the Senate is as tough as it can be in holding down spending. Other economists are predicting the deficit will be $100 billion.
Despite the dismal predictions, the Republican senators emerged from the White House saying they were encouraged. Domenici, who had appeared far apart from the president because of his recent calls for tax increases, said he was encouraged that Reagan is coming up with a package "we can support."
As he emerged from the White House, Domenici was asked if he had gone down swinging. "No, I didn't go down at all," he said.
The immediate battle is likely to be over a continuing resolution to fund the government in the absence of an approved budget. The current resolution expires Nov. 20, and the House Appropriations Committee is scheduled to begin working on a new resolution Thursday.
Reagan's advisers will put the results of yesterday's meetings in writing over the weekend, a Baker aide said, and a follow-up meeting is scheduled Monday involving Baker, the chairmen of five Senate committees involved in the budget process, Stockman, Regan and several of the president's top advisers.
Staff writers Caroline Atkinson and Martin Schram contributed to this report.