Congress won a battle with President Reagan over the budget mix in its veto override vote last week, but a study by the Congressional Budget Office makes clear that Reagan still is easily winning the war.
Reagan said the $14.1 billion 1982 supplemental appropriations bill he vetoed was a budget-buster. In fact his objections were not so much to the total as to the mix -- more than he wanted for domestic programs, less for defense.
Both houses of Congress -- Republican-controlled Senate as well as Democratic-controlled House -- slapped him down, an indication he may have trouble as he continues to tilt the budget toward the Pentagon.
But the CBO study suggests that a lot of this tilting already has occurred.
Rising percentages of the federal budget are going to defense, interest on the national debt, Social Security and other aid to the elderly, while spending on everything else is declining after adjustment for inflation.
The Congressional Budget Office's recently updated economic and budget outlook indicates that, on the basis of current law, federal budget outlays will rise less than 2 percent a year after adjustment for inflation between 1980 and 1985, and in the latter year will equal 22.7 percent of the gross national product -- almost the same as in 1980.
However, within the roughly $900 billion represented by that 22.7 percent slice of the nation's output in 1985, federal dollars will be flowing in considerably different ways than they were in the last full year of the Carter administration.
Over the five years, after adjustment for inflation, the biggest jump in spending in percentage terms will be for interest on the national debt. The debt itself is projected by CBO to soar from $914 billion at the end of 1980 to $1.7 trillion at the end of 1885 because of large continuing deficits. As a result, net interest payments are expected to rise 58 percent over the five years.
Following closely on the heels of interest payments is national defense spending, which will be up 48 percent in real terms, CBO said. Moreover, that figure does not include the rising cost of military pensions.
Payments for pensions of all types--Social Security, federal civilian and military, Railroad Retirement and so forth -- along with Medicare costs will go up about 21 percent, CBO estimated.
Three other major categories of spending, constituting all the rest of the budget, all show declines after adjustment for inflation.
The cost of other entitlement programs, such as food stamps and Medicaid, is expected to fall 10 percent over the five-year period. Non-defense discretionary programs -- which covers everything from parks, highways and the FBI to revenue sharing, the president's salary and flood control projects -- will contract by 31 percent. Finally, a group of other programs, including child nuitrition and physical rehabilitation, will drop by 54 percent.
In short, interest and national defense spending will be going up nearly 10 percent a year faster than inflation. Pensions and Medicare will be rising about 4 percent faster than inflation. The other three CBO categories all decline.
The money being saved by the cuts in the programs that will decline almost precisely offset the large increase in defense spending. But then there is nothing left to match against the rising cost of pensions and Medicare or the rapid climb in interest payments.
With this reality on the spending side, last year's massive tax cuts, although partly reversed by the tax hike passed in August with Reagan's backing, leave the budget deeply in the red. Even with a full economic recovery, there still would be a deficit of $40 billion to $50 billion, analysts calculate.
In this situation, there clearly will be another push to cut spending and it undoubtely will focus on Social Security benefits, which is on the verge of running out of money. Once a presidential study commission headed by economist Alan Greenspan reports after the November election, Reagan is expected to recommend some type of reduction in future benefits.
If such cuts in pensions are made, then the change in federal spending priorities will be even more dramatic than that made so far -- unless the planned large increases in defense spending also are reduced.
Reagan, in a speech last week at the University of Kansas, warned of the dangers of the course on which the country was moving when he took office. "In the last 19 months," he declared, "a coalition of Republicans and Democrats has begun to rein in a government careening out of control, pushing us toward economic collapse, and quite probably, the end of our way of life.
"This is no exaggeration," Reagan insisted. "Over a 22-year period, the federal government has managed only one balanced budget, has increased spending more than 600 percent, increased taxes more than 500 percent and mortgaged our future by pushing the national debt over $1 trillion."
According to the CBO figures, that debt will grow by almost exactly $500 billion during the four years of Reagan's term. The budget deficit alone for fiscal 1983, which begins next month, will be about $155 billion, by far the largest in history and also the largest, as a proportion of GNP, since World War II. CBO also projected matching deficits of $152 billion for both 1984 and 1985.
The analysis led CBO to declare, "If the 1985 budget were to be balanced without further reductions in spending for defense and pensions, other non-interest spending would have to be cut by about one-half.
"Under present national priorities and needs, it is unlikely that sufficient spending reductions can be found in the near future to achieve a balanced budget. Therefore, both spending cuts and further tax increases will be needed to balance the federal budget in the coming years," CBO concluded.