President Reagan's chief economic advisers, going into the final days of decision-making on the fiscal 1984 budget, plan to ask him Monday to approve tax increases to reduce deficits in later years when the economy presumably would be recovering, administration officials say.
The new tax plan is being described as one that would not conflict with the president's statement at his news conference last Wednesday that "a tax is the wrong thing to do when you're trying to come out of a recession."
The proposal, described by one administration official as an "overall strategy" on taxes, is said to have the backing of the key administration economic advisers who also have urged Reagan to scale back his military buildup to hold down future deficits. They include Office of Management and Budget Director David A. Stockman, Treasury Secretary Donald T. Regan, and Martin Feldstein, chairman of the president's Council of Economic Advisers.
Meanwhile, administration officials expressed doubt yesterday whether Defense Secretary Caspar W. Weinberger will come through this week with any significant budget cuts in the proposed Reagan defense buildup. Last week, under pressure from senior administration officials, Weinberger said he would return to the Pentagon in search of possible cuts to help bring deficits under control.
"He's stonewalling," an administration official said yesterday. "The Defense Department is digging in."
This official said Weinberger may be able to "stall" beyond the deadline later this week for submission of the fiscal 1984 budget to the printers. "If Cap fights and stonewalls, you're left with nothing," he said.
Significant budget savings by the Pentagon were described by administration officials as a necessary part of any "freeze" on government spending now being discussed at the White House as a way to reduce deficits.
The idea of a freeze was broached to Reagan last week by congressional Republicans. The president "was attracted to the idea," said one administration official, because it could be a simple yet bold stroke that GOP leaders suggested would help him recapture the offensive in economic policy.
But the freeze concept, as envisioned within the administration, would have to apply to both Pentagon and domestic spending to have an impact in bringing down large budget deficits, the officials added. "You've got to have a military freeze, too," one said.
This official noted that $33 billion in cuts that Reagan currently plans to seek in projected domestic spending for fiscal 1984 already are "close to a freeze" level.
But even with these cuts, the budget deficit for 1984 is projected to top $200 billion. Last week, Reagan was given a projection showing that without further action, the deficit would rise to $296 billion by 1988, which was described as "a little terrifying" by Sen. Paul Laxalt (R-Nev.).
Administration officials said Reagan's interest in the freeze idea stems partly from the prospect that it could appeal to both Democrats and Republicans. It did not go without notice at the White House that the concept has been pushed by Sen. Ernest F. Hollings (S.C.), a Democratic presidential hopeful, as well as by conservative Republicans in Congress.
But administration officials cautioned that Reagan has yet to be fully convinced, partly because he must wait for Weinberger to report on what savings can be found in the Pentagon budget. Military spending is projected to be $247 billion next year.
Officials said some inflation adjustments that Weinberger is expected to accept would trim that slightly. But they added this would not provide the kind of long-term savings Republican congressional leaders urged in meetings with Reagan last week.
Administration officials speculated that without significant military spending cuts or tax increases, the president's budget would be quickly rejected on Capitol Hill again this year because of the huge deficit. Although this led to a negotiating process in 1982 that eventually produced a compromise, some officials do not want that to be repeated this year as the 1984 presidential campaign begins to pick up steam.
"If we send up a budget and it gets knocked down, it will hurt Reagan politically," said an administration official. "A replay of last year will really damage the president's political standing. All it will do is help the economies of Iowa and New Hampshire," where the first presidential campaign contests occur, he added.
Administration officials did not disclose the details of tax increases to be proposed to Reagan on Monday. But they were described as coming into effect only after economic recovery gets under way.
One reason that deficits are projected to expand in later years is the scheduled 1985 indexing of tax rates to inflation. Although this was not part of the original Reagan economic program, the president has defended it as vital, along with the last installment of his three-year, 25 percent tax cut. Some members of Congress have called for eliminating indexing or the third year of the tax cut, but Reagan has resisted them.
Last summer, the president signed a $99 billion tax increase and, in recent months, has generally ruled out another tax increase soon. But at his news conference this week, Reagan left the door open to a possible tax hike after recovery gets under way. He also did not rule out a speedup in the scheduled increases in Social Security payroll taxes.