When President Reagan took office, two descriptions of him were commonly voiced: a doctrinaire conservative and a pragmatic politican. At the start of his term, he was mostly the former and embraced patently silly arguments offered in the name of supply-side economics to justify large tax cuts alongside a very substantial buildup in defense spending.

Now in his third year, he will be forced to be mostly the pragmatic politician. What is leading to this metamorphosis is the prospect of historically large budget deficits as far ahead as anyone can see--$200 billion this year and next and even more thereafter if economic expansion is as slow as his economic advisers are projecting and if Defense Secretary Weinberger gets all he wants.

What should one think about such deficits? And what policy changes are they likely to provoke?

First, the deficits for this year and next are not a source of concern. The economy is flat on its back, and much of the deficit results from the loss of revenues that accompanies reduced profits and personal incomes and from increased unemployment compensation expenditures. This deficit is not crowding out private spending for investment or anything else. It is helping an economic recovery get started. To raise taxes or cut spending to try to reduce these near-term deficits would only risk weakening the economy further. Both the president's advisers and a majority of Congress can be expected to recognize that.

The deficits that would remain even if the economy were operating at high employment levels are a different matter. Although there is no single "right" deficit or surplus number for this high-employment budget, the large deficits being projected for fiscal year 1986 and beyond translate to historically large high-employment deficits--in the neighborhood of $140 billion, or about 3 percent of high-employment GNP.

For some time now, there has been agreement that such large high-employment deficits in the out years are undesirable if we want a prosperous economy with low interest rates and high investment levels. But there has not been agreement in the past about how to reduce those deficits. In particular, until very recently, the president would not consider cuts in defense spending or increases in taxes.

Confronted with the risk of losing all control of economic policy-making by Congress and under pressure from his own advisers, the president appears finally to be changing course and looking for compromise. It should now be much easier to reach political agreements that will bring future high employment deficits much closer to balance. And the changes that are needed are not of that great a magnitude.

Social Security is providing the first test. The president had wanted to reduce substantially the future benefits promised by the system in its present form. Speaker O'Neill had wanted a package centered on advancing scheduled increases in the payroll tax. Seeing that outcome as inevitable, the president is opting for an early compromise that he can take some credit for.

On defense, it is entirely possible that Congress will simply not approve MX production funding, and may also force reductions and spread-outs in other programs. It would certainly not agree to the spending levels that the Defense Department pushed for originally and that have already been resisted by most of the president's other advisers. How much the president will offer to scale back defense is unclear, but he will eventually settle for much lower spending than Weinberger has been asking for.

Congress will also be relatively unconstrained in its search for additional revenues for future years. Most of the steps taken in dealing with Social Security would also reduce the deficit in the overall budget, adding about $15 billion a year by fiscal 1986. Deferring the start of indexation of income taxes would add another $20 billion a year to present revenue projections by fiscal 1986 and more each year thereafter. Beyond these, Congress may consider a range of base-broadening measures. Without touching the really untouchables, such as ending the deductibility of home mortgage interest, it could raise perhaps another $10 billion a year in this way.

Thus even without a major new tax, Congress should easily be able to find an additional $40 to $50 billion of revenue for fiscal 1986 and beyond. It should also be possible to save, say, $20 to $30 billion from defense outlays recently projected by Congress--more from levels Weinberger wanted. Together with some reduction in nondefense entitlement programs, all these steps would reduce the high-employment deficit for fiscal 1986 by $80 or $90 billion, eliminating most of the projected $140 billion deficit in the high-employment budget.

The remaining high-employment deficit of $50 to $60 billion would be about 11/4 percent of estimated high-employment GNP. That is well within our experience and would be a tolerable deficit. But if we really wanted to, we could eliminate that remaining deficit with small increases in personal and corporate tax rates. Alternatively, any major restructuring of taxes that the administration might propose would be designed to raise substantially more revenues than the present system. If such a tax change were made contingent on the actual deficit for fiscal 1985, it would be certain to become effective.

Budgetary changes that were regarded as unachievable a few months ago because of the president's intransigence now appear within reach. Actual budget deficits will still be large this year and next. But the important high-employment budget for future years will be brought under better control. And if monetary policy stops holding back economic expansion, actual budget deficits in future years will decline sharply as well. The bond market is now dropping as the size of the deficits implied by past administration policy is sinking in. Once it is clear that policy changes are forthcoming, the bond market should rejoice in anticipation.