DEFENSE SPENDING and taxation are now
the central questions of the Reagan budget and perhaps of the Reagan presidency as well. Congress returns from its recess today to take them up again with a series of deadlines to meet. In the purely formal sense those deadlines are set by the law that establishes the budget procedure. More substantially, they are enforced by anxieties about the recovery from the recession, and the probability that fiscal deadlock will stunt and damage it.
The Senate Budget Committee is to go back to work tomorrow, after a hiatus of nearly a month requested by Mr. Reagan to give him an opportunity to generate greater public support for his military program. But there doesn't seem to be much evidence that his speeches on defense have changed many congressional minds. Defense spending will certainly rise next year, but the question is, once again, how much?
Last year Congress did cut Mr. Reagan's defense spending for 1983 by about $6 billion, or nearly 3 percent below his original request. In terms of budget authority, which reaches into the years beyond this one, the cut was a good deal larger. But at the Pentagon there has been little indication of any corresponding slowdown in arms procurement. The administration is now trying to persuade Congress to restore some of the money cut last year, as it continues the acceleration.
As for taxation, there now seems to be a remarkably wide agreement that something pretty impressive is going to have to be done over the next several years. There's no agreement yet on which taxes to raise, or precisely how to do it. But you can see a consensus beginning to take shape on the size of the increase. The House, just before the recess, passed a budget resolution that calls for about $140 billion in new revenues over the next three years. That includes the increases in Social Security taxes that Congress has now passed. President Reagan's January budget called for new revenues over the next three years of about $84 billion, if you include his contingent tax as well as the Social Security taxes. Those two numbers set the dimensions of the tax debate as it is now going forward.
The higher number is, unfortunately, closer to reality. The right way to raise taxes is to follow the precedent of the Social Security formula and enact a series of increases that will take effect in steps over the next several years as--let's hope--the economy strengthens. It is absurd of Mr. Reagan to go along year after year pretending that there is no inconsistency between his rising defense spending and his low taxes. The deficit is already large enough to threaten the economy's stability. Since he concedes that higher taxes are needed, the only issues still open are how much and how soon.