THE SENATE returns this week to what is far and away the toughest budget battle it has yet faced. Its Republican leadership will be trying to substitute a budget resolution more to the president's liking for the version voted earlier by the Senate Budget Committee. But the leadership is finding it difficult to line up moderate Republicans behind the resolution that the president insists on because of the enormous deficits implied for the foreseeable future.
Essentially this is a replay of the earlier struggle in the Budget Committee. Except among the most conservative members, domestic spending is not really an issue. The full Senate has already supported amendments that would put domestic spending at about $12.5 billion more than the president sought--roughly enough to keep it in step with inflation and provide medical help to the jobless. But the Democrats and a sizable number of Republicans want higher taxes, smaller increases in defense and, as a result, lower deficits.
The curious thing about the present impasse is that, without outside interference, it would be relatively easy for moderate Republicans and Democrats to agree on a compromise budget resolution which, after further horse-trading with the House, would probably also move relatively easily to passage in both houses. Two things, however, stand in the way of that course.
One is that the impetus for compromise is weak because the outcome would only make the best of a bad situation. Congress long ago locked itself into damagingly high deficits when it bought the president's program of continuing tax cuts and big defense increases. And raising taxes and cutting off defense spending once in progress are actions that Congress finds singularly uncongenial.
The other obstacle is the president himself. Having resisted any compromise in the Budget Committee, Mr. Reagan is now insisting that Republican leaders stick by a compromise that adopts the committee's domestic spending but which requires a bigger increase in defense spending and no erosion of the tax cuts scheduled for the next two years--a plan that the House won't buy intact even if it can be pushed through the Senate.
The president seems to prefer to run the risk of upending the budget procedures, trusting that congressional inertia will ensure no increase in taxes and that the more compliant appropriations system will give him the defense spending he wants. It's not a good idea. The Senate leadership is already weary from bailing out the administration on the various compromises--earlier budgets and the tax, highway, Social Security and jobs bills--that now stand as the administration's major accomplishments. And the financial markets will not be soothed by the prospect of a federal deficit spiraling out of control while the president consoles himself with fanciful theories of how the economy ought to work