Former president Gerald R. Ford today urged the Reagan administration to curb its military buildup and domestic spending and to consider tax increases to reduce federal deficits.
His stand represents a break with the White House party line.
Ford, a Republican, joined former leaders of West Germany, France, Great Britain and Australia in terming the huge American budget deficit a threat to the world economy.
They are meeting here in the second annual Gerald Ford World Forum sponsored by the American Enterprise Institute, a Washington think tank. The two-day session, which has attracted more than 50 corporate heads from all over the world, is closed to the public.
Ford told the first session that one way of reducing the impending $200 billion deficits would be to abandon plans for indexing the tax system beginning in 1986. He also mentioned the possibility of an import duty on crude oil.
Administration officials, led by President Reagan, have strongly resisted the notion of tax increases to balance the budget. Reagan has said indexation will not be dropped.
But in endorsing the grim assessment of the deficit by his fellow former heads of government, Ford told a press conference that "Reagan and congressional leaders will have to sit down and work this out. Everybody is going to have to give a little."
Ford is also known to believe that the Reagan administration, while moving in the right direction in seeking an arms control agreement with the Soviet Union, should accelerate efforts, resisting the extreme right wing of the Republican Party, which counsels against such a step.
Concern about the enormous American budget deficits was a major topic of discussion by former West German chancellor Helmut Schmidt, former French president Valery Giscard d'Estaing, former British prime minister James Callaghan and former Australian prime minister Malcolm Fraser.
All of them said that the deficits as currently estimated are intolerable. Both Schmidt and Fraser referred to them as a "menace." Except for Giscard, they agreed that the deficits should be reduced by a combination of increased taxes and lowered expenditures. Giscard, the most sympathetic to the Reagan administration, expressed the view that budget deficits should be trimmed primarily by expenditure control, because taxes are already too high.
But all of the foreign leaders agreed that the American deficit cannot be tolerated because, in effect, foreign countries are helping finance the flow of American red ink at the expense of their economic growth.
Schmidt said the high unemployment and stagnation that had dominated the economies in Europe and in North America for the past couple of years constitute "a political menace" comparable to the one that preceded the rise of Hitler in Germany in the early 1930s. He estimated that unemployment is now "as bad" as in 1931, although not as bad as in 1932 and 1933.
In general, Schmidt appeared to be the most critical among the foreign leaders of American policymaking and policymakers. The former chancellor also said that the last two economic summits--in Versailles and Williamsburg--were "failures" because they did not prevent further deterioration of the western alliance.
Among the Pacific Basin attendees, a prominent topic of informal conversation related to Reagan's plans to visit the Philippines and meet with President Ferdinand Marcos in the wake of the recent assassination of opposition leader Benigo Aquino Jr. Fraser said he hoped that Reagan could make the trip, which holds important symbolism for the area, but noted the problem of security.
Another prominent Asian said privately, "If the Marcos government wasn't involved in the assassination , then clearly there is a question about its ability to provide adequate security for Reagan, but if it was involved, then of course there's a nice political and moral dilemma for Reagan."
The conference will conclude Sunday with discussions on trade policy issues and a reception at the Ford residence in Beaver Creek, Colo.