THE CONGRESSIONAL Budget Office report on the effect of budget cuts passed by Congress since Mr. Reagan came to office tells a lot about why the president's favorite way to close the federal deficit--cutting domestic spending--is not likely to produce the results he wants. The CBO has charted the difference between what spending would have been under 1981 laws and what it has been and is scheduled to be under 1983 laws for most federal domestic programs. Looking at each major category of spending, and the cuts that have already been achieved, helps us to understand why we're not likely to see any additional cuts of similar magnitude any time soon. Take them one by one:
Retirement and disability. Most of this spending is Social Security, and altogether it accounts for 60 percent of spending on the domestic programs CBO examined. Congress and the president spent a lot of energy and political capital agreeing on a compromise measure to rescue Social Security this spring. No one is going to open this can of political worms again. Prospects: zero cuts.
Other income-security programs. These include Aid to Families With Dependent Children, unemployment insurance, food stamps, child nutrition, WIC, housing assistance and low-income energy assistance. All but WIC have absorbed spending cuts, from 4 to 28 percent. Protests against cuts center on these programs; they have especially hurt the working poor, who seem to be turning out at the polls in increasing numbers. Prospects: pressures for increases, at the least, will cancel out pressures for further cuts.
Health. Medicare and Medicaid spending have each been cut 5 percent. Greater cuts would be possible if the administration cracks down on health-care costs, which have continued to increase at double-digit rates even as inflation has declined. Prospects: some additional cuts possible, but not huge ones.
Education and social services. Here percentage cuts have been very large, and additional cuts are possible in the block grants the administration has used to replace the old anti-poverty community action programs. But what politician in today's environment is going to cut even the least defensible education programs? This category amounts to only 4 percent of the domestic spending CBO measured. Prospects: minimal cuts at most.
Employment and training. Public Service Employment was "zeroed out," and general employment and training and the work incentive program cut by one-third. Despite high unemployment, there doesn't seem to be strong support for these programs. But they only amount to 3 percent of the spending measured by CBO. Prospects: minimal cuts at most.
What about domestic programs not in the CBO report? Interest on the national debt can't be controlled. The government is going to keep spending some money on transportation, public works and natural resources programs, as well as general housekeeping; only small savings are possible. There may be more savings possible in farm programs, which have risen from $3 billion to $22 billion in this administration. But there is no way you can get up to anything like the $200 billion needed to eliminate the federal deficit. And that's true regardless of what political scenario you adopt for 1984 and 1985.
So how to get rid of deficits? If Mr. Reagan remains adamant on defense spending, there's only one way: raise taxes.