President Reagan, flush from his landslide reelection victory and five days of rest in California, today is expected to begin confronting what aides describe as thorny policy choices on the budget, taxes, legislative strategy and arms control.
The administration euphoria that followed Reagan's reelection may be dampened this week by assessments from key Reagan advisers that economic growth will not make the deficit disappear and that the president faces a more difficult legislative outlook than he did after his 1980 victory, despite some GOP House gains.
Reagan plans to spend five days at the White House before returning to California Saturday for an extended Thanksgiving holiday at his mountain-top ranch near Santa Barbara.
The high spirits that followed the election also appeared to be dampened by concern about the health of First Lady Nancy Reagan, who fell from a raised hotel bed the morning before the election. Brief reports from Reagan's ranch issued by the White House last week said that Nancy Reagan was "feeling much better," but it appeared that she did not join the president in horseback riding as frequently as she had in the past.
This week, Reagan is expected to lay the groundwork for his opening budget and foreign policy initiatives in 1985.
The president is expected to get an overview of the congressional elections, concluding that -- despite gains in the House -- Republican strength on Capitol Hill is insufficient to carry Reagan's programs without bipartisan cooperation.
Although Reagan may take a confrontational approach on some issues next year, aides said he is willing to seek cooperation from Democrats on major parts of his program, particularly on a tax-simplification plan that others think could be a vehicle for a tax increase.
Several top administration officials said they have concluded privately that the $170 billion federal deficit is not melting away because of economic growth as Reagan had suggested in the campaign.
While lower interest rates could help reduce it, they said, slower economic expansion than predicted this summer, combined with higher appropriations by Congress than Reagan sought, seems to be propelling the deficit upward if no further action is taken.
The scope of Reagan's expected second-term assault on federal spending is yet to be defined.
There are divergent views among top aides. Officials said White House counselor Edwin Meese III has prepared an ambitious agenda of budget actions that envisions scrapping entire programs and deeply cutting others. Officials quoted Meese as calling this a "Sherman's march to the sea" on federal spending.
Other officials at the White House and the Office of Management and Budget are said to be skeptical whether Congress would accept such a program, given that Reagan already has put three-quarters of the budget off-limits to cuts, including defense spending and Social Security, and ruled out tax increases. These officials also doubt whether Congress will consider new cuts in programs for the poor, such as welfare, that are reportedly part of the Meese package.
"That's what was so ridiculous about the 'secret plan' talk," said one official. "The truth is, there is no plan."
Reagan also is confronted with difficult but perhaps less immediate decisions on arms control and whether to appoint a special envoy to help Secretary of State George P. Shultz handle discussions with Moscow.
On domestic policy, several White House aides said they remain concerned that during the campaign the president put too many budget-reducing options off-limits. Sources said OMB Director David A. Stockman was disturbed by the options Reagan foreclosed during the battle with Walter F. Mondale.
The president seemed to go a step further on the day after the election. Asked where he would make spending cuts, with defense and Social Security off-limits, Reagan talked of "not going along with the idea that the only way you can cut spending is to eliminate or reduce some program. What we're talking about is being able to do things government is supposed to do, but doing it more efficiently and economically."
Officials said they have come to a sharply different conclusion. Efficiency improvements and elimination of "fat" in government is not enough to bring down the deficit.
Today, a dozen of Reagan's top economic advisers and Cabinet members begin grappling with the budget. Stockman, Treasury Secretary Donald T. Regan, Commerce Secretary Malcolm Baldrige and a group of Reagan assistants are to hold their first budget session today.
Among their first tasks is to agree on all-important economic assumptions for the fiscal 1986 budget that Reagan will submit to Congress in January. These assumptions about the economy's performance directly influence the size of the deficit in later years.
Officials said there is some sentiment for retaining the administration's current estimate of 4 percent inflation-adjusted economic growth, although the economy is showing signs of slowing below that.
However, one official said that even with 4 percent growth, the deficit projections for the next five years do not decline appreciably from current levels, if no other action is taken.
On the other hand, if the administration assumes higher growth, the financial markets may dismiss the predictions as unreasonably optimistic and Reagan's credibility could be undermined, officials said.
In the administration's August budget estimates, it was predicted that a "high-growth" scenario, with 5.5 percent economic expansion, could dramatically drop the deficit to $21 billion by 1989. But a "low-growth" scenario of 2.5 percent expansion and higher interest rates showed a deficit of $229 billion by that year. The administration's last official projection was for a $139 billion deficit by 1989.
Reagan is expected to make basic decisions on the budget by week's end. Originally, he was not scheduled to return to his California retreat until Nov. 21, but officials said yesterday Reagan would leave for Thanksgiving at Rancho del Cielo on Saturday.
The plan is for Reagan to receive a Treasury Department report on tax simplification next month and begin a highly visible effort to build public support for the concept while aides and lawmakers hammer out a bipartisan compromise bill.