President Reagan's senior foreign policy advisers, including Secretary of State George P. Shultz and national security affairs adviser Robert C. McFarlane, are discussing a $7 billion to $8 billion increase in military and economic assistance next year to U.S. allies and Third World nations, administration sources said yesterday.
Such a program would increase by half this year's $14.4 billion foreign aid spending. The additional funds would be targeted on such areas as the Middle East, particularly Egypt and Israel; the Caribbean, Latin America, and other nations such as South Korea and Turkey, officials said.
The proposal is under active discussion by Shultz, McFarlane and Defense Secretary Caspar W. Weinberger. Reagan has not yet received any specific proposal for expanding foreign aid, officials said.
Officials said major hurdles in Congress and within the administration could block the idea before it gets off the ground.
Office of Management and Budget Director David A. Stockman would certainly oppose it, they said, and Sen. Jesse Helms (R-N.C.) would be a formidable roadblock if he chooses to become chairman of the Senate Foreign Relations Committee.
"It's not nailed down," said one official familiar with the discussions, "but it would be supremely logical."
Officials said it would be part of a Reagan initiative to encourage democracy around the globe.
They said it would also be designed to encourage allies to defend themselves with their own forces at less cost than relying on U.S. forces.
At a time when the White House is struggling to trim a projected $206 billion budget deficit for the next fiscal year, officials said it was possible that all or part of the increased aid outlay could come out of the Pentagon budget and would be under Defense Department control.
"It's additional bucks, and it either has to be new money or come from somewhere else," said the official, who added, "Cap has to be on board."
The foreign aid expansion is one option on a "global agenda" of national security and foreign policy issues prepared since last summer by Shultz and McFarlane. White House officials said they were not certain when Reagan would address the options in the document.
But some planning for the foreign aid package is already under way, sources said, should Reagan decide to make the proposal as part of the fiscal 1986 budget he submits to Congress early next year.
During Reagan's first term, U.S. military and economic assistance grew from about $7.4 billion in fiscal 1981 to $14.4 billion this fiscal year, 1985. Officials who favor the further expansion of foreign aid say they would like to model it on a proposal by the Kissinger Commission, which called for a mix of economic and military aid in Central America.
The official who said an expansion of foreign aid would be "supremely logical" added that Reagan is perceived around the globe as a "world leader" and the United States as "on a roll for democracy." But, he said, "It is very important for us to back up words with actions," such as increased foreign aid.
Specifically, this official said the money would be important for many smaller nations, like those in the Caribbean, that often take a back seat to Israel and Egypt, the two largest beneficiaries of U.S. aid.
But a second official skeptical of the need for such an ambitious program called it "crazy" at a time when many other federal activities are being severely squeezed and when new pressure is building for slower growth in the defense budget. "You bet there would be a challenge to it," the official said.