President Reagan will be presented today with a deficit-reduction plan that will include cuts in defense as well as domestic programs, allowing his military buildup to continue but at a slower rate than the administration hoped earlier this year, sources said yesterday.
The plan aims at cutting the likely federal deficit in half, to about $100 billion, by fiscal 1988. Most of the burden would fall on domestic programs, some of which would be eliminated entirely. But Reagan's "core group" of senior advisers has now decided to propose that the Pentagon bear part of the burden as well
The curtailment proposal is virtually certain to be opposed by Defense Secretary Caspar W. Weinberger. That would make it the opening round in an internal battle over military spending that has occurred almost every year of Reagan's presidency.
The sources said the defense proposal is not an across-the-board retrenchment but a selective one. It would produce less than $10 billion in defense savings next fiscal year, 1986. The administration's August budget estimates had envisioned Pentagon spending of $294.6 billion for next year.
But officials said the so-called "standstill" plan would produce nearly $30 billion in savings by fiscal 1988, when the administration had envisioned defense spending at $368.7 billion.
These figures represent actual Pentagon spending and reductions in the deficit. The amount Reagan requests from Congress for the Pentagon is certain to be higher. This is because the nature of big military procurement projects is such that outlays lag considerably behind what Congress appropriates from year to year.
Other aspects of the deficit-reduction plan, to be presented by Office of Management and Budget Director David A. Stockman, include the elimination or phase-ouT of dozens of non-defense federal programs that provide subsidies to business and industry, from export credits to ruralelectrification, officials said.
The plan generally avoids cuts in programs that benefit the poor, officials said.
Previously, White House officials have said defense spending was off-limits as they seek to reduce deficits estimated at $200 billion over the next several years. But some Cabinet members have been pressing Defense Secretary Caspar W. Weinberger for some curtailment. Weinberger has resisted their demands, officials said, and it is highly uncertain if Reagan will accept the slowdown when it is presented at a White House meeting today.
The proposal originated with Reagan's budget "core group," which includes Stockman, Treasury Secretary Donald T. Regan, Commerce Secretary Malcolm Baldrige, White House counselor Edwin Meese III, White House chief of staff James A. Baker III, deputy chief of staff Michael K. Deaver, senior member of the Council of Economic Advisers William A. Niskanen Jr., and presidential assistants Richard G. Darman, Craig Fuller, M.B. Oglesby and John Svahn. The White House has scheduled meetings with the Cabinet and Republican congressional leaders on Thursday to show them the deficit-reduction proposals.
The new defense plan has been called a "standstill" because it would keep spending on a rising path, but generally not one that is steeper than the path in the current fiscal year, and not as fast as the administration had estimated in August.
In the past, after Congress had reduced Reagan's requested defense buildup somewhat, Weinberger has argued that the president should again seek to return to the higher levels in his next budget.
The new approach would mean that Reagan would not seek to return to those levels but go along with more modest growth.
"For example, if you were going to buy 22 F16s this year, and if you were going to buy 42 next year, you would only buy 22 next year" under the new approach, according to one official, who called it a "freeze on the rate of procurement."
"The rate of the buildup is preserved," the official said.
It could not be learned how other components of the Pentagon budget, such as pay and operations, would be affected.
Other officials said they thought it was important to include some defense budget savings in the package that Reagan will be shown today. "If there's not any defense in it, you can't make it" to shrinking the deficit to $100 billion, one aide said. "And you can't sell it" to Congress, the aide added.
A recent study by the Congressional Research Service of the Library of Congress found that defense spending increased an average of 9 percent a year after inflation between fiscal 1981 and 1984.
Within the last few weeks, some White House officials have hinted that Reagan could live with a substantially slower growth rate in a second term; one official said 5 percent would be satisfactory.