President Reagan defended his planned 5 percent pay cut for federal civilian workers yesterday, saying he was merely asking them to emulate labor union members who "took cuts to help those industries in which they were employed get back on their feet" during the 1981-82 recession.
In a 28-minute news conference, his first since Nov. 7, Reagan also embraced the Treasury Department's tax simplification plan, which previously he had held at arm's length. While not endorsing every specific item in the modified "flat tax" proposal, he said, "I think that it is probably the best and most complete study of the tax system and the best proposals for changing the tax system that has ever occurred within my lifetime."
Reagan said he will discuss with Defense Secretary Caspar W. Weinberger next week "what he can contribute" in budget cuts. But Reagan said twice that the Pentagon had trimmed $116 billion -- which would have been spread over five years -- from its requests since 1981 and expressed hope that, as a result, "maybe the people will change the image they have somewhat of an extravagant Defense Department."
The president appeared to rule out any changes in Social Security to reduce the deficit, saying it is one of two items in the budget that "actually can't be changed," the other being interest payments on the national debt.
Asked why Republican congressional leaders have raised the possibility of a one-year delay in Social Security cost-of-living adjustments, Reagan said "the process is still going on," but he was not more specific.
Reagan said correctly that "Social Security is totally funded by a payroll tax" but mistakenly said a reduction in benefits "would not, in any way, reduce the deficit."
The Social Security system is self-contained in that its taxes can be spent only for benefits, and surpluses accumulate. But the taxes count as federal revenues and benefits count as spending. If spending is lowered through a delay in cost-of-living adjustments, the federal budget deficit is reduced.
Reagan said a political compromise to save what he called the "bankrupt" Social Security program was worked out in 1983 after Republicans were "victimized by political demagoguery, unequalled in many years, regarding our supposed enmity towards Social Security . . . . "
The president, taking questions in the White House press briefing room, opened with a statement that he wanted recent attention on the budget to be seen in a "broader perspective." He said last month's elections made clear that voters wanted "first and foremost" to continue economic growth. He said they voted against tax increases and "wasteful government spending, and they were right."
Reagan refused to comment on specific budget decisions, but defended the federal pay cut when a reporter noted complaints from federal workers that they are being asked "in a non-recessionary time to do something that other Americans don't have to do."
"They're wrong about that other Americans don't have to do," Reagan said. "We just thought in approaching this and making that suggestion about taking a pay cut -- it starts with me -- that we're doing something that has been done in a number of major industries in the United States.
"Coming out of the recession, labor renegotiated their contracts and labor took cuts to help those industries in which they were employed get back on their feet, get back in business again.
"Is it fair for those who are employed by government, at a time when the deficit spending has become such a crisis that everyone is calling it the No. 1 problem, . . . that government employes should be immune from the same thing that other workers in America have done to try and help the economic situation?" Reagan asked.
A spokesman for the AFL-CIO, Murray Seeger, noted that federal workers, unlike union members in the private sector, cannot bargain for pay, although they negotiate on other matters.
Later in the news conference, Reagan was asked whether he could make cuts in "large, high-level" government jobs rather than squeeze budget items for the poor.
"We're not destroying, in anything we're considering, the safety net," Reagan said. "And, as I say, the cut in salaries, if this is one of the features that comes into the finished package, it will be across the board.
"But I think I would like to point out also that if you compare the executive salary level in government, a great many people have to make a personal sacrifice in order to take those positions because they are so far out of line with the comparable pay scales and benefits out in the private sector."
Reagan also said that there are 75,000 "fewer employes than we once had in the federal government, and we're going to continue along that same line." The payroll cut he mentioned was partly offset in his first term by increases in Pentagon employment.
The president stumbled over dates yesterday, referring to spending at the "1945 level" instead of 1985 and to the 1974 deficit instead of 1984.
Reagan was asked why he told voters during the campaign that deficits would decline with economic growth when his own advisers have calculated since the election that the deficit was rising. He responded that "growth improves revenues. Tax increases, high tax rates don't. They reduce government revenues, because they have an adverse effect on the economy."
After extolling the recovery and reduced unemployment, Reagan was asked again why the deficit is now projected over $200 billion for next year, compared with White House estimates of $170 billion in August.
He blamed the higher figure on rising interest payments on the national debt. "When you ask about puzzles, about deficits going up and so forth," he said, "we think there is a structural cause of much of the deficit spending . . . ."
Reagan said he is "not one bit" closer to accepting a tax increase than he was during the campaign.
The president brushed off a question about whether he has resolved recently publicized differences with his son, Michael.