President Reagan has agreed to a new proposal that would trim the defense budget, but still would leave him well short of his goal of $100 billion in deficit reductions over the next three fiscal years, administration sources said last night.
White House spokesman Larry Speakes said Reagan had made up his mind on defense spending for fiscal 1986, but Speakes would not disclose details.
However, other officials said the proposal, which will be discussed by Secretary of Defense Caspar W. Weinberger at a news conference today, amounts to $27 billion in defense-spending reductions over three years, slightly less than half the $58 billion in defense cuts proposed by budget director David A. Stockman.
Reagan reportedly has agreed to propose an $8 billion defense cut for fiscal 1986 -- about $2 billion more than Weinberger recommended last week -- which would meet Stockman's target for Pentagon spending reductions for that year.
However, officials said the new figures are well below the larger cuts Stockman has called for in the following years -- $20 billion in fiscal 1987 and $30 billion in 1988 -- that would freeze some weapons procurement and other budget items.
Weinberger declined comment on his specific proposals other than to say they will be detailed today.
Officials said he will outline reductions amounting to $9 billion in fiscal 1987, instead of the $7 billion he originally proposed, and $10 billion in 1988, instead of the $6 billion in his first proposal.
An official said this means Reagan will have to make further cuts in domestic programs or back off his deficit-reduction target. He already has proposed $34 billion in domestic cuts for fiscal 1986. He has ruled out a tax increase.
However, Republican congressional leaders have bluntly warned that the defense cuts must be realistic and substantial to be accepted by Congress.
This was reiterated yesterday by Sen. Paul Laxalt (R-Nev.), the president's closest friend in Congress.
"The Republican message from the Hill is a plain one: we need a package that includes real defense cuts," Laxalt said. "The essence of security is a sound economy, and the Soviets understand that."
As an example of how the defense budget could be cut, one official said that the Air Force is willing to cut 30 F16 fighters from its fiscal 1986 production if the other services come up with similar cuts that would enable Weinberger to reach the $8 billion target. But another official said this was "a conjectural cut" and suggested that Weinberger could reach the target with reserve funds without cutting production at all.
Meanwhile, seven major business organizations outlined plans to pressure Congress for an across-the-board freeze on federal spending, including defense spending, as a means of dealing with the deficit. Their plan calls for a freeze in Social Security cost-of-living increases, which Reagan has pledged not to touch.
Jack Albertine, president of the American Business Conference, said there is "widespread rhetorical support" in Congress for a freeze but added that this might not stand up when legislators begin looking at the programs that would be affected. He said it would take "an enormous effort by the business community" to get Congress to enact a freeze.