President Reagan welcomes the Senate Republican leaders' move to draft their own budget, a senior White House official said yesterday, and is prepared to consider a freeze on Social Security cost-of-living adjustments as some senators have suggested -- but only if congressional Democrats endorse such a move and take it out of the area of partisan politics.
The official, who met with reporters on the condition that his name not be used, said the decision announced Friday by Senate Majority Leader Robert J. Dole (R-Kan.) to put together a Senate GOP budget before Reagan formally submits his spending blueprint Feb. 4 is not a repudiation of or setback for the president.
"What they are doing has our cooperation and approval," he said. "We all recognize it will take a coordinated effort to pass any budget this year. We want to involve them early, and they all understand that the president's approval will be necessary for their success."
The official also said Reagan intends to make a "major effort" for tax simplification this year but wants to conduct "extensive discussions and negotiations" with Congress before submitting a proposal. Details, Page D1.
The official said work is continuing at the White House on identifying further domestic cuts to meet the president's goal of holding non-interest outlays in fiscal 1986 to the $820 billion level of the current fiscal year. He confirmed that Reagan has abandoned his goal of cutting projected deficits for the following two fiscal years from 4 percent of the gross national product to 2 percent.
On the politically sensitive question of Social Security cost-of-living adjustments (COLAs) for inflation, the official appeared to suggest a slightly greater degree of flexibility on the president's part -- without contradicting Reagan's reiterated promise during the 1984 campaign to oppose any reductions in anyone's Social Security benefits.
Dole and other Republican senators have said that a one-year freeze on the Social Security COLAs, which would save about $6 billion, may be necessary to reach the spending -- reduction targets and to be equitable with freezes in aid programs for low-income people that the president is expected to propose.
The official said Reagan will not recommend any such Social Security freeze and "would work actively against it, unless the leadership of both parties came forward with it.
"This is a pledge Ronald Reagan is not going to break," he said. "But if there is an overwhelming consensus on the Hill -- if the Democratic and Republican leadership of both houses came forward with it -- he would obviously have to consider it."
Reagan's position reflects two political sensitivities -- first, to his 1984 campaign promise; second, to the memory of the way in which congressional Democrats used a 1981 Reagan proposal to trim selected Social Security benefits as a major issue in the 1982 midterm election campaign.
Top House Democrats have said they would oppose a Social Security COLA freeze unless Reagan recommended it. Yesterday House Minority Leader Robert H. Michel (R-Ill.) threw cold water on the idea as well, saying that "we have to honor" the president's statements that such a freeze would be "off-limits."
The official signaled the White House's readiness to bargain with Congress on another politically sensitive issue -- farm-price supports. He said Reagan has signed off on a budget proposal that would cap the amount of "deficiency" payments or loans a farmer could receive from the government.
Documents prepared by Office of Management and Budget Director David A. Stockman indicate that Reagan will propose limiting deficiency payments to $20,000 per farm in 1986, declining to $10,000 by 1988, and capping non-recourse loans at $200,000 per farm.
The official said the limits were high enough that "75 to 80 percent of the farmers, all but the very large operators and agri-business firms," would not feel their impact.
But the proposed limits, which Secretary of Agriculture John R. Block and farm spokesmen in Congress are fighting, might be eased further or delayed, the official suggested, if Congress came up with less politically painful options for domestic savings.
Michel, Dole and other top congressional Republicans have suggested that there will have to be further cuts in projected defense spending, but the White House official said Reagan is not taking another look at defense spending. He conceded that many of the GOP legislators "have different ideas" from the president on that issue.