In a 1980 campaign speech, Ronald Reagan attacked President Jimmy Carter for saying he "simply cannot balance the budget, provide for the national security and reduce the high tax load on the American people." Reagan said he could do them all: "I say, 'Stand aside -- because we can! And we will!' "
In his radio speech yesterday, Reagan was still using the same themes, calling his next budget "the most exhaustive effort ever made to rein in government's chronic overspending" and saying that it will "stop the excessive growth of government-spending in its tracks" while putting deficits on a "permanent downward path."
But the budget Reagan is to submit Monday will include a $180 billion deficit for next year even if all the spending cuts he wants are approved, and the document does not foresee a balanced budget anytime in his second term.
In his first term, Reagan nearly doubled the national debt; in this one, it will almost certainly top $2 trillion.
Reagan blames Congress for this gap between his promises and his performance.
"All this talk, and during the campaign when I was accused of having never submitted a balanced budget since I'd been here, I wonder how they had the nerve to say that," Reagan said recently. "The president has no right to spend money. The Constitution doesn't give the president the right to spend a nickel. That's up there on the Hill."
But Reagan's decisions over the last four years suggest a different answer:
That the deficit has never been as important to him as his rhetoric would suggest.
Instead, his main objectives have been to lower tax rates and shift national spending priorities away from domestic programs and toward defense.
This order of preferences is well understood among those who have worked closely with Reagan on budget issues since he came to office, and they point to the fiscal 1986 budget he will propose Monday as a textbook example.
Almost every dollar in domestic spending that is shaved from the budget will be replaced by a dollar of new defense spending, and Reagan remains adamantly against tax increases to bring the deficit into a lower range.
Rearrangement of government rather than shrinkage of it has also been a Reagan objective in another way. His combination of tax cuts and spending shifts has created new groups of winners and losers in the population.
Reagan's first-term budget targets were chiefly programs for those at the lower end of the income scale. This year, however, he will shift focus slightly to squeeze the big spending programs that largely benefit the middle class.
His first-term tax cuts, meanwhile, are criticized as having helped mainly the rich, although Reagan denies this, and the tax simplification plan he has promised to propose this year would hurt some favored groups as well.
The record shows that Reagan, for all his warnings over the years about the dangers of deficits, has been one of the biggest-spending presidents in American history. Rather than reduce the government's share of the economy, as he once promised to do and still insists that he will, Reagan has increased it.
Total government spending has reached a peacetime high of nearly 25 percent of the gross national product. Four years ago, in the first budget document he submitted to Congress, Reagan predicted that he would have it under 20 percent by now.
Reagan squeezed domestic spending hard in his first term, and by his budget office's account, Congress approved about half of his requests. But that was not enough to realize his three-cornered promise to balance the budget, cut taxes and rebuild the military. The worst recession since World War II forced the deficit still higher.
When his goals collided, Reagan decided early that the defense buildup and lower taxes were more important than the balanced budget. He grudgingly made some compromises along the way, but the decisions of his first term, and the choices he made for next year's budget, show that they are still his most valued objectives.
Reagan has often insisted that the deficit could be reduced if only more cuts were made in domestic spending, particularly to weed out "waste, fraud and abuse."
Yet Reagan spent more time on this budget than any other he has submitted, going over it line by line in search of savings from domestic programs. And he will still fall short of the goal set by his staff of slicing the deficit in half, to $100 billion by 1988. Instead, Reagan would be left with a $144 billion deficit that year if all his cuts were enacted.
Yesterday, the rhetoric and posturing on the budget continued as it has for the last four years.
House Speaker Thomas P. (Tip) O'Neill Jr. (D-Mass.) said Reagan's budget will get "a respectful and complete consideration on Capitol Hill." But O'Neill insisted that Reagan must "go beyond the generalities and tell the American people exactly what he has in mind for them."
Senate Majority Leader Robert J. Dole (R-Kan.) promised, after a briefing from Office of Management and Budget Director David A. Stockman, to put the budget on a fast track, starting hearings next week with the goal of having a bill on the Senate floor before March.
Stockman said the "initial reading" he had from Senate GOP leaders is that "a great majority of the freezes and cuts that we have in the budget will be acceptable." Senate Budget Committee Chairman Pete V. Domenici (R-N.M.) warned, "The time is now to decide whether there are domestic programs that are far too expensive for the public good and for the purpose intended. They will have to be reformed dramatically. If we're not willing to do that, we can stop talking about everything."
If Congress balks at his proposals, Reagan said in a Jan. 26 interview with radio correspondents, "then I've said we'd take our case to the people and explain to the people what it is we're trying to do and why we have to do it."
Yet some of Reagan's aides say privately that there is less to these new budget cuts than administration rhetoric implies. One of the president's senior advisers, speaking on condition that he not be identified, acknowledged that the nation's financial markets no longer expect a "massive deficit reduction" in Reagan's second term.
They realize, he said, that "there is a division in the political system," meaning that Congress will not give the president everything he asks for. But it is not just Congress, he suggested; he said there is a fear in the markets that "the deficits are now so large and the path the budget is on is so worrisome that it may get totally out of control. The system will just lose control, and there will be a quasi -- "
He paused, not finishing the word. "A fairly irresponsible financial policy for the long run," he said.
"If we can implement a $50 billion package in '86 that is credible -- because what's credible depends on how much screaming there is about it -- the markets will conclude that government is taking things away, shutting off some switches and spigots.
"It would be large enough" he said, "to put the budget in a manageable zone" if the economy continues to expand. "It's not an ideal zone. It's going to cause problems of absorption, savings and capital for a long time to come. But at least it takes it out of what I call the danger zone."
This official at one point was publicly predicting, much as the president, that administration policy could produce a balanced budget. Asked why his goals have grown steadily more modest over the years, the official replied, "Well, each year reality gets a little more intractable."
This reality was not evident in Reagan's reelection campaign. He optimistically reassured American voters that the deficit would melt away with economic growth. But after the election, Stockman took to Capitol Hill a chart that told a somewhat different story.
The document showed that, as a percentage of GNP, the current deficit is not shrinking as fast as did previous deficits in recoveries after recessions. In other words, growth was not having the power- ful tonic on deficits that Reagan had predicted in his campaign speeches.
For example, the Stockman chart showed that in the recession that hit bottom in 1971, the defict went up to 2.2 percent of GNP. By the third year of recovery, it had diminished to .5 percent. Likewise, when the recession of 1976 hit bottom, the deficit was 4.5 percent of GNP, then it declined to 1.7 percent by the third year of recovery.
In Reagan's first term, the recession reached bottom with the deficit at 6.4 percent of GNP, but the deficit has declined only slightly during recovery -- to 5.7 percent this year and 5.4 percent next year if no action is taken. If all Reagan's proposed budget cuts are adopted, the deficit would still be about 4 percent next year.
As the deficits have mounted, Reagan increasingly has turned his rhetoric to another solution, a balanced budget amendment to the Constitution. But that would not take effect in his term; it would leave the hard choices to his successor.
"The constitutional amendment, if adopted, would set a target date, that based on a declining path of deficits, then you could foresee and say: by such and such a date we must achieve a balanced budget, and, from then on, the government spend no more than it takes in," Reagan said in the interview with radio correspondents.
Reagan said he doesn't know what that date will be, but it apparently won't be soon:
"You can't now pull the rug out from under people who have maybe directed their business practices or agriculture, things of that kind, and say to them, 'We're pulling the rug out right now. The whole game has changed.'