PRESIDENT REAGAN'S budget for 1986 is a deliberate invitation to a fight, not only with Congress but with most of the organized forces in American politics. He is calling for another crusade against federal spending -- with the conspicuous exceptions of spending on defense and Social Security -- and he is calling for it in terms that guarantee much strife within his own party. The danger in this kind of brawl is the prospect that it can settle into paralysis not only on the budget but on all economic decisions generally.
Mr. Reagan's attitude toward spending is more complex than it looks at first sight. Under his presidency, federal spending has risen higher, not only in dollars but as a proportion of GNP, than at any time since World War II. He is not a low-budget president. In 1983, federal spending took the highest share of GNP since 1946 -- but 1983 began at the trough of a severe recession that was a defensible reason for high expenditure. In 1984, spending dropped a little in relation to GNP. This year, the third of a strong recovery, both spending and deficit are rising rapidly again and, by the administration's figures, will be only slightly below the record levels of two years ago. That's an important signal of a loss of fiscal control. It's not only defense spending that's going up, incidentally, but non-defense spending as well.
The new budget calls for another great shift next year in favor of defense. The defense figures seem to have taken on a life of their own within the administration, and it's now the number of dollars spent that is supposed to indicate strength and purpose to the Soviets rather than the things that those dollars buy -- or fail to buy. If this budget were enacted, the losers would include, in roughly the following order, farmers, local governments, civil servants, hospitals and college students. Some of these cuts are justifiable, like the abolition of revenue sharing; some are plausible, but not necessarily the same ones. Some will have to be made merely to keep the deficit from rising. Interest on the federal debt is going to compound faster than the budget suggests.
The great budget experiment of Mr. Reagan's first term was whether accelerating defense spending and tax cuts could lead to a balanced budget. With the deficit now running $222 billion a year, that issue has been pretty clearly settled. The great budget experiment of Mr. Reagan's second term will be to see whether deficits matter. He evidently has decided that spending matters, because it sets the scale of government. Taxes matter, and there's still no mention of an increase. But to him, deficits remain very secondary. He has abandoned even the modest deficit- reduction targets he embraced two months ago.
This budget, Mr. Reagan's fifth, continues in precisely the same direction as all its predecessors. The only change is that the imbalances, in both policy and dollars, are getting bigger.