FORECASTS OF inflation in the defense budget used to be too low. In the high-inflation 1970s, presidents unfailingly predicted each budget season that their policies would reduce inflation. These political predictions were then enshrined in their budgets. For the Pentagon, that meant a steady pattern of good news followed by bad: low cost estimates, large cost overruns, especially on longer-term procurement contracts. The problem was exacerbated by the tendency of both contractors and the services to underestimate weapons costs to win initial congressional approval.
Now this pattern has been reversed. The Reagan administration has succeeded beyond its official forecasts in bringing inflation down. This has created a dividend in the defense budget. The dividend has been the greater because the administration, partly to avoid further cost overruns, began to use a higher inflation multiplier for defense than for civilian programs.
Les Aspin, who is chairman of the House Armed Services Committee, estimated yesterday that as a result, Congress in the last four years appropriated between $18 billion and $50 billion more than the true cost of programs in the defense budget.
Some of this money was spent, with congressional concurrence, on other defense programs; some appropriations have lapsed; some are for projects not yet completed or begun. Mr. Aspin suggested that some of the money may also have gone to contractors in the form of higher profits.
The Defense Department has also used the inflation dividend in making paper "budget cuts" when Congress seemed likely to squeeze its budget. In the most recent and egregious example, the Senate Armed Services Committee last week was about to cut the defense authorization bill when Secretary Caspar W. Weinberger announced he had just found $4 billion. Several committee members, who should have known better, complained indignantly that the secretary was playing games with them.
Mr. Aspin would rule out such scenes in the future with a proposal that sounds simpler than it is. Instead of appropriating for defense inflation in advance, he would appropriate for it one year in arrears. The Pentagon would receive its cost-of-living allowance each year, as Social Security recipients do, on the basis of the past year's verified inflation rate. There are accounting and other administrative problems in this; the Pentagon needs to join Congress in looking at them. But the present system needs improvement. The department now is sacrificing its credibility to preserve its programs. That is good for no one.