President Reagan declared yesterday that a House-passed budget containing $56 billion in deficit reductions for next year endangered national security and was "unacceptable to me and to the American people."
But despite Reagan's denunciation of the $967 billion House budget resolution and his praise for an earlier Senate-passed version, a White House official said the president would accept a compromise that eliminates a one-year freeze on Social Security cost-of-living increases if House-Senate conferees came up with "real savings of the same magnitude."
The Social Security freeze, assailed by Democrats as a repudiation of Reagan's campaign promise, is contained in the budget resolution passed by the Republican-controlled Senate but not in the budget approved Thursday by the Democratic-dominated House.
Assistant White House press secretary Albert (Rusty) Brashear said at a briefing yesterday that he was "sure" Reagan would accept a recommendation eliminating the Social Security freeze if the conferees provided compensatory savings in other programs. Later, Brashear emphasized that Reagan would not accept any of the "funny-money stuff passed by the House" or any compromises that "further undermined national security."
In a speech to the National Association of Manufacturers yesterday, Reagan said the defense cuts voted by the House "would undermine our negotiating position in Geneva [arms control talks] and put the defense of our nation at risk."
He praised the Senate version of the budget as "a major effort to control government spending" that will "prepare the way for tax reform and help put our economy on a growth path through the end of the decade."
The Senate version of the budget, which totals $965 billion, also proposes $56 billion in deficit reductions but differs with the House plan on defense as well as Social Security.
Reagan said that billions of the savings outlined in the House bill "would come from what could only be charitably described as phantom cuts." The president said the House bill "goes easy on the fat in domestic programs and turns instead to our armed forces, freezing the budget for our national defense at last year's level -- in real terms, a deep cut."
Negotiators from the House and the Senate will attempt to resolve the differences between the two budget resolutions after Congress returns from a week-long Memorial Day recess on June 3.
Reagan's appearance before the manufacturers kicked off a week of economic speeches that the president will make on behalf of a tax-overhaul plan he will formally propose in a nationally televised address Tuesday night. The president is expected to give a foretaste of the speech in his weekly radio address today and again Monday in a speech in Orlando, Fla. He will then attempt to generate public support in speeches in three states later in the week.
In an attempt to rekindle some of the early-year enthusiasm for what he calls "the second American revolution," Reagan said yesterday that "the momentum of public support is building" for tax reform "to the point that what was once thought impossible is now considered inevitable. Tax reform's time has come."
He gave no details of the plan but urged the business leaders to give him their support. It is time, said Reagan, to stop "trying to run the economy through the tax code."
Meanwhile, Sen. Bill Bradley (D-N.J.), coauthor of the leading Democratic tax-revision bill, said the administration appears to be having trouble making its plan "revenue-neutral."
"Looking at the numbers, my concern is that the deficit might be increased," said Bradley, who was briefed on the proposal by administration officials because he will be out of the country when it is announced. "That would be a disaster and unacceptable."
Bradley said he assumed the proposal as finally released would bring in the same revenues as the current code but "given what I understand to be some of the decisions that were taken and knowing the value of all those loopholes, it might not balance out unless there is some whopping, big minimum tax as well."
The plan is believed to include a minimum tax on individuals and corporations of 20 percent.
In his speech yesterday Reagan also spoke up for the House-rejected proposal that would provide $14 million in "humanitarian aid" to the rebels fighting the leftist Sandinista government of Nicaragua.
". . . We are going to come back again and again until the House fulfills its responsibilities to protect freedom and our own security," Reagan said.
The president called Nicaragua "another pawn in the Soviet grand strategy of expansion" and said that "if the Sandinistas, the communists, are allowed to export their violence" that the southern states "could become virtual refugee camps for hundreds of thousands -- even millions -- of the dispossessed."