President Reagan's new budget director, James Miller, has been given an impossible task. His orders in the budget he is drawing up for next fiscal year are to cut the deficit to $144 billion. But he has been denied the means to do so in a credible way. There is gimmickry in every federal budget; in this there will be more. To make the numbers come out where he must, Mr. Miller is now proposing selling off familiar government assets, such fixtures as the Bonneville Power Administration and Naval Petroleum Reserve.
Think what you please about the merits of such transfers, they are not answers to the budget problem. Assume even that the sales could be easily consummated, as this year's proposed sale of Conrail, for example, was not. They would lower the deficit only artificially and temporarily. The underlying gap between revenues and costs would be the same, would actually be a few hundred million dollars larger. The power administration serves to reduce the deficit; it makes a little money every year. If it didn't, you couldn't sell it. That is the ultimate perversity of this approach.
You cannot fault Mr. Miller. Indeed, you have to admire his inventiveness. The budget is now in the neighborhood of $1 trillion. Defense spending, which the president wants to continue to increase rather than cut, is now about 29 percent of this amount. Social Security, which he has also put off limits, is about 21 percent, and interest on the debt 15 percent. Mr. Miller needs to make about $50 billion in spending cuts to hit his deficit target (the president has also ruled out a tax increase). But he has been given only about a third of the budget in which to work.
Nor is even that third as collapsible as Mr. Miller might wish. About $100 billion of it -- almost a third of the cuttabl third -- is taken up by Medicare and Medicaid. Another $50 billion is in programs for the poor -- food stamps, rent supplements, aid to the needy elderly, blind and disabled, the federal share of Aid to Families with Dependent Children. Major forms of income support for other sectors of society make up another $100 billion. These are benefits to federal civilian and military retirees ($43 billion), unemployment compensation (an estimated $16 billion next fiscal year), farm price and income supports (perhaps $18 billion) and the budget for veterans ($27 billion).
Any of these major programs can of course be cut, but as a practical matter there are no great instant savings to be had here. No one is proposing that whole programs in this category be excised. It is the rest of the budget -- a span of at most $150 billion -- in which most of the deficit-reducing work must occur. Even here it is hard; this remainder includes such well-protected items as the highway program (perhaps $17 billion), college student aid ($8 billion), aid to elementary and secondary education ($7 billion) and the administration's foreign aid program ($14 billion).
The president's budget positions don't add up. Mr. Miller's proposed asset sales may help to paper over that fact when the budget goes to Congress next month. But that paper's getting pretty thin.