President Reagan's budget for next fiscal year features a host of conservative economic ideas that were discarded or overshadowed in earlier attempts to control federal spending on domestic programs, according to White House officials.
The ideas are aimed at permanently shrinking the federal establishment by transferring functions to private business or other levels of government. Reagan intends to strike this theme in his Jan. 28 State of the Union address, saying he is doing so "not to turn the clock back, but to look ahead," as one presidential adviser put it.
Many of the ideas were discarded as politically impossible or impractical in earlier budget-cutting rounds, and some administration officials have privately scorned them even now as "cats and dogs." In addition, Congress appears to have little appetite for the new approach, and leaders there have already warned of a budget "dead on arrival."
But the ideas have been resurrected because of pressure to meet the new $144 billion deficit target next year, and the threat of automatic spending cuts if Reagan and Congress deadlock over spending. White House officials say that despite grumbling on Capitol Hill, at least some of Reagan's domestic spending cuts may well be approved, given the alternative of deep, across-the board cuts under the Gramm-Rudman-Hollings law.
Office of Management and Budget Director James C. Miller III has championed the new ideas, stressing somewhat different justifications for budget cuts than did his predecessor, David A. Stockman.
Stockman's five-year war on domestic spending came with a heavy dose of conservative ideology, but the former Michigan congressman also brought a pragmatic political streak to the process, weighing how his proposals would be accepted on Capitol Hill.
Miller, an economist and former chairman of the Federal Trade Commission, has given more weight to the philosophy behind various policy changes. In screening the budget for cuts, Miller this year asked such questions as whether private businesses could perform the functions better, whether the services could be delivered better, and whether government assets could be sold because "we need the money."
Miller also has been urging Reagan to take a more direct and confrontational approach to Congress on behalf of these proposals, rather than the negotiated tack that Stockman often preferred.
Both budget directors reached common conclusions on wiping out some agencies, such as the Small Business Administration and subsidies to Amtrak. But Miller went further. "He took what Stockman did last year, then expanded it, not only in dollars but in philosophy," said a senior policy-maker who has worked for both.
These ideas include transferring some federal functions to private industry, known as "privatization." Reagan will also seek to transfer other functions to state and local governments, similar to his "New Federalism" initiative of 1982, which Congress never accepted but which Reagan is still trying to implement. For example, Reagan will propose transferring some highway and transportation functions to local governments, then provide block grants, at reduced levels of funding, to pay for the same functions.
The president will seek to eliminate the Interstate Commerce Commission, a move that will do little to reduce the deficit but eliminate a century-old regulatory agency. Miller has long been an advocate of less government regulation.
Reagan also will propose increased "contracting out" of various government functions like garbage collection and security. And he will again seek to impose "user fees" for things such as national parks, Customs services and navigation.
Another theme in the budget will be "asset sales," in which Reagan will ask Congress to sell such items as loan portfolios and the Naval Petroleum Reserves. These were avoided in earlier years partly because officials feared Congress would accept them to achieve quick deficit savings rather than long-term program reforms.
Yet another theme, worked out under OMB Deputy Director Joseph R. Wright Jr., is to be "credit reform," selling off some loan portfolios, charging fees for high-risk lending, raising the existing low interest rates on many federal loans and screening loan applications governmentwide. The result will be to eliminate many subsidies in federal lending.