THE PRESIDENT cannot be completely denied the domestic spending cuts he seeks to reduce the deficit -- nor should he be. There remain important weak spots on the domestic side of the budget. These are not large enough to do as the president suggests; they will not eliminate the need for higher taxes and some defense restraint. But on their merits as well as for their bargaining value, they ought to be a part of the budget compromise.
The areas of weakness are in commercial more than strictly social programs. Exactly how these should be dealt with -- abruptly dropped, phased out, left alone, merely trimmed -- is not clear in every case. But many of these programs escaped the budget-cutting of the earlier Reagan years, and what can be said about them is that they now have a higher burden of justification to meet. The question Congress should ask this year is not why they should be cut, but why they should remain. There are at least four groups of questionable programs:
*Business subsidies. Most confections of this kind are on the tax side of the budget, but not all. The administration last year proposed eliminating the direct loan (as distinct from loan guarantee and insurance) programs of the Export-Import Bank; entirely dismantling the Small Business Administration; and raising user fees for such groups as shippers who ply federal waterways. Ex-Im subsidies go mainly to a few of the largest U.S. corporations (and their foreign customers), and the SBA is to a large extent an exercise in federal nostalgia. Barge owners could pay, and pass along in rates, more of the cost of their rights-of-way. All these subsidies are suspect.
*Energy subsidies. The government subsidizes the utility bills of rural people (through the Rural Electrification Administration) and people in the West (whose power comes from federal dams). The administration last year proposed reducing both subsidies, and this year will reportedly propose selling off the dams. At least the subsidies should be reduced. The government also heavily subsidizes energy research and development (even now that Congress has abolished the Synfuels Corp.). House Republicans last year proposed cutting these R&D subsidies and relying more on private enterprise to feel the way into the future. Why not?
*Development programs. The government now spends about $8 billion on "community and regional development," mostly through the departments of Housing and Urban Development and Agriculture, and through such lesser outlets as the Economic Development Administration and the Appalachian Regional Commission. On grounds that a lot of the development paid for is either of marginal or of altogether local benefit, the administration has proposed abolishing EDA and ARC, scaling back Agriculture's rural development programs and eliminating HUD's Urban Development Action Grants. The republic could probably survive all these steps.
More of a problem is the Community Development Block Grant program, largest of all these at about $3.5 billion a year. CDBGs were created in 1974 by lumping together the remnants of urban renewal, Model Cities and other urban programs of earlier eras. Grants go to most local governments, supposedly for the benefit mainly of poorer neighborhoods. But the program is really a form of general revenue sharing for public works. Having dropped revenue sharing, should Congress also trim this? If it does, perhaps it should compensate the state-and-local sector by taking on a comparable amount of other burdens now shared -- the welfare burden, for example.
*Middle-class social programs. Middle-class veterans can get free hospital care, middle-class schoolchildren get low-cost lunches. Why, in a tight budget year? Congress almost passed legislation last year means-testing Veterans Administration hospital admissions. This should be revived.
There are scattered other possibilities. Some of the lesser forms of federal aid to public schools, for example, have been merged into a program of block grants that lack clear purpose. In a sorting out of responsibilities with the state-and-local sector, these might go. Sorting out is what this budget will finally be about. The vital federal functions should not be cut to reduce the deficit. That is the point where Congress must shift to a tax increase.