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President to Avoid Deep Defense Cuts : Will Attempt to Curb Deficits by Reducing Inefficiency, Subsidies

January 12, 1986|GAYLORD SHAW | Times Staff Writer

WASHINGTON — President Reagan, again ruling out a tax increase and vowing to deflect deep cuts in defense spending, said Saturday that his Administration will meet new budget-balancing requirements by eliminating government inefficiency and curtailing unnecessary subsidies.

In his weekly radio address, delivered from his retreat at Camp David, Md., Reagan spoke of the mandates of the Gramm-Rudman Act, which requires across-the-board spending cuts if Congress fails to meet a series of budget deficit ceilings, declining to zero in 1991.

"While the amendment tells us that we must bring deficits to an end, it leaves crucial questions about just how to do so unanswered," Reagan said.

No Tax Increase

"As far as I'm concerned, a tax increase is out. I furthermore intend to insist upon the maintenance of a strong national defense as the first duty of government to the people," he added. "Instead, our Administration will meet its . . . obligations by submitting budgets which eliminate government inefficiency and curtail needless expenses like vast amounts for Amtrak and subsidies for those who don't need them."

The law, enacted by Congress and signed by Reagan last month, is being challenged in court. Federal agencies are expected to announce next Wednesday that, under its provisions, federal spending must be reduced $11.7 billion for the 1986 fiscal year. Reagan acted Friday to shield military pay from the automatic cuts, informing Congress that he is invoking a clause in the law allowing him to exempt such spending in the first year.

(Meanwhile, the Office of Management and Budget and the Congressional Budget Office will report this week that the federal deficit for this fiscal year may soar to $220 billion, higher than last year's record of $212 billion and far exceeding the $171.9-billion estimate in the congressional budget resolution adopted last August, the Washington Post said.)

Seeks Help on Tax Bill

In his radio address, Reagan appealed for public support in giving "the government a sense of fiscal responsibility" and in enacting tax revisions this year. He said that the tax revision bill passed by the House last year "has its weak points" but that "we'll have a chance to improve it" in the Senate.

"Believe me, the special interests are going to be there, lobbying just as hard as they can," he said. "If we're going to protect the interests of all the people, I'm going to need your support."

Reagan cited recent economic statistics, including announcement that the overall unemployment rate had dropped to 6.8%, the lowest level in five years, as proof that "our economic engines are being recharged."

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