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Last Reagan Budget: More for Defense, Less for Rest : $1.1-Trillion Figure Due Bush Review

January 09, 1989|Associated Press

WASHINGTON — President Reagan today sent Congress a $1.15-trillion farewell budget that attacks his biggest economic failure, the federal deficit, by again offering up domestic cuts while still increasing defense spending.

The President's ninth and final spending plan--out of balance like all of his others--is largely an academic exercise, certain to be overhauled to reflect the priorities of a Democratic-controlled Congress and President-elect Bush, after his inauguration Jan. 20.

Bush called Reagan's final spending proposal "an excellent budget which demonstrates clearly" that the deficit can be reduced without raising taxes.

"Naturally, I support its intent. However, I will continue to review it for possible amendments after I assume the office of the presidency," Bush said in a statement.

Congressional Democrats, however, found much to criticize. Senate Budget Committee Chairman Jim Sasser (D-Tenn.) faulted the Reagan budget for relying exclusively on domestic spending cuts to lower the deficit.

"It provides a formula for a meaner, harsher America rather than a kinder, gentler one," Sasser said in a statement. "It is a blueprint for mounting debt, a continued reliance on foreign capital and a steadily eroding standard of living for Americans." If Reagan's ideas were adopted in their entirety, the deficit would fall to $92.5 billion in the 1990 fiscal year, the lowest since 1981 when he took office.

'New Taxes Not Required'

"This budget shows that a gradual elimination of the deficit is possible without raising taxes," Reagan said in his budget message. "It can be done in a reasonable, responsible way--with discipline and fairness. New taxes are not required."

In his proposals, Reagan advocated terminating a total of 82 government programs, slashing spending on farm programs by $9.7 billion and trimming the growth in Medicare and Medicaid, the giant health programs, by about $5 billion. The Pentagon's budget, on the other hand, was awarded a big spending increase.

To protect his defense buildup, one of the hallmarks of his presidency, Reagan proposed a 5.4% increase to $315.2 billion in spending authority, 2% higher than the expected rate of inflation. As part of the increase, the budget seeks a 44% increase in spending authority for development of the space-based "Star Wars" nuclear defense shield.

Among the 82 individual programs recommended for termination by Reagan are the Interstate Commerce Commission, the Legal Services Corp., the Economic Development Administration, the Appalachian Regional Commission, direct loans by the Small Business Administration, Amtrak railroad passenger subsidies, mass transit grants and subsidies to airlines serving small airports.

Reagan has tried and failed over the years to get Congress to go along with these proposals.

Many private economists believe Reagan's 1990 deficit estimate is based on overly optimistic assessments about how the economy will perform, including expectations that growth will continue at a rapid clip while inflation and interest rates both decline.

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