Summary: All budgets reflect two very different elements, a financial plan and a statement of political objectives and philosophy. The Reagan budget proposals are no different. One of the dominant budget priorities of the Administration is to change the trend line of Federal spending. The Administration estimates that this will yield a balanced budget in 1984 of $770 billion. A second priority is to increase the level of spending for defense. A third priority is to reduce Federal involvement in the domestic economy and to reduce the Federal role in dealing with domestic social problems. In some categories, such as grants to States and localities, there will be substantial absolute declines. A fourth stated priority is to reduce waste and inefficiency in Government. However, there is some divergency between rhetoric and action. The most effective defenses against fraud, abuse, and waste are good program design, competent and motivated managers, strong internal controls, and aggressive internal auditors. Among the new Administration's first acts was the firing of the entire corps of Inspectors General and reducing the staffs of internal audit units. There are also reported reductions planned in the staff working on agency accounting systems. GAO recently put together a package of actions for consideration by Congress ranging from more aggressive collection of delinqent debts owed the Government to replacement of obsolete computers. The Administration opposed every item in the package without exception. Arbitrary ceilings on the number of Federal employees will lead to shortages of people with critical skills, imbalances of workload, bottlenecks in operations, and contracting for services at higher costs. It could mean the elimination of precisely the people whose job it is to identify and eliminate fraud, abuse, and waste. Arbitrary ceilings on salaries will drive good people out of managerial positions into the private sector. Administration themes that are likely for the 1983 and 1984 budgets are: continued restraint in the budget totals; continued growth in defense spending; more intensive retrenchment in domestic social programs, in the form of reduced intergovernmental assistance and reduced support for the safety net programs; and, perhaps, more vigorous efforts to eliminate inefficiency. Success in the attack on inefficiency can moderate the degree of retrenchment in domestic programs but cannot eliminate it entirely.
