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With that as a given, all budget decisions follow naturally. There can be no thought of cutting defense spending. As Reagan told TIME in an interview, "Defense cannot be looked at as a part of a budgetary solution. Defense must be looked at as to what needs to be done to ensure our national security." Nor can there be any trimming or delay of the 25%, three-year cut in income tax rates that he rammed through Congress in 1981. That reduction is too essential to the Reagan world view, in which taxes are bad and cutting them cannot be anything but good.
To many critics outside the White House, and not a few inside, these positions seem contradictory or at least susceptible to being pushed too far, too fast. Nancy Reagan, in an interview with TIME, defends her husband against the frequent charge that he decides many important matters on instinct alone. Says the First Lady: "Some decisions are on just pure instinct. [But] on a lot of the terribly substantive ones, the budget and so on, you cannot go just on instinct." She adds, however: "He has changed his mind and his positions on things; whether he is quick enough to do it or not, I don't know. I think . . . yes, I think he can be stubborn at times."
In Reagan's view, his stubbornness is fully justified, and that introduces the second indispensable element in his outlook: his eternal optimism. He believes that a policy founded on correct principles must succeed, and so the deficits can only be a passing embarrassment that should not distract his Administration from its long er-range goals. As he likes to tell his staff, "When you are up to your ass in alligators, you sometimes forget that we are here to drain the swamp."
Reagan simply does not believe the forecasts of his own economists that his tax and defense policies are building enormous deficits into the budget for fiscal 1984 and for many more years to come. He will report those forecasts to Congress only because by law he must. Reagan thinks that his tax cuts and slashes in social spending will shortly produce a boom that will fund lavish military spending and shrink the deficits too. Economic predictions, as he has told his staff quite correctly, are often wrong, "so why not take the optimistic view?" Says one aide: "He is absolutely convinced that there will be a big recovery and that the economic picture in 1984 will be very conducive to his re-election."
In short, if he holds true to his principles, everything will work out for the best, as it always has in Ronald Reagan's world. "He is an optimist. My God, is he an optimist!" exclaims a subordinate. Reagan's cheery outlook is so deeply rooted that it regularly cracks the critical doubts of his staff. Says one Cabinet officer, discussing the current economic bind: "I don't see how he can get out of it, but I wouldn't be surprised if he does."