President Reagan is considering proposals to abolish the Departments...


WASHINGTON -- President Reagan is considering proposals to abolish the Departments of Energy and Education and postpone cost-of-living increases in Social Security and all other federal benefit programs for three months, it was learned Wednesday night.

White House officials said the package of deep cuts, totaling $16.3 billion from the 1982 fiscal year budget, also provides for the dismissal of 75,000 federal employees.


Officials said the deferment of the cost-of-living increase in the 1982 budget would not only apply to millions of older Americans on Social Security, but also to millions more who are federal retirees, veterans and those on other military programs, food stamps and black lung beneficiaries.

The drastic cutbacks to meet Reagan's target of a $42.5 billion deficit in 1982 were drafted at a meeting Wednesday on Capitol Hill between Budget Director David Stockman, Senate Republican leader Howard Baker and White House chief of staff James Baker.


Eliminating the Departments of Energy and Education from the Cabinet would fulfill a Reagan campaign promise. Officials said the function of the two departments would be redirected to other agencies in order to reduce the federal bureaucracy.

Many of the functions of the Education Department would be returned to the Department of Health and Human Services, where they were once lodged when it was the Department of Health, Education and Welfare.

Officials said the slashing of 75,000 federal workers from the payroll would save $300 million in 1982 and $3.3 billion over a three-year period. They said it would reduce the federal payroll by 6.5 percent and the dismissals would applyto all agencies across-the-board.

The officials also reported the $2 billion Reagan intends to trim from the 1982 defense department budget is included in the $16.3 billion cutbacks overall for next year.

The three-month deferral of the cost-of-living increases would be extended across-the-board for every pension and benefit program and represent savings of $5 billion, officials said.

They insisted that a postponment of the scheduled Social Security cost-of-living increase would not represent a retreat on Reagan's promise Tuesday that he would not seek to balance the budget 'at the expense of those on Social Security.'


Officials said the proposed three-month postponement was first recommended by the Democratic leadership.

The proposals, officials said, have the unanimous support of the Republican congressional leadership.

Reagan met with Stockman and top aides Wednesday on his budget plans. He was expected to reveal his plans to a meeting of the full Cabinet Thursday.

Deputy White House press secretary Larry Speakes said the group considered 'the options for zeroing in on the necessary cuts' to hold the government's red ink to $42.5 billion next year and a balanced 1984 budget as promised.

The president also was preparing for his trip to Grand Rapids, Mich., Thursday for the dedication of the Gerald Ford Museum. During the stop, Reagan will hold discussions with fellow guests, Canadian Prime Minister Pierre Trudeau and Mexican President Jose Lopez Portillo.

A senior administration official said Reagan will be talking about energy policy, among other subjects, with the Canadians, and about El Salvador and Central American security in general with Lopez Portillo.

But before leaving for Michigan, Reagan will meet with his cost-conscious Cabinet members to review the 1983 and 1984 budget sacrifices each will be asked to make, as well as the 1982 reductions said to be in the range of $10 billion to $14 billion.


Reagan has given each department a spending ceiling that comes to a cumulative cut of nearly $75 billion in fiscal 1983 and 1984 combined.

The president is expected to make public next week his decisions on those cuts and his austerity plans for 1982.

It is possible, sources said, that Reagan will make a televised speech to explain his decisions.

Reagan will go to Denver Friday to address the 21st Biennial National Federation of Republican Women Convention. He'll go to Camp David, Md., for the weekend late Friday on his return from Colorado.

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