WASHINGTON – President Bush learned a lot of economics from the man he eulogized at a state funeral in Washington on June 11: former President Reagan.

Reagan slashed taxes and boosted spending mightily when he came to office in 1981. Bush did the same thing, and, like Reagan, has begun to generate huge budget deficits.

Reagan poured money into defense to defeat the Soviets. Bush has done it to defeat terrorism. And while Reagan partially offset his military increases with cuts in other areas, spending has shot up across the board under Bush’s watch. And there’s more to come with new Medicare prescription-drug benefits in the offing.

“Reagan proved deficits don’t matter,” said Vice President Dick Cheney, as quoted in journalist Bob Woodward’s book “Plan of Attack.”

In both instances, a strong dose of Reaganomics had the same result: an economic boost at the cost of huge budget deficits. The 1983 deficit reached $207.8 billion, equivalent to 6 percent of the economy, the highest level since the World War II era. The 2003 deficit hit $375.3 billion, or 3.5 percent of the economy, a huge spending boost that economists agree has helped spur the economic recovery that’s under way today.

But the final verdict on Reaganomics – and budget deficits – is far from clear. Reagan’s bold economic strokes were gradually reversed, and many economists think America faces the same choice today: Reverse some of Bush’s tax cuts or risk years of large budget deficits that could undermine economic growth.

Reagan himself retreated. Faced with soaring deficits, he accepted a series of tax hikes before he left office in 1989. The first President Bush added another increase in 1990, as did President Clinton in 1993.

On the spending side, the end of the Cold War in 1989 brought the so-called peace dividend. Annual military spending, which had risen from $158 billion when Reagan took office in 1981 to $320 billion a decade later, fell back to $266 billion by 1996. Bush’s war on terrorism has since pushed it up to $451 billion.

Finally, years of strong economic growth in the 1990s along with the late “90s stock-market bubble brought a surge in tax revenues, tipping the government into a budget surplus in 1998.

The outlook for a retreat from today’s deficits is uncertain.

Many of Bush’s tax reductions are due to expire in 2011, but he wants to make them permanent.

The war on terrorism is far from over, and a 1990s-style stock-market boom seems a remote possibility.

The retirement of the baby boom generation, those born between 1946 and 1964, will cause an explosion in Social Security and Medicare costs, which at $786 billion a year already account for a third of federal spending. The prescription-drug coverage under Medicare is projected to cost $47 billion when it starts in 2006 and rise to $153 billion annually in 2014.

Social Security and Medicare taxes have exceeded spending in recent years. But Medicare is expected to slip into the red this year and Social Security beginning in 2018, leading to higher budget deficits unless taxes increase.

Conservatives hoped that Reagan’s tax cuts would force spending reductions by “starving the beast” of funding.

Reagan made some spending cuts outside of defense, but his own budget director, David Stockman, later said Reagan didn’t have the heart to make the truly deep reductions needed to balance the budget.

Economist Kevin Hassett of the conservative American Enterprise Institute in Washington thinks tax cuts reduced spending somewhat, but not enough to balance the budget.

And while tax-rate reductions generate economic growth and create income that can be taxed – offsetting some of the revenue loss from lower rates – they don’t make up the difference.

So the United States may be about to sail into uncharted waters: an extended period of extremely large budget deficits that could add trillions of dollars to the national debt, which currently is $7.2 trillion – $24,564 per citizen.