(FORTUNE Magazine) – POLITICIANS, pundits, and most economists have come to agree that the federal budget deficit is the paramount problem facing the U.S. By ''the deficit'' they no longer mean the difference between this year's revenues and outlays. The term now refers to the river of deficits flooding forever into the future. Washington's tallest oracle, Federal Reserve Chairman Paul Volcker, warns that the deficit is the greatest obstacle to prosperity. Hardly anyone dissents. The folks on the Potomac are focusing on the wrong problem. The deficit is the manifestation of a much deeper malady--namely, uncontrolled federal spending. The budget is way out of balance because of a little-known fact: real federal spending, adjusted for inflation, has climbed even faster under President Reagan than it did in the Carter years. Without major changes in federal programs, spending will continue to bound upward. The latest calculations for this fiscal year put the deficit around $200 billion, some $25 billion more than the Congressional Budget Office and the President's Office of Management and Budget were predicting last summer. The CBO estimates that--absent tax increases or spending cuts--the deficit will hover around $200 billion again in fiscal 1986 and will climb to $290 billion by 1990. Another recession could balloon the deficit to $350 billion. Continuing deficits of that magnitude must eventually choke off investment and put a powerful brake on the economy. Foreigners have spared the U.S. the pain of financing the deficit for the past couple of years by shipping enough capital into the country to satisfy much of the government's appetite for cash. But that happy arrangement cannot continue indefinitely; the rest of the world simply doesn't have enough wealth to keep sending the U.S. $100 billion to $150 billion year after year. When the foreign capital finally ebbs, the government will have to finance its outlays by commandeering more domestic savings or by printing money. Either action would devastate investment, the first by crowding business out of the credit market and the second by creating a new wave of inflation. The only way to get the deficit down and keep it down is to solve the underlying problem by halting the inexorable growth of government spending. Those rising deficits that the CBO projects through the end of the decade reflect the simple, chilling fact that the federal budget is growing faster than the economy. Despite all the talk of austerity, despite Ronald Reagan's clampdown on programs for the poor and near poor, despite last year's vaunted ''down payment'' on the deficit, federal spending is still rising faster than GNP. The CBO estimates that in this fiscal year, for example, spending will jump 11.4%, while GNP probably will grow by 7.7%. Spending, measured as a percent of GNP, will go from 23.5% last year to 24.3%--and this is in the third year of a recovery. Taxes, which have come down a bit under Reagan, now take a relatively constant share of GNP unless Congress raises tax rates. The result: the deficit gets larger in absolute dollars and as a percentage of GNP. The present situation leaves the U.S. with a large and growing ''structural'' deficit. The structural part of the deficit is the amount that reflects a fundamental imbalance between taxes and spending, and that would remain even if the economy were operating at full blast. By the CBO's calculations, the structural deficit came to 0.5% of GNP in fiscal 1981. This year it hit 4.1%. If current spending programs are left unchanged, it will rise to 5% by 1990. The growing structural deficit means that Congress cannot solve the problem by raising taxes unless it is willing to raise them again and again to keep up with the growth of spending. The budget that Reagan has proposed for fiscal 1986 would make a strong start at controlling spending. Indeed, outlays would rise only 1.6% and would actually drop 2.6% after adjustment for inflation. But the President doesn't go far enough in cutting future spending. Outlays start growing again in real terms in fiscal 1987, and the deficit remains unacceptably high even under the unrealistic assumption that the economy performs better than ever before in the postwar era. What Congress needs to do is eliminate the growth of spending for years to come and allow itself no more money, adjusted for inflation, than in 1985. That level of self-denial would balance the budget in five or six years. In a series that begins with the following article on defense, FORTUNE will lay out proposals that would enable Congress to hold the budget at the 1985 level. Articles in succeeding issues will propose reductions in farm subsidies, subsidies to business, subsidies to the middle class, and ways to reduce the interest on the national debt. FORTUNE's plan doesn't call for a freeze for every part of the budget. Defense spending, for instance, would continue to rise, though much more slowly than the Administration wants. With some parts of the budget rising, others would have to be cut--and some eliminated--to keep overall spending constant. None of the cuts is politically practical by itself, but each ought to be palatable as part of an overall program of restraint. And each involves spending that America can make do without.