If the American public seems less than engaged in the current battle over a tax cut, could it be because it feels a certain unease about the whole exercise? Certainly Americans need some relief from the burden of climbing social security taxes and of being thrust into ever higher tax brackets because of inflation. No will complain about extra dollars in the pocket -- whether it is the Republican or the Democratic version of a tax cut which is soon passed by the Congress. But the question must nag: will either bill as now constituted really serve the long-range objective of balancing the federal budget and thus helping bring inflation under control?
Virtually everyone acknowledges that Reagan economics is experimental. Even detractors are willing to await the verdict of time. Yet the fact is that the administration will not emerge with the clean tax-cut bill it had originally proposed as part of its overall economic package. In the hectic bid to win votes, it has accepted so many additional special-interest benefits, primarily for high-income segments and for industry, that future loss of revenue could lead to the very thing the President seeks to curb -- big deficits.
The problem arises after fiscal 1984. If the present "sweeteners" for different groups of taxpayers go through -- and both the Senate Republicans and House Democrats have been falling over themselves to dispense the largesse -- the deficits could surge out of control and put the government in what Business Week calls a "fiscal straitjacket" by the middle of the decade. Loss of revenue from the indexing of individual income tax rates to the consumer price index, for instance, could rise to $45 billion in 1986. Further losses could be expected from such measures as reducing the windfall profits tax on some oil producers, lowering federal duties on gifts and estates, and allowing individual taxpayers who do not itemize their deductions to deduct their contributions to charity.
Even before the addition of these and other vote enticements there was a fair amount of doubt that the original Reagan tax-cut bill would stimulate investment rather than demand. Now there is growing concern that the Reagan administration , to meet what is expected to be a huge shortfall of revenue in future years, would have to slash government spending even further to balance the budget. Unless the President would reverse himself and pull back on his massive military plans, social programs would seem to be the likely target again. This could include social security. Mr. Reagan clearly was responding to the rumblings of discontent already heard when he chose to assure elderly Americans in his television address this week that he would not cut back their social security payments.
All of which is to say that there are potential pitfalls in the tax-cut bills under consideration to which Americans ought to be alert. Inasmuch as no one has a sure-fire recipe for the nation's economic ills, the broad course the Reagan admnistration has carved out deserves to be tested. In the end, however, the President may have struck the nail on the head when he asked Americans "to trust yourselves" and in effect to draw on the "creativity" that has made the United States what it is.
Tax cut or no, Americans doubtless have sustained enough adversity in the past few years to know that it is their own individual resourcefulness more than action in Congress on which they must prim arily count.