Meese: Reagan would look 'seriously' at April 1 tax cut
Washington — President Reagan, in an effort to boost the economy earlier than his own summer projections, apparently would be receptive to moving up the 10 percent income tax cut now set for July 1 to April 1.
In a recent interview with the Monitor, presidential counselor Edwin Meese III said that ''If the Congress is willing to do that (move up the tax cut), we would want to look at that very seriously.'' Such a proposal has been put forward by House minority leader Robert H. Michel (R) of Illinois. Other congressmen have suggested just the opposite - delaying or eliminating the tax cut to provide more revenue.
Mr. Meese said the President also would be willing to ''at least take a look'' at a congressional proposal to do away with income-tax indexing now scheduled to begin in 1985. Indexing keeps taxpayers from automatically advancing into higher tax brackets as the cost of living rises.
Despite these signs of compromise, Meese said that the President was adamant in resisting any change in his overall tax-cut program or any cuts in his defense budget.
Meese also set a distinct deadline - the end of this year - by which Mr. Reagan will need to see a strong upturn in the state of the economy - or face political difficulties.
''If the economic recovery isn't showing some signs in the year 1982,'' Meese said, ''and doesn't develop into an actual recovery, then I think it is a serious problem.''
''But,'' he added, ''We do see the potential for visible signs of economic recovery appearing the middle of the year.''
''You are talking about summer?'' he was asked. ''Right,'' he replied.
But Meese also refused to concede that if no rise in the economy occurs the GOP will suffer devastating losses in November.
''I do think we will see signs of recovery before then,'' he said. ''And also I think no matter what happens the American people realize the Republican Party is the party with some answers and with the answers that offer some hope for the future.''
Excerpts from the interview follow:
What permanent changes does this administration expect to put into effect during this four-year term?
Well, I think several things. First, we have reversed the growth trend of the federal government. Second, the ''new federalism'' program will result in a dramatic restructuring of governmental functions and governmental revenue sources. Also, the President has dramatically changed the tax picture by the Economic Recovery Tax Act, which has changed the constantly increasing revenue picture which the federal government has depended on for its expansion in the past.
When a president comes forward with a massive budget deficit, isn't it logical that it would shake the faith of many of his supporters, especially the conservatives?
Well, you have to look at the deficit in terms of its historical comparison. In 1976, when we were pulling out of a recession, the deficit that year was 4 percent of the national product. The deficit this year that is projected is only 2.7 percent of the gross national product. The numbers are bigger - but so is the economy.
There's no question: We don't like the deficit. It's too high. But it was the least worst of several alternatives the President faced. He could have raised taxes, which would not have been a good idea. He could have cut the defense budget, which would have neglected our obligation for the security of our people.
But with the economy lagging, can the President, as he did last year, go to the public and say, ''Hey, get behind me on this economic program. Prod your congressman to get behind me.''
I think the public will respond. Americans really don't see any real alternative. Even the alternatives presented by various members of Congress are essentially variations of what the President has proposed, namely control and cuts in the spending.
On the Caribbean: What does the President mean when he says the US ''will do whatever is prudent and necessary'' to ensure peace and security in the Caribbean?
Basically, that we will take the necessary action to provide assistance to those countries in the Central America-Caribbean area so that they can defend themselves against aggression. And this includes assisting them in protecting themselves from the exportation by Cuba and other Soviet satellites of subversion into their country. . . .
The President has said many times that we have no plans to deploy US military forces in Central America.
But you aren't ruling out any options?
The President has said that at no time do you rule out (certain) options. That would necessarily diminish your position in dealing with the adversary.