At a time when almost everyone in Washington agrees that upcoming massive federal budget deficits must be reduced to bring down the high interest rates that are dampening business confidence and working against an economic recovery, it is difficult to accept the rationale of the Democratic-controlled House Ways and Means Committee in avoiding the responsibility of drafting its own version of a new tax bill. The short-term politics of it are understandable, but what about the long-term public good?
It is not just that the House is the primary legislative chamber tasked with putting together revenue measures - that in itself is sufficient reason for showing the courage necessary to raise new taxes, whatever the political risk. But there is also the fact that the House leadership has apparently lost an opportunity to produce an alternative proposal that could prove beneficial to the economy and the American people by going beyond the limited Republican measure.
If there was ever any doubt about the need to press forward with finding new income, it was surely laid to rest this week by the testimony of Alice Rivlin, head of the Congressional Budget Office. According to the CBO, deficits could swell to $140 billion or more during each of the next three years. If so, that would be far higher than deficits projected at more than $100 billion by the Reagan administration. Even if the CBO estimates prove too high - as administration officials contend will be the case - they underscore the urgency for enacting a tax package that offsets future deficits as much as posible.
The 99-billion-dollar three-year Senate tax bill, as we noted the other day, is quite reasonable. However, the bill does not go far enough in raising new revenues. In the upcoming discussions between the Senate and House, there is still time to ensure that there is a wise fine-tuning of the specific measure that emerges for Mr. Reagan's signature. Indeed, it is paramount that both chambers move with dispatch in enacting a bill to send a clear signal to financial markets that Congress means business about reducing deficits and thereby help bring interest rates down.
There are a number of steps that lawmakers might still reasonably consider:
* The tax leasing provision, though now restricted in the Senate bill, should be totally scrapped. Profitable businesses have escaped paying millions in taxes because of this loophole, which has been sharply criticized not only by liberal Democrats but Republicans such as Senator Dole.
* Why go only halfway in eliminating the three-martini-lunch deduction? Does anyone really believe that corporate transactions in the US will grind to a halt if businessmen are not allowed to deduct lunch-hour costs?
* Interest-income deductions which encourage consumption - as opposed to savings and investment - are counterproductive and should be reduced. Why should credit-card users have the benefit not only of convenience and delayed payment but of a tax deduction?
* In the same vein, why should the mortgage-interest deduction now possible on a second (or third or fourth) home be allowed, costing the Treasury millions of dollars annually in lost revenue? The purpose of instituting the deduction in the first place was to encourage individual home ownership, not speculation by the well-to-do.
By declining to fashion its own alternative measure, the House leadership has abdicated its responsibilities to the American people. However, the House now has a special duty to take up the Senate measure in a fair and expeditious manner. To the extent that is done, the Democrats could redeem the timidity of the past few days.