Voters cool to Reagan tax reform plan. Congress finds public more interested in trade, deficit, and farm issues

Tax reform, the flagship of President Reagan's domestic program for the year, appears to be caught in the doldrums of public indifference. The President traveled South yesterday to stir enthusiasm for his tax proposal and lambaste the current system with its loopholes as unfair.

``The way our tax system is structured, the harder you work and the more you earn, the less you get to keep,'' he told a cheering crowd at North Carolina State University.

But the speech is unlikely to have much impact on Capitol Hill, where the reform package would have to be enacted. Members of both parties see virtually no public pressure behind the Reagan tax reforms.

Even Reagan stalwart Sen. Jesse Helms (R), who accompanied the President on the visit to the senator's state yesterday, voiced doubts. ``With all due respect to my President,'' he confided to reporters, ``I have not heard one person in North Carolina mention it except in a deprecating way.''

``I talked to thousands of people,'' said Rep. Richard Cheney, a member of the House GOP leadership, in an interview after travels through Wyoming. ``I never met one individual who said, `Dick, I sure hope you'll support the President's tax reform proposal.' ''

House Speaker Thomas P. O'Neill Jr. told reporters this week that a tax bill could be passed only with ``great difficulty'' because of the lack of sentiment for it. ``The people in the street -- they never even mention it,'' said the Massachusetts Democrat.

Constituents were far more interested in cutting the federal deficit and in the trade imbalance, said members of both parties.

The flagging interest in tax reform does not stop the legislative machinery, which has already been set in action. Rep. Dan Rostenkowski, chairman of the House Ways and Means Committee, takes his tax-writing panel to a Virginia countryside retreat this weekend to review the task of overhauling the nation's tax code.

Mr. Rostenkowski, an Illinois Democrat, has made a commitment to produce a tax reform bill this fall. Many on Capitol Hill predict that he will deliver a bill, although the outlook for passage in the full House this year is dim.

``Danny [Rostenkowski] is the only thing that's keeping tax reform alive,'' said Rep. Tony Coelho (D) of California, charging that the proposal has no strong supporter in the GOP Senate.

But Speaker O'Neill has taken care to back the Ways and Means chairman on proceeding with tax reform. ``We can't let it go away,'' O'Neill explained this week, ``because if we let it go away, the President will clobber us.''

Meanwhile, both the House and Senate are preparingto give the Reagan administration a drubbing in the area of foreign trade. Lawmakers accused the President of failing to act as the United States trade deficit moves toward a record $150 billion this year.

Several hundred protectionist trade bills are now piling up in the congressional hoppers, and the groundswell of support for protectionism during the summer almost guarantees that some will pass.

``There's danger of flailing around and doing something that wouldn't really address the problem,'' said Secretary of Commerce Malcolm Baldrige yesterday to a breakfast meeting with reporters.

Mr. Baldrige said he was urging the President to begin using broad powers given him under Section 301 of the 1974 Trade Act to retaliate against countries that close their markets to American goods.

``We would only use 301 as a market-opening device,'' he said.

Such authority has rarely been used, and recent presidents, including Mr. Reagan, have generally taken stands for free trade.

White House officials are currently reviewing trade policy, but Mr. Baldrige predicted the study would take up to two months. Moreover, he doubted that even a new policy would halt action on Capitol Hill.

``I'm not sure a presidential statement would stop some the bills' passage in the House,'' said Baldrige. ``A veto would probably be necessary in some of the cases.''

Baldrige conceded that the protectionist mood in Congress has strengthened Reagan's hand when dealing with other nations.

When asked why the President has not taken a tougher stand on trade, he said, ``Why don't you ask another question?'' and then responded, ``I think we've got a lot of major issues on the agenda, and I think trade is going to be a major issue.''

The Commerce secretary, who described the economy as moving ``sideways,'' also said there was some ``uncertainty'' in the financial markets because of tax reform. Some decisions are being delayed, others speeded up in anticipation of new law, he said.

``I don't think it's having a major effect,'' Baldrige added.

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