US East and West, left and right want tax cut; New Reagan proposal upstages Carter
Washington — Ronald Reagan has made his first decisive thrust of the 1980 campaign at what would appear to be Jimmy Carter's greatest vulnerability -- the economy. The likely Republican nominee's $22.3 billion tax-cut proposal for 1981, outlined Wednesday in Los Angeles, has caught the Carter administration with its own tax-cut plans still on the drawing boards.
With Mr. Carter out of the country, the administration's anti-inflation adviser, Alfred E. Kahn, this week began sketching a possible $15 billion to $25 billion cut for next year.
But administration officials, meanwhile, are keeping their distance from the Kahn tax-cut proposal. They point out that only when the revised midyear eco nomic forecast is released July 21 would it be appropriate to say whether or not a cut is in order for 1981. "In present planning, there's not going to be one," a White House source says.
However, other administration sources seem determined to keep Mr. Reagan from preempting the tax-cut issue. They point out that President Carter has said publicly -- as early as his first campaign trip outside Washington to Philadelphia May 9 -- that a tax cut would be needed next year. These sources say only the timing and structure of a cut remain in doubt.
The Reagan move comes at a time when public confidence in Mr. Carter's handling of the economy has sagged to a dismal 18-percent approval rating, near the 15 percent bottom he hit last July.
Mr. Reagan's tax-cut proposal reflects a backing off from any all-or-nothing support of the so-called Kemp-Roth bill -- a three-year, 30 percent tax reduction plan. His advisers' strategy, in opting for a one-year proposal, is to make Mr. Reagan look "pragmatic" and not the all-or-nothing conservative ideologue his opponents would make him appear to be.
"This is a tactical move," says a Reagan spokesman. "Politically speaking, you're not going to get the three-year Kemp-Roth plan past Congress all at once. This is a way to mesh Governor Reagan's campaign with specific proposals in Congress."
The Reagan tax cut would reduce individual taxes 10 percent across the board beginning Jan. 1 for the full calendar year, reducing the tax take by $19.8 billion. Another $2.5 billion in cuts would take the form of faster depreciation schedules for business. At least a fifth of the tax cut would be offset by greater revenues stimulated by the cut itself, Reagan advisers say.
Actually, some economists argue there could be at least a $30 billion tax cut , to recover at least half the $60 billion in tax hikes slated for next year. By one estimate, government take from income for 1981 is expected to rise $14 billion in so-called "bracket creep" as inflation pushes wage earners into higher tax brackets, $18 billion in payroll tax increases, and $25 billion to $ 30 billion in the windfall profits tax.
It is not yet clear how the tax-cut debate will play among voters, the experts say.
What is loosely called "the economic issue" is actually a cluster of issues -- ranging from budget balancing, to aid to cities, and to encouraging business investment -- read quite differently by different groups in different parts of the country, sayd Democratic pollster Michael Barrone.
Even in the South, which Mr. Barrone says will be a "brute economic vote" battle between Mr. Carter and Mr. Reagan, the economic interests and values of subregions split into different camps. The "oil South" states of Texas, Louisiana, and Mississippi -- which some analysts see leaning toward Mr. Reagan -- "have a boom mentality," Mr. Barrone says. "They think they have the answers , that economic growth can be achieved without inflation."
In poorer, "nonoil South" -- Alabama, Tennessee, Georgia, Kentucky -- "where millworkers still outnumber the country club folks, Mr. Carter is still in a good position," Mr. Barrone says.
In the Northeast, another Reagan-Carter battleground, Mr. Carter proved vulnerable on economic issues in his primary race against Edward M. Kennedy, where the senator's performance put him to within 1 percent of Mr. Carter in votes outside the South, Mr. Barrone says.
The economic issue continues complicated in the West, especially on the Pacific Coast, where the "old Democratic coalition gets turned on its head," Mr. Barrone says.