Testing the Reagan tax cut

Despite the lively debate in progress on the floor of the US Senate over the Reagan administration's proposed budget cuts, the real battle is still to come -- and mainly in the legislative chamber next door. That will be over Mr. Reagan's three-year, across-the-board tax cut. But all indications, the President appears likely to win a substantial part of his budget cuts, even in the House. But the proposed tax cuts, according to Dan Rostenkowski, chairman of the Ways and Means Committee, and Speaker "Tip" O'Neill, will never make it through the House.

That, we think, would be regrettable.

Although the Reagan tax-cut proposal --the so-called Kemp-Roth plan -- carries decided risks, strong arguments can be made in favor of giving the administration the benefit of the doubt at the present time. The plan is not without flaws. Many economists believe that the cuts would unduly benefit the top strata of taxpayers and would be inflationary. There is genuine doubt whether the cuts would lead to a surge of new investment as foreseen by the administration. On the other hand, Mr. Reagan argues that his budget and tax cuts are part of a comprehensive package, and that to dilute one half of that package is to undercut the possibility of success of the program. Many lawmakers and economists may question the validity of the "linkage" between the two aspects of the plan, but Mr. Reagan does not.

It should not be overlooked that in representative government the party out of power often seeks to "gut" a new administration's policies for political reasons while the party newly in power invariably tries to undo programs of the past associated with the defeated party. The significant point is that the Democrats do not yet have a formal alternative tax-cut scheme. What they have are opinions about the presumed (adverse) impact of the Reagan plan, with lawmakers lining up behind a variety of tax-related proposals.

Congress certainly has an obligation to take a hard look at the Reagan proposals. But at the same time it ought to remember -- as the President is fond of reminding people --that he did carry the last election, winning 44 states and the Senate as well. The burden of proof should be on the opposition to show that his tax-cut program absolutely will not work, or would work in such a way as to imperil the economy. Unless that is the case, the public certainly has given Mr. Reagan a mandate to test his "supply-side" economic package in the marketplace.

That does not mean that Congress should adopt the total three-year cut; that could be unnecessarily risky. But if lawmakers accepted a one-year cut along the lines of the Reagan plan, they would still have time next year either to undo their work by voting a better tax-cut plan if things turn out poorly or, alternatively, to extend the Reagan cuts for a second or third year. The American people have voted in a conservative government --and the Democrats, in the national interest, should gi ve conservatism a chance to work.

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