White House circles its wagons around economic recovery plan
Washington — Democrats in Congress may feel on the defensive, but apparently so does the Reagan administration, so far as the integrity of the President's economic program is concerned.
This explains the firmness with which high administration officials, publicly and privately, insist that the Reagan package should be adopted as a whole.
Vice-President George Bush says that Mr. Reagan would give "very, very serious consideration" to vetoing a one-year tax cut, if Congress fails to give the President the three-year program he wants.
What difference would it really make, if Congress cut taxes only one year at a time?
"Because," said a high administration official, "people could not be sure what was coming, so they would hold back on making investments."
A spurt of fresh savings and investment, partly as a result of lower taxes, is -- according to the Reagan scenario -- needed to thrust the lagging economy into higher gear.
"No one," the official said, "questions the wisdom of letting businessmen know what their tax burdens will be over a period of years. That allows businesses to plan their investments.
"Why," he asked, "should it be thought that families and individuals are any different?"
On President Reagan's orders, a phalanx of administration officials is denying that the White House offered any compromise on taxes to Rep. James R. Jones (D) of Oklahoma, chairman of the House Budget Committee.
Mr. Jones kicked up some dust recently when, on "Face the Nation" (CBS-TV), he said he had "received communications from different people in the administration," indicating willingness "to reach some compromises to get this [ whole budget package] through Congress."
White House officials express their respect and liking for the quiet, thoughtful Jones, but they insist no compromise was offered.
"There is a growing feeling," said Jones on television, "that if you have a three-year, 30-percent cut in taxes, that you're leaving yourself wide open to a very large deficit the third year out, and so I believe that the administration, in the indications that I've received unofficially, will be willing to work with the Congress on the tax bill and will be willing to compromise."
By reducing government revenues through major tax cuts, many Democrats believe, budget deficits in the years ahead are likely to swell.
Democratic leaders, backed by studies from the Congressional Budget Office (CBO), believe that the White House has underestimated the level of government spending in coming years.
Fear of large deficits, in fact, impelled three conservative Republican members of the Senate Budget Committee to reject a Reagan-backed budget package until further spending cuts are specified.
The White House indicates that Reagan will try to satisfy the three Republicans that spending cuts in fiscal 1983 and 1984 indeed will bring about a balanced budget by 1984.
But future spending cuts beyond those already earmarked for fiscal 1982 may tread on some mighty sensitive toes, including more than 35 million social security recipients.
That vast program is due for overhaul, Reagan aides acknowledge, to bring its outgo more in balance with income.
But the administration had hoped to defer politically sensitive questions, such as this, until after the first year of budget and tax cuts were well under way, giving confidence to Americans that the Reagan program was working.
In short, the White House does not want to specify in advance what additional cuts it may propose in fiscal 1983 and 1984.
Somewhat the same problem exists where tax cuts are concerned. Mr. Reagan wants a "clean" three-year, across-the-board income tax cut totaling 30 percent, plus tax incentives for business.
With that in place, his lieutenants would be ready to discuss additional tax cut measures, including elimination of the so-called marriage penalty, lighter taxes for Americans working overseas, and reduction of taxes on savings and investment income.
But the White House hopes to postpone discussion of -- and action on -- such measures, until after the three-year initial program is firmly in place.