Dole may be mixing winning formula for tax-cut compromise
Washington — A tax compromise acceptable to President Reagan and both houses of Congress may be taking shape. Sen. Bob Dole (R) of Kansas, chairman of the Senate Finance Committee, is the architect. The essential ingredient is a three-year annual tax cut, first of 5 percent, and then 10 percent for each of the next two years.
Both White House chief of staff James Baker III and Secretary of the Treasury Donald T. Regan have given it conditional support. They have told Senator Dole they like it enough that they would "look it over."
The senator says the plan encompasses "the three things the President feels firmly about: across-the-board cuts; multiyear, three-year cuts; and that the taxpayers get something this year."
Dole says the Republican majority on his committee will back this plan, which the senator unveiled at breakfast with reporters here May 27. Further, he says, with the presidential support that now seems indicated, he sees the compromise gaining approval of the full Senate.
The Kansas senator now will sit down with Rep. Dan Rostenkowski (D) of Illinois, chairman of the House Ways and Means Committee, to see if, using the Dole plan as a basic blueprint, he can through some give-and-take persuade Mr. Rostenkowski to come along.
The senator says Rostenkowski "has some hesitation about the three years and that there is not enough of the tax cut going to those with the $15,000 to $50, 000 income bracket."
He said the proposed compromise included amendments that would help those in the bracket Rostenkowski was concerned about. And with that concession, he seemed hopeful that Rostenkowski "would go along and talk to other Democratic leaders about giving their support."
Also, the senator indicated that the President might shave his insistence on three years down to 30 months, which might be enough for Rostenkowski.
Under the Dole plan, which he says encompasses the thinking of Republicans on the Senate Finance Committee, the first tax cut of 5 percent would be effective Oct. 1. The second, a 10 percent cut, would take place the following July 1, and another cut of 10 percent the following July 1.
The senator said he would go ahead with his plan even if the House Democrats refused to go along with it.
This seems to be an effort to offer a carrot to House Democrats as well as a stick. Dole appears to be telling them that by going along with his plan legislation can be passed by the middle of July, but that otherwise it will drag on into the fall.
In effect, he is saying that by coming along with Republicans the House Democrats can make Congress (and themselves) look good by putting a tax cut into effect in a hurry.
But he is also implying a threat, it seems, that if House Democrats drag their feet on this compromise, they may be seen as obstructing a popular president in his effort to put the economy back on its feet.
Last week, Dole and Rostenkowski met to discuss possible accomodation on a tax plan. Rostenkowski, it seems, is attracted to these talks with Dole because he sees them as a bond with the Republican senator that could head off another coalition between the administration and conservati ve congressmen who helped Reagan win his budget victory.