Reagan and tax cut: will he have to settle for less?

For the first time the Reagan asministration faces the possibility of a major reversal. The issue: its tax-cut proposal. Even should President Reagan lose and be forced to accept the Democratic proposal, a 15 percent tax reduction over two years, he still will be getting much of the tax relief he set out to get last winter.

Therefore, it would not be a substantial defeat, not a change-of-direction blow. But settling for less than his 25-percent-over- 33-months tax cut might look to the public like a shift in the political wind, perhaps a hint of things to come.

Outwardly, the Reagan forces still are talking bravely of putting through their tax policy without further concessions.

But privately, key administration figures are expressing growing concern.

"We need all our Republicans in the House to vote with us," one White House aide says, "but as of now there are a dozen or so who are expressing reservations about our proposal."

"We think we have 15 to 18 solid votes from the conservative Democrats," another White House aide says. "But we need to have our Republicans hold with us and still pick up 26 Democratic votes."

There also are indications in recent days that conservative House Democrats are moving back to the support of House leadership, at least on this important measure.

House Speaker Thomas P. O'Neill Jr. (D) of Massachusetts and Rep. Dan Rostenkowski (D) of Illinois are wooing these conservatives, the so-called "boll weevils," by including "sweeteners": tax breaks for oil-well owners and businessmen that are more alluring than those included in the Reagan tax package.

Some Democratic conservatives in the House are taking their own vote counts and reporting a softening of support for Mr. Reagan along with a movement, not yet irreversible, toward voting with fellow Democrats on this issue.

But, as one Reagan associate puts it, "We've really just begun to fight. The President will be working intensively now to bring both these Democrats and wavering Republicans into the fold."

He emphasized that up to now Reagan has been most persuasive once he addressed himself fully to putting his coalition together.

"It's doable," says chief of staff James Baker III. "We said the budget fight was tough but doable, and we characterize the tax fight as tougher but doable. We think we can get it or we wouldn't be going into it."

Mr. Baker said the President's "strongest argument" will be that "a tax cut is what the election of 1980 was all about."

He said that Reagan would argue that anything less than his tax-relief plan would not be meaningful, would not give the business community enough incentives to push boldly ahead and strengthen the economy.

On the other side of the issue, the Democratic Party is applying new heat to its renegade members in the House.

Democratic national chairman Charles T. Manatt says it is "high time" that the House Democratic caucus punish these members if they don't get in line.

Further, Democratic Party leaders at the state and local level are beginning to send this message to conservative Democrats: Keep voting Republican and you may lose your House seat next time around.

The President's advisers also are concerned that the Democratic leadership in the House may delay the vote on the tax measure until after the summer recess.

"They might delay it until the President has lost more of his public support, " one administration official says. "That might make it even more difficult for us to win."

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