Budget, tax cut = long, hot summer for Congress

While many Americans make plans for summer vacations, Congress can put its travel brochures aside for now. Hopes for an extended break have been doused, as it becomes clear that the lawmakers will be spending the coming weeks handling some of the most difficult issues of the year.

And if the Washington sunshine has been sparse this season, then the issues will provide plenty of political heat as Congress tackles the federal budget, taxes, and a growing stack of appropriations bills.

Already a clear pattern of jockeying has emerged.

As a House-Senate conference committee begins work on a final budget this week, leaders in both parties are looking for a compromise. It may not please many, but at least it would save the budget process.

However, the White House has noticeably lost interest in passing any budget. It all but dropped out of the congressional budget discussions as both the House and Senate refused to back its plans for 10 percent defense growth coupled with new cuts in domestic spending and virtually no new taxes.

''Congress may still save the (budget) process over the President's objections,'' said House Speaker Thomas P. O'Neill Jr. (D) of Massachusetts in a speech Monday. ''If we do it, it will be because of bipartisan cooperation.''

Senate majority leader Howard H. Baker Jr. (R) of Tennessee, a strong backer of the budget process, now is speaking of the possibility that the two chambers will not agree on a 1984 budget.

A group of members from both chambers will begin, probably Wednesday, to seek common ground for the '84 tax and spending plan. The biggest challenges will be on taxes, which are much higher in the House version, and domestic spending, also higher in the House budget proposal. Defense spending will likely be resolved by a compromise between 6 percent real growth in the Senate version and 4 percent in the House.

Even more difficult than the budget, which gives only target numbers for spending and taxes, will be the actual tax legislation.

Democrats led by House Speaker O'Neill are launching a new ''fairness'' offensive by trying to cap the 10 percent income tax cut that goes into effect July 1. The maximum would be $700 per taxpayer, according to the O'Neill proposal.

''Every taxpayer would receive a cut but those earning $100,000 a year would not get a $2,300 windfall,'' O'Neill said in a speech to the American Stock Exchange. He told reporters beforehand that the cap would give the full 10 percent tax break to those earning up to about $45,000 a year.

The speaker's message is that President Reagan's economic programs aid the wealthy at the expense of the lower- and middle-income groups. And O'Neill underlined it by arguing that during the three years of Reagan tax cuts, the family earning $10,000 to $20,000 will save a little more than $1,000, while the family earning more than $80,000 will have saved almost $60,000.

The tax-cap effort has an uphill journey, coming just three weeks before the third and final phase of the tax cut goes into effect. Even before the O'Neill legislation was written, Senate majority leader Baker predicted that if passed, it would be vetoed and that the veto would be sustained in the Republican-controlled Senate.

At best for Democrats, the issue could provide a brush to paint the Reagan administration as ''government by the rich, of the rich, for the rich,'' as Rep. Tony Coelho (D) of California told reporters last week.

Representative Coelho, chairman of the Democratic Congressional Campaign Committee and a political strategist for his party, also said Democrats would be proving they can govern by doing ''our housekeeping chores.''

In doing its chores, the House showed it could pass its own version of the budget with relative ease and has now turned to the 13 annual appropriations bills that fund the US government. Last year Congress completed action on only six of those spending bills and had to wrap up the rest of the spending in a stopgap ''continuing resolution,'' partly because the House failed to act on the individual spending bills.

''We don't want government by continuing resolution,'' Speaker O'Neill said recently in explaining why the House is now moving full steam ahead on appropriations. It has already passed two '84 appropriations bills: one to fund the Congress itself and another for Housing and Urban Development and other agencies.

Senator Baker, who had once hoped to send Congress home for July and August, now has conceded that the senators will have to stay at their desks to work on the appropriation bills.