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Reagan Touts Tax Reform but His Plan Is in Trouble

September 06, 1985|RUDY ABRAMSON and TOM REDBURN | Times Staff Writers

RALEIGH, N. C. — President Reagan touted his tax initiative Thursday as the key to a new "age of opportunity," but more trouble brewed for his top-priority domestic program even as he promised that the plan would mean "more jobs, bigger paychecks, smaller taxes."

Reagan--who is banking on his personal popularity to help pass a proposal whose fate is widely considered doubtful--characterized himself as an underdog confronting an array of enemies and cynics "with a vested interest in the status quo."

"By closing loopholes and making sure that everybody pays their fair share, we can lower tax rates for everybody," he said. "With lower personal and corporate rates and another cut in the capital gains tax, small and entrepreneurial businesses will take off. Americans will have an open field to test their dreams and challenge their imaginations--and the next decade will become known as the age of opportunity."

But, despite the resounding cheers from more than 20,000 college students jammed into a sweltering basketball arena at North Carolina State University, it was not a great day for the Reagan tax proposals.

En route to Raleigh aboard the President's plane, Sen. Jesse Helms (R-N. C.), one of Reagan's most loyal boosters, told reporters that he does not see much evidence of support for tax changes in North Carolina.

"With all due respect to my President," Helms said, "I have not heard one person in North Carolina mention it, except in a deprecating way."

Back in Washington, Rep. Robert H. Michel of Illinois, the House Republican leader, sounded a similar note, saying that voters are more concerned about the federal budget deficit and the trade deficit than they are about the tax system.

Michel's comments were markedly similar to those of House Speaker Thomas P. (Tip) O'Neill Jr. (D-Mass.), who said he found little enthusiasm for the Reagan tax plan during the congressional recess. O'Neill predicted that a tax bill would have difficulty getting through the House.

On top of that, Rep. Dan Rostenkowski (D-Ill.), chairman of the House Ways and Means Committee, postponed consideration of the tax measure.

The tax-writing committee initially had been scheduled to begin work on the Administration's proposal on Sept. 17 but delayed it until Sept. 23 so it could take up such issues as the Medicare budget and trade hearings, which many members view as more important than the tax revision bill.

Key House Democrats met with the Speaker Thursday afternoon, and sources said they favored bringing trade legislation to a vote before taking up Reagan's tax initiative. O'Neill and Rostenkowski balked at their proposal, according to one source.

"If we don't get the trade bill first, we'll never get it," one participant in the session reportedly said.

Sensing Trouble

However, other sources said that the key Democrats' move did not indicate an effort to bottle up the tax bill in committee or to prevent it from coming to a vote.

White House officials, sensing trouble for the tax bill, have pointed to Reagan's unusually high approval rating in public opinion polls and suggested that his personal popularity can be translated into congressional support.

Reagan's 20-minute speech at North Carolina State was his second for the tax plan since he ended his three-week Santa Barbara, Calif., vacation. He is expected to go on the road regularly over the next several weeks to try to drum up support.

In the speech, Reagan did not deal with the tax package's impact on future federal deficits, a problem that the Administration addressed earlier this week with new proposals that would increase revenues by $22.9 billion.

'Revenue Neutral'

One university student raised the question during a closed luncheon meeting with the President, White House spokesman Larry Speakes said, and Reagan assured the group that the tax overhaul would be "revenue neutral"--that is, it would not increase the deficits.

In crediting his first-term tax cut with creating nearly 8 million new jobs, the President declared: "Our goal is a decade of expansion and 10 million more jobs in the next four years.

"And that's 10 million very good reasons why our nation simply can't afford a tax increase that would hurt economic growth," he said. "No matter what they call it, no matter how they disguise it, no tax increase will cross my desk without my writing a big veto."

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