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Urges Tax Revision in Tennessee Speech : Reagan Calls U.S. Growth 'Damsel in Distress'

September 25, 1985|RUDY ABRAMSON | Times Staff Writer

ATHENS, Tenn. — Finding his metaphors in his background as a leading man in Hollywood Westerns, President Reagan on Tuesday compared the nation's future economic growth to a "damsel in distress" who is now "tied to the tracks and struggling to break free."

And the heroes riding to her rescue, he said in a speech from the steps of the McMinn County Courthouse here, "are the citizens across this country who are asking for tax justice."

Although it appears that Congress will not approve the Administration's tax revision proposal this year, Reagan came to Tennessee still insisting that it can be done and continuing his efforts to rally grass-roots support.

Greater Growth, Revenues

In his enthusiasm, he went beyond previous Administration statements, and beyond a new report by his Council of Economic Advisers, when he contended that his tax changes not only would stimulate growth in national output but also would increase the revenues collected by the government.

He found a friendly audience in this economically hard-pressed county seat and at the University of Tennessee at Knoxville, where he spoke to a seminar on the state's promotion of high technology.

Reagan called his struggle with Congress over the tax measure "a kind of drama, with good guys and bad guys--and even a damsel in distress." After touting the role that citizens play, he added: "The villains are the special interests--the 'I got mine' gang. And the damsel in distress? A lass named Endless Economic Growth who's tied to the tracks and struggling to break free."

Gain of $600 a Year

As he has told other audiences in recent weeks, he said his tax plan would produce millions of new jobs and an average economic gain of $600 a year for each household.

Taking issue with critics of his tax measure, he told the crowd of more than 20,000 who greeted him in Athens that his plan will "ultimately bring a lot more money into the government."

"One reason," he said, "is that every time we cut taxes in one area--say, capital gains--we bring in more capital gains tax revenues, because the cut in rates stimulates economic activity."

More Cautious View

But a document released Tuesday by the Council of Economic Advisers took a more cautious view of the impact of the proposed changes.

Based on studies conducted by private economists, the council concluded that Reagan's plan "will improve long-run economic performance by encouraging investment of resources in more productive uses, rather than investments where tax reduction is the chief incentive."

However, the analysis also concluded that this impact would occur gradually, with the adjustment period "as long as 10 years or longer."

At the University of Tennessee symposium, Reagan spoke of his economic programs as the beginning of a new era and told his audience that "misguided tax policies in the late '60s and '70s almost destroyed America's position as the leader of the high-tech revolution."

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