Frustrated That Spending Cuts Are Only Alternative : Senators See Taxes as Factor on Deficits

From Newsday

Members of the Senate Appropriations Committee expressed frustration Tuesday that efforts to reduce the federal deficit were being restricted to spending cuts, without consideration of taxes.

“You know some of us look at the problem from perhaps a little different perspective--that there are really two sides of the coin: You have the spending side and the revenue side,” the committee chairman, Sen. Mark O. Hatfield (R-Ore.), told senior members of the Reagan Administration on Tuesday. “Really, I think we’re dealing with half a problem, half a solution.”

Sen. William Proxmire (D-Wis.), complained “about the appalling fact that very, very large corporations with big net incomes, net profits are paying literally nothing in income tax.” He cited General Electric as an example.

Proxmire called for a 15% minimum corporate tax.


Treasury Secretary James A. Baker III said that, although he was “not prepared to endorse a minimum tax on corporations,” such inequities provide “one of the most persuasive arguments there is for an overall reform of the tax system.”

He said: “It is one of the reasons, quite frankly, that tax simplification--tax reform--is one of the President’s domestic priorities.”

Last Resort

Reagan has said he will oppose a tax increase except as a last resort. Although he has endorsed tax simplification, he also has said that changes in the tax code should not result in any net increase in tax revenues. The tax simplification proposal disclosed by the Treasury Department last November would reduce the overall tax burden on individuals while raising more funds from corporations.


Baker refused to pinpoint when the White House would submit a tax simplification proposal to Congress, saying only that it would come up sometime this year.

Baker and Budget Director David A. Stockman took issue with the move by Senate Republicans to examine an across-the-board budget freeze instead of Reagan’s $974-billion 1986 budget proposal.

Reagan’s plan allows defense spending to rise more than $30 billion while making $40 billion in cuts in domestic programs.

“We wouldn’t get the support we need downtown,” Baker said of a freeze, alluding to the President. Stockman called a freeze a “cop-out” in which Congress would avoid making decisions.

Baker and Stockman also sparred with committee members from both parties who took issue with Reagan’s call for a constitutional amendment to require a balanced budget at the same time that he proposed a 1986 budget envisioning a $180-billion federal deficit.

Sen. Lowell P. Weicker Jr. (R-Conn.) said Reagan’s call for the constitutional amendment under such circumstances was like “a quarterback leaving the game and going up into the stands and saying, ‘We need a touchdown.’ ”

In other developments, Sen. Warren B. Rudman (R-N.H.) unveiled a plan to cut $4.6 billion from Reagan’s defense buildup in 1986 and $21 billion over three years.