President to Offer Revised Plan on Tax Reform, Regan Says

United Press International

White House chief of staff Donald T. Regan today defended a newly passed Senate budget plan and said President Reagan soon will offer Congress a revised tax reform package that will take millions of people in lower tax brackets off the rolls.

Regan, in an interview shortly before leaving Portugal with the presidential party, took issue with comments by an NBC “Today” reporter that Reagan had “caved in on defense” and “broken his promise on Social Security” in accepting the budget passed by the Senate, 50 to 49, early today. (Story, Page 8.)

Regan said, “Those are pretty strong words. I wouldn’t quite agree, obviously, with them.”

As for a tax reform package, Regan said the President will offer a fair and equitable plan to Congress soon.


“On defense, the President has made a very careful hedge on that. If in fiscal 1986 he thinks that he needs more money for defense, he’ll go back to the Congress for supplementary funds.

‘Best He Could Do’

“As far as the COLAs (cost-of-living adjustments for Social Security and other government pensions) are concerned, this is the best that he could possibly do,” Regan said.

He said that about 90% to 93% of the savings in Reagan’s original budget on non-defense items are in the Senate-passed package. He noted 13 programs have been eliminated and “practically every other program, including farming and the like, are being cut back.”


“Every part of the federal budget is being affected,” he said. “That means more Americans are being affected by this. But it has to be done if we’re going to keep the economy going.”

As for the Social Security issue, Regan said 79 of the senators agreed something should be done with the cost-of-living adjustments for recipients.

Basic Amounts Unchanged

“This doesn’t change the underlying amounts of money that they’re going to receive,” he said. “That is their actual benefits. What this reflects is the add-ons each year and for one year they’ll be frozen.”

Regan also disagreed that the tax reform plan proposed by Reagan and the Treasury Department is tilted more toward businesses.

“What we’re trying to do is to keep individual rates down to a maximum of 35%, hopefully even less than that when the final decisions are made,” he said. “In addition we’ll be taking millions off the tax roll by upping the exemptions that people will get.”

Among the items expected to be included or changed in the new proposal, Regan said there will be “some” taxing of health insurance premiums.