Bush Visits State, Plugs Tax Reform, Free Trade

Vice President George Bush arrived in California on Tuesday on a four-day visit, politicking for the President’s tax plan, for free trade, for Republican candidates and, yes, for Bush himself.

The vice president ate a private lunch of stuffed sole with one of his biggest California boosters, Gov. George Deukmejian, and the two toured the Capitol, trailed by a small mob of photographers. An aide said the vice president offered in general terms to assist the governor in his upcoming 1986 reelection.

Bush, who is expected to run for President in 1988, posed with Deukmejian beneath a Capitol portrait of a Republican who has figured importantly in both their careers, Ronald Reagan. Bush remarked that the realistic painting of Reagan during his governorship here from 1966 to 1974 reminded him of a “high school yearbook.” Deukmejian has been an unabashed fan of Bush’s since the 1984 national campaign, and the governor made the nominating speech for Bush at the GOP convention.

At an earlier meeting with business leaders that began Bush’s California tour, the vice president insisted that the Reagan tax simplification plan would save taxpayers here money even if they could no longer deduct their state and local taxes.

This issue of deductibility has generated substantial criticism of the Reagan tax plan in high-tax states such as California. But Bush, citing a California Franchise Tax Board study, said the plan would result in an overall tax savings of $3.2 billion in the state.

Roger Mentz, chief economist of the U.S. Department of the Treasury, who accompanied Bush, warned against high hopes for compromise on the issue.

“Any compromise on state and local (tax deductibility) would have to be a very small one,” Mentz said. The reason, he added, is to keep the President’s tax plan in balance.

During questioning by businessmen, Bush seemed to drift from the script somewhat, focusing less on tax reform than on the persistent federal budget deficit, which some forecasters now say is on its way back toward $200 billion for 1986.

The vice president described deficit reduction as the solution to no fewer than five national problems raised--interest rates, fear of renewed inflation, the U.S. trade deficit, the deterioration of highways and other public works, and the economic troubles facing farmers.

Some Republicans, including Senate majority leader Bob Dole of Kansas, began 1985 urging action on the deficit before tax reform.

The vice president spoke privately with Deukmejian about the Reagan tax plan during their luncheon. Vice presidential press secretary Marlin M. Fitzwater said Deukmejian, who has called the plan “a good beginning but . . . only a beginning,” noted that two provisions of the measure have stirred concern in California: deductibility of local taxes and major changes in the taxation of the timber industry.

Bush later visited a high-tech Silicon Valley factory, and in a speech the American Electronics Assn. meeting in Santa Clara, he spoke strongly against political demands for protectionist international trade policies. He described protectionist sentiment in Congress as the strongest he could remember in his life.

“As many as 800,000 jobs in California depend either on imports, exports or both. Protectionism here is certain to be answered inevitably with protectionism abroad, and those 800,000 jobs or certainly many of them would soon be threatened,” he declared.

Bush has scheduled closed-door meetings with California Republican leaders and political supporters. The purpose is to describe his 4-month-old political action committee created to help GOP candidates in 1986 elections.

Spokeswoman Shirley Green said the vice president explained how the organization operates but undertook no direct fund raising.

One of these meetings occurred Tuesday at midday with state Senate Republicans as the vice president toured the Capitol. This caused a brief stir among some Democrats, including Senate Democratic floor leader Barry Keene of Benecia, who complained that Bush did not visit with them.

As a consolation, Keene was publicly offered the chance to shake the hand of a Republican state senator who had shaken the hand of the vice president.