Stockman Calls for $100-Billion Tax Hike : He Sees Deficits Causing Economic Turmoil, Assails Reagan Plan
Former Budget Director David A. Stockman called Sunday for a “very major tax increase” of at least $100 billion a year to help erase massive federal budget deficits and prevent “traumatic economic dislocations.”
Blasting Republicans and Democrats alike for political cowardice in failing to deal firmly with deficits, Stockman also urged a two-year federal spending freeze that would hit such sacred cows as Social Security increases and defense appropriations to prevent key sectors of the economy from sliding into a “depression.”
The often controversial Stockman, who quit last month to write his memoirs and take a lucrative job as a Wall Street investment banker, took a swipe at President Reagan’s tax revision program, calling it “preposterous” because it was not designed to bring in additional revenue that would lower the deficit.
‘Joy Ride Is Over’
“The joy ride is over,” Stockman said in an interview on ABC’s “This Week With David Brinkley,” citing recent political and economic developments to prove his point. “We just can’t live with these massive deficits without traumatic economic dislocations. We’re beginning to see them in the panic on trade, the balance of payments deficit, this effort to try to tinker with the world currency market to bring down the dollar.”
While figuring prominently in the implementation of Reagan’s economic policies, Stockman still frequently managed to get into hot water for appearing to criticize those programs. Not long after Reagan’s 1981 tax cut package became law, the President had to scold Stockman for comments the budget chief made to the Atlantic Monthly magazine, which cast doubt on some of the economic assumptions made to justify the cut.
Last June, an off-the-record Stockman speech to the directors of the New York Stock Exchange created a stir when the New York Times reported that he had backed a tax increase as the only deficit reduction step “consistent with fiscal sanity.” Reagan has firmly opposed any tax hikes. Although a text of the speech showed that Stockman’s remarks apparently had been taken out of context, his latest tax statements were unequivocal.
“If we’re going to get out of this situation and restore any semblance of national solvency and fiscal discipline, it’s going to take a very major tax increase, larger than we’ve ever had or contemplated before,” Stockman said. He said that the increase should raise at least $100 billion in revenue a year, about 2% of the gross national product.
Assails Tax Loophole Cuts
Stockman, who was still on the job when Reagan launched his tax plan last May, ridiculed a major part of that program, suggesting that money saved from cutting tax loopholes should be used to reduce the deficit.
“I think the idea of a revenue-neutral tax reform is preposterous,” Stockman said. “The loopholes that we close, the revenues ought to be put in the Treasury to pay our bills, not to give further tax cuts. We can’t afford the ones we have already.”
Appearing on the same program, Sen. Bob Packwood (R-Ore.), chairman of the Senate Finance Committee, predicted that Congress would finish action on Reagan’s tax program this year only if the House passed the bill and sent it to the Senate by Nov. 1, at the latest.