Tax Bill in Limbo as House Refuses to Even Consider It : Reagan Seeks New Vote After 223-202 Setback

The House, in a stunning setback to President Reagan’s drive to overhaul the nation’s tax code, refused by a 223-202 vote Wednesday even to consider the House Ways and Means Committee’s tax proposal.

Reagan hastily began meeting with Republican House members late in the day in an effort to engineer a new vote today and reverse Wednesday’s outcome. But shocked and angry Democratic leaders, who supported the tax bill, insisted that they would not try to resurrect it until Reagan could promise enough GOP votes to ensure its passage.

The defeat came largely at the hands of the President’s fellow Republicans, who have warned for more than a week that they would oppose the bill. Despite pleas from Reagan to support the measure, only 14 House Republicans voted to allow debate on the bill to proceed, and 164 lined up on the other side.

“I would have to say if the President can’t deliver the votes . . . the bill is dead,” House Speaker Thomas P. (Tip) O’Neill Jr. (D-Mass.) said. Ways and Means Committee Chairman Dan Rostenkowski (D-Ill.), the chief architect of the House version of the bill, estimated that he needs support from at least 30 Republicans.

Reagan, in a speech to a business organization backing the bill, said: “We do not believe that after all our efforts . . . our work should be lost for lack of a handful of votes. . . . If we let tax reform die, I think it will be years before we can bring it back.”

The bill went into limbo when the House rejected the rule to set the bill’s terms of debate on the House floor. In all, 188 Democrats supported the rule and 59 voted against it.

GOP Support Told

Republicans who met with Reagan after the vote told reporters that they would support the rule, which would have permitted the House to vote only on the Democratic-written bill and a Republican substitute, if it were altered to allow votes on some amendments.

But a White House official said he did not believe changing the rule was the answer. “If you start opening that rule,” he said, “it’s like opening up Pandora’s box” because House members would be tempted to support revenue-losing amendments sponsored by special interests.

Instead, White House strategists were seeking a second vote on the same rule today, in the hope that they could whip their troops into line.

But California Rep. Robert T. Matsui (D-Sacramento) warned that the effort might fail. With only a few days remaining before Congress adjourns for the year, “the special interests are starting to smell blood,” he said. “There isn’t a lot of time for Reagan to round up the Republicans we need.”

Second ‘Revolution’

Reagan had hailed his tax plan last May as a “second American Revolution” that would undo many of the inequities of a 72-year-old tax system. His proposal would reduce individual and corporate tax rates and eliminate a host of tax breaks.

The House bill, which was approved by the Ways and Means Committee, differs significantly from Reagan’s original proposal--it would shift a greater share of the tax burden away from individuals to businesses, for example, and cut tax rates somewhat less than Reagan had asked. But the President embraced the measure as his only hope of achieving any of the tax changes he had sought.

From the start, the strongest opposition to the proposal has come from Republicans, who now contend that the Ways and Means bill would hurt the economy. Joining them are Democrats from states that rely heavily on oil, timber and heavy manufacturing--already depressed industries that would suffer under the tax proposal.

Reagan asked that Republicans support the Ways and Means bill so that the GOP-controlled Senate would have a chance to improve on it. The Senate will act only if a version of the bill is approved by the House.

Vote Usually Routine

But Reagan’s argument did not move House Republican leaders. And the procedural vote on the usually routine motion to approve the rule offered them their best opportunity to stop the measure because they would not be forced to vote against the bill itself.

“Kill this snake before it gets out of the hole,” said Rep. Trent Lott (R-Miss.), the House’s second-ranking Republican.

Some House members said they opposed the rule because it would not have allowed a separate vote on a provision of the bill to impose higher taxes up-front on pensions for government workers. While this issue dominated the House debate on the rule and added some votes to the opposition, both sides agreed that it did not change the outcome.

“People used that as an excuse,” said Rep. Raymond J. McGrath (R-N.Y.), a Ways and Means member and one of the bill’s few GOP supporters. “None of the major public employee unions felt that was a problem with the bill.

“If I were the chairman (Rostenkowski), I’d go back to the President and tell him to deliver the votes. Then we can proceed.”

Campaign in Question

It was unclear whether the President’s effort to round up Republicans before Wednesday’s vote was as vigorous or skillful as his previous successful campaigns for other issues, such as the MX missile. Some congressmen said Reagan had argued forcefully, but others disagreed.

“The White House still, even at this late date, hasn’t shown how strongly they want this bill,” one Republican aide said.

O’Neill stated flatly: “If the President really cares about tax reform, then he will deliver the votes. Otherwise, Dec. 11 will be remembered as the date that Ronald Reagan became a lame duck on the floor of the House.”

California’s 45-member congressional delegation voted largely along party lines. Rep. Robert J. Lagomarsino (R-Ojai) was the only California Republican supporting the bill on the procedural vote. Three Democrats--Ronald V. Dellums of Berkeley, Vic Fazio of Sacramento and Augustus F. Hawkins of Los Angeles--opposed it over the pension issue.

California Rep. Tony Coelho (D-Merced), a Democratic leader who had been accused by O’Neill of working to defeat the bill, voted for the rule that would have allowed debate to proceed.