Ex-Reagan Aide Says Tax Reform Would Be Harmful

Murray L. Weidenbaum, formerly President Reagan’s chief economic adviser, said today that the President’s tax-overhaul plan would worsen national problems and should be abandoned in favor of serious efforts to reduce the budget and trade deficits.

“When I rank the most serious problems facing our country right now, tax reform doesn’t even make the list,” Weidenbaum, the first person to chair Reagan’s Council of Economic Advisers, told the Senate Finance Committee.

Two other economists with ties to the Reagan Administration--Alan Greenspan and Paul Craig Roberts--also said there are more important problems.

They agreed with Weidenbaum, and with three economic forecasters who testified Wednesday, that either Reagan’s tax bill or the version passed by the House would hurt the economy, especially the ability of U.S. businesses to compete abroad.

“Matching pluses and minuses suggests that the short-term impact of the (House) tax bill on the economy would be at least mildly negative,” said Greenspan, who has advised Reagan and served as chief economic adviser to President Gerald R. Ford.

“The major adverse impact of the tax bill is likely to be in manufacturing industries which already have been depressed significantly by high interest rates and the strong dollar.”

He said Reagan’s own tax bill was only marginally better than the House version.

Roberts, who as an assistant secretary of the Treasury helped put together Reagan’s 1981 tax plan, said of the 1985-86 version: “We can’t find any section of the economy that would be helped by this bill. . . . There doesn’t seem to be any real purpose for this bill.”

“It is an exercise in pretense,” added Roberts, now a professor at Georgetown University.

The Finance Committee is holding a final round of hearings on the tax legislation before beginning to write its own version. If the lawmakers followed the advice of their first six witnesses--all economists--they would abandon the effort.