GOP Split Widens on Tax Increase Issue

The differences among Republicans over proposed higher taxes widened Friday as President Reagan repeated to House Republicans his opposition to new taxes and Senate Budget Committee Chairman Pete V. Domenici (R-N.M.) warned publicly that $20 billion in additional revenues might be needed this year.

Reagan made a rare visit to Capitol Hill to meet with the House GOP members to discuss his entire legislative agenda, the center of which is his fiscal 1987 budget. The visit also was a preview of the campaign Reagan plans to launch in a nationally televised address next week to build public support for military spending growth and $100 million in new aid for rebels fighting Nicaragua’s Sandinista government.

The session was closed to the media, but one aide who attended it recalled that Reagan paraphrased Shakespeare as he told the Republicans: “A tax increase by any other name would smell this rotten.” Reagan repeatedly has contended that deficit reduction can be accomplished through domestic spending cuts alone, still allowing for a 3% after-inflation increase in the defense budget.

Domenici, speaking across town to the National Assn. of State Legislators, said Congress would try its best to develop a fiscal 1987 budget that would cut the deficit without raising taxes.

But if that effort does not cut the deficit to the $144-billion target mandated under the new Gramm-Rudman balanced-budget law, Domenici said, “we’ll either have to punt, or put some kind of revenues in . . . somewhere between $12 (billion) and $20 (billion).” The law is being challenged in court, but lawmakers have vowed to adhere to its goals.

Domenici suggested that the new revenue, if needed, would be raised in some form other than income taxes.

The House GOP members said their session with Reagan was upbeat--a clear contrast to his previous visit late last year, when he dashed up to Capitol Hill to personally lobby to rescue an endangered tax-overhaul bill.

At that time, House Republicans, complaining that the White House had not consulted them on the bill and generally ignored their concerns on most issues, had staged a revolt that had threatened to kill the legislation. Since that brush with near-defeat, the Administration has tried to keep in closer contact with the badly outnumbered House GOP minority.

One area where the new strategy may have paid off is in the request for aid to the Nicaraguan rebels, known as contras. Last year House Minority Leader Robert H. Michel (R-Ill.) told Reagan flatly that his proposal for military aid was “dead in the water” and Reagan had to settle for humanitarian aid.

This time around, Michel is backing the $70 million in military aid and $30 million in economic aid that Reagan has requested. He also has suggested that Reagan ask that the funds be diverted from some other program, rather than be appropriated separately, to ease congressional concerns about additional spending.

“We’ve got a lot of missionary work to do,” Michel said. But he added: “We think from the standpoint of the budget restraints and all the rest here, we can get more support through reprogramming than we can simply (by) coming up with a brand-new $100 million off the wall.”

However, House Speaker Thomas P. (Tip) O’Neill Jr. (D-Mass.) repeated his opposition to the additional aid to the contras and warned that it could ultimately draw U.S. forces into the battle.