House Effort to Write Tax Bill Gets Off to Rocky Start

Two days after President Reagan said “nuts” to those who would raise taxes, the House Ways and Means Committee got off to a rocky start Thursday when it tried to begin writing a tax bill to meet the revived Gramm-Rudman law’s deficit-reduction plan.

A closed drafting session broke up earlier than expected after House Republicans refused to support even the tax proposals that were included in Reagan’s version of the budget.

Committee Chairman Dan Rostenkowski (D-Ill.) said that Democrats may be forced to write the bill, which is expected to include $12 billion in new taxes, without Republican participation. “To say I’m disappointed would minimize my dilemma,” Rostenkowski added.

Getting Them Off the Hook

Indeed, a bill approved by the committee with no Republican support might have a difficult time on the House floor because Democrats are afraid that a vote for higher taxes could then be used as a political weapon against them. Rep. Hal Daub (R-Neb.), a member of the committee, said that Republican votes would “get the Democrats off the hook on raising taxes.”

On the other hand, sending such a bill to the President’s desk also would have a powerful political appeal for Democrats even without Republican support: It would force Reagan to choose between publicly backing down from his pledge to fight a tax increase or allowing Gramm-Rudman’s automatic cuts, including sharp reductions in defense, to take effect.

“We have a good political hammer here,” said California Rep. Robert T. Matsui (D-Sacramento), a committee member. Reagan “is going to have to face his moment of truth, if we can get a bill to him.”

As he signed the Gramm-Rudman legislation Tuesday, the President indicated that he will refuse to accept such a choice. “To those who say we must weaken America’s defenses, they’re nuts. To those who say we must raise the tax burden on the American people, they too are nuts,” Reagan said.

The President and House Republicans insist that Congress should make further spending cuts to reach Gramm-Rudman’s requirement for $23 billion in deficit reduction in fiscal 1988, which began Thursday. Democrats insist that at least $12 billion in new taxes will be needed.

A proposal circulated by Rostenkowski included plans for $8 billion in revenues, including $2.9 billion that was in the President’s initial budget proposal. The most controversial of the higher taxes proposed by Reagan is extension of the Medicare payroll tax to all state and local employees.

Rostenkowski also is sounding out political sentiment for several other proposals, among them extending the 3% telephone excise tax; freezing estate and gift taxes at current rates, rather than lowering them as scheduled, and extending the federal-state unemployment insurance taxes now scheduled to expire next January.