Ford and Carter Ask Bush to Accept Some Tax Hikes

In a rare bipartisan effort, former Presidents Gerald R. Ford and Jimmy Carter met Monday with President-elect George Bush and recommended that he agree to at least moderate tax increases to reduce the federal budget deficit.

Ford and Carter are among the loudest voices yet in a chorus of major figures and institutions urging Bush to break his campaign promise of “no new taxes.”

During a one-hour meeting at the White House, they presented Bush with a report telling him that “being a candidate for President and being President are two very different things. . . . There is no disgrace in adjusting your course to meet changing realities; but there may be danger in failing to do so.”

At a minimum, they told Bush in the paper, titled, “American Agenda,” he should ask for about $13 billion a year in increased taxes on cigarettes, alcohol and gasoline as part of a package that could defray the deficit, now about $150 billion, by $40 billion a year.

Ford and Carter also suggested spending cuts, including a small reduction in Social Security cost-of-living increases, a controversial item during the campaign.

Although former presidents often have offered their views, solicited and otherwise, to their successors in the past, no recent precedent exists for the sort of bipartisan effort that the American Agenda report represents.

The project, compiling the recommendations of a number of former Ford and Carter Administration officials, was proposed by Ford’s domestic policy chief, James Cannon, and Carter’s domestic adviser, Stuart E. Eizenstat, to provide independent guidance to the incoming President on major issues he will confront. It was funded by a grant from Times Mirror Co., which owns the Los Angeles Times and other newspapers.

How much influence the advice will have remains to be seen.

Bush “listened very carefully” but gave no indications that he is ready to change his mind on taxes, Ford told reporters after the meeting. Bush’s press secretary, Sheila Tate, was more blunt. When asked at an afternoon briefing whether the tax-increase appeal had altered Bush’s opposition to tax hikes, she said, simply: “No.”

In addition to suggesting that Bush break his campaign pledge, the two former chief executives called for several major departures from the policies of the Reagan Administration.

Bush, they said, should propose spending increases on children’s programs, such as Head Start and childhood immunizations and environmental cleanup efforts, which President Reagan at one point or another has tried to cut. They also urged changes from current Administration policy toward the beleaguered savings and loan industry, the Third World debt problem and relations with Congress.

The two former presidents took pains not to criticize Reagan directly, Carter told reporters after the two met with Bush. But in some areas, ranging from government management to broad social concerns, the report offered strong, although indirect, rebukes to Reagan policies.

For example, they listed as one priority for the new President a move to “depoliticize” the White House Office of Management and Budget. Under the current Administration, “OMB’s figures and data are . . . viewed with suspicion,” they said.

On social policy, they said, “we see two Americas, one increasingly wealthy, one tragically poor, a land of opportunity for most and of idle hopelessness for too many.”

Although the report ranged over both foreign and domestic policies, urging, among other things, stronger encouragement to Japan to aid less-developed countries, the deficit was the centerpiece of both the report and the meeting between the former presidents and Bush.

Reducing the deficit with no tax increases and without touching either defense or Social Security, as Bush advocated during the campaign, “is impossible,” Ford and Carter warned Bush in the report.

“We don’t see any route” to balancing the budget without some tax increases, Carter said after the meeting. Ford, for his part, called the tax increases they propose “moderate” and “responsible.” The proposed tax hikes would increase the cost of a pack of cigarettes by 16 cents, gasoline by 6 to 10 cents a gallon and the cost of a six-pack of beer by about 50 cents.

‘Flexible Freeze’

Bush, in adamantly rejecting tax increases in many campaign appearances, has said that he believes economic growth and a “flexible freeze” on government spending programs could bring the deficit under control.

On the growing savings and loan crisis, Ford and Carter “stressed very strongly” that Bush should “deal with the problem quickly,” said Eizenstat, who sat in on the meeting along with Cannon and three senior Bush aides.

“If we thought the problem was getting better, we’d favor just riding it out, but it’s getting worse,” said Eizenstat, the report’s co-director. Bailing out the depositors in bankrupt savings and loans will cost somewhere between $50 billion and $100 billion, some of which may have to come out of taxpayer funds, Ford and Carter told Bush.

The two also warned him that the United States risks losing world leadership in handling the Third World debt crisis. Japan already is preparing its own plan for helping Third World nations with their debts and the U.S. government will find itself playing second fiddle to the Japanese on the issue unless a new U.S. plan is developed before the June economic summit of the major industrial nations, Carter told Bush.

During the campaign, Bush said only that he supported a plan put forward by his campaign chairman, James A. Baker III, while Baker was secretary of the Treasury. The plan by Baker, whom Bush has tapped to be secretary of state, would have provided Third World debtor nations with additional money or voluntary write-offs by banks in return for commitments to reform their domestic economies along free market lines.

But, Ford and Carter told Bush, that plan no longer is enough to handle the growing problem of countries, particularly in Latin America, that cannot afford to pay the interest on their loans.

Ford and Carter also told Bush of a discussion they had had with several leading senators about the problem of congressional “micromanagement” of executive branch policy-making. The senators had suggested that Congress would be willing to give the executive branch more latitude if Bush consulted with Congress more than Reagan had.

Ford and Carter recommended that Bush invite congressional leaders to an unstructured three- or four-day retreat outside of Washington to begin to build a cooperative relationship, Carter said. The idea “seemed to be of great interest” to Bush, Carter said.