Business Groups Call Deficit Reduction Most Critical Task

<i> Times Staff Writer </i>

For organizations representing business in Washington, the transition from President Reagan to President Bush is a change from very good to even better.

Business almost always found itself on Reagan’s side. His campaigns to cut tax rates and reduce burdensome federal regulations could have been written in corporate board rooms.

But Reagan’s Administration was a tumultuous one. He vetoed 78 pieces of legislation in his eight years, and Congress managed to override him nine times.

Now representatives of business organizations are looking forward with pleasure to a kinder, gentler era. George Bush, while no less business oriented than Reagan, is a two-term veteran of the House of Representatives; of the 13 Cabinet members he has selected so far, two are former senators and three are former House members.


Business leaders predict that Bush will try to establish a more cooperative relationship with the Democratic-controlled House and Senate. And that, they hope, will prove more productive--especially on the all-important issue of reducing the federal deficit--than Reagan’s more confrontational style.

“Bush is a consummate Washington insider,” said Joseph P. O’Neil, president of the American Retail Federation. “He’s more inclined to seek accommodations than President Reagan was. On that score, a lot of issues left on the table are likely to get settled.”

For example, several business lobbyists suggested, Bush might propose a compromise minimum wage increase, lower than the $4.55 an hour unsuccessfully sought by the Democrats. That way, Bush could get credit for helping the working poor without offending business groups.

Similarly, Bush proposals on parental leave and child care would force Congress to address those issues on his terms and impose less of a burden on business than Democratic alternatives that were talked to death in the Senate last fall.

Prefer Spending Cuts

Business has no particular legislative wish list of its own. At one time it might have hoped that Bush would follow through on a campaign promise and propose a tax break for capital gains. But now it understands that Bush does not dare propose tinkering with the tax code for fear that Congress would take the opportunity to legislate tax increases as well as reductions.

“Business agenda?” asked Stacy Mobley, vice president for federal relations of Du Pont Co. “We’re always reacting. This coming year, like all other years, we’re going to be reacting.” Business’ fondest hope is that Bush and Congress will join forces to reduce the federal deficit. Business organizations regard spending cuts as the best approach, although some of them would even tolerate a tax increase.

Sara Ross, assistant vice president for communications of the National Assn. of Manufacturers, said NAM hoped that Bush would follow the lead of the National Economic Commission, a congressionally mandated blue-ribbon panel that is to recommend budget-cutting measures next year.

“We favor spending cuts,” Ross said, “and then a consumption tax increase as a last resort.”

O’Neil, of the American Retail Federation, agreed that the budget was the most critical issue facing the nation and said a lot of Washington insiders expected a tax increase next year.

“Retailers are against consumption taxes,” he said, “but a lot of business firms would support a gasoline tax increase as a way to cut the deficit if the money is earmarked for that purpose.”

Mobley also rated deficit reduction as Bush’s leading problem. “Everything hinges on that,” Mobley said. “At least a combination of spending cuts and new revenues are needed. Bush is going to have to play an active role. I don’t foresee any stalemate or legislative gridlock.”

Veto Less Likely

As for a gasoline tax increase, he added: “We’re not pushing it, but if you had to look at additional revenues, it’s broad-based, doesn’t adversely affect energy-intensive industries and is probably the lesser of all the evils.”

But most business representatives take a hard line against any kind of tax increase. “If Bush agrees to a tax increase as the Democrats want him to do, he’s a one-term President,” said John J. Motley, legislative director for the National Federation of Independent Business, which represents small retail and service firms with an average of eight employees and $500,000 in annual sales.

And Stephen Moore, a budget analyst for the business-backed Heritage Foundation, said Bush should be willing to accept the automatic, indiscriminate spending cuts of the Gramm-Rudman law rather than raise taxes.

On overall relations with Congress, there was a consensus that Bush would be far less likely to resort to the veto and more likely to make deals with the Democrats.

“Bush is a product of Washington,” Du Pont’s Mobley said. “He didn’t run against Washington. My feeling is that he will be able to work with Congress better than Reagan or Jimmy Carter. I think he will seek accommodation.”

Al Bourland, a veteran of 20 years of lobbying for the U.S. Chamber of Commerce, agreed.

“He (Bush) is going to put out the olive branch more than Reagan did,” Bourland said. “I think you’ll have less of a philosophical approach--he’s more inclined to a political, pragmatic solution.”

But Bourland added that the Democratic majorities in the House and Senate could challenge Bush on the theory that he is less popular than Reagan and thus less likely to be able to appeal to the public over the heads of the lawmakers.

In the past, he said, business groups could rely on a Reagan veto or the threat of a Reagan veto to influence major legislation as it went through the House and Senate. “It was one of the biggest arrows in our quiver,” Bourland recalled.

Others, however, think that Bush could undercut his--and business’s--political opponents by going on the offensive on such controversial issues as raising the federal minimum wage, unchanged since 1981 at $3.35 an hour.

Senate Democrats brought up a bill this year to raise that figure to $4.55 an hour, but Republicans filibustered it to death--even though Bush said in a campaign statement that he favored some unspecified increase.

Lobbyist Motley said Bush could propose a $4.25 hourly rate, together with a lower figure for young people, and probably get near-unanimous Republican support and enough Democrats to assure the bill’s enactment.

“I think you may see this Administration go on the offensive with initiatives of their own in two or three areas,” Motley said.

The same technique, business lobbyists agreed, could be employed on other social legislation to get bipartisan backing for Bush initiatives on child care, unpaid leave for new parents and health insurance for workers not covered by company plans.

And on environmental issues, business expects renewed action now that Senate Democrats have selected George J. Mitchell of Maine as their new leader and Bush has named William K. Reilly, president of the World Wildlife Fund, as head of the Environmental Protection Agency.

In particular, Congress is likely to try to amend the Clean Air Act, a pet issue of Mitchell’s. But business groups are confident that Mitchell will have to make concessions to their concerns over additional costs if he wants to get the legislation through Congress.

On their major stand against new federal benefits, the business groups expect Bush to be on their side, with his veto pen ready if necessary. But there is a yearning for a more ecumenical style.

“Bush is a very pro-business President, and we’re grateful for that,” said the NAM’s Ross. “But problems are coming to a head, with a lot of unfinished business. We need a consensus approach.”