Former President Gerald R. Ford yesterday criticized President Carter as-yet-undisclosed $25 billion tax-cut package as too small and recommended one nearly three times as large by 1981.
Ford said the Carter proposals would barely offset the big new tax increases on energy and Social Security and inflation-induced rises in the personal income tax in 1978. But the overall tax burden will continue to grow through 1981 under the President's program, the former chief executive charged in a speech last night to the American Enterprise Institute.
However, neither President Carter nor his advisers have ruled out further tax cuts by 1981, and Carter's top economic adviser, Charles L. Schultze, has hinted that further tax cuts will be needed beyond the $25 billion the President will propose shortly.
Ford said that under the administration's approach, federal taxes would grow from 19.4 per cent of total economic production today to 21 per cent by 1981.
That translates into a net tax increase of "some $45 billion" by 1981, according to Ford. "In other words, for every one dollar the government says it is saving you with its right hand, it will be quietly taking away two more dollars with its left hand."
Ford proposed holding federal taxes to 19.4 per cent of total economic production in 1981.
"What we need now are not paper tax cuts, but real tax cuts," Ford said.
He acknowledged, in remarks prepared for the first annual Francis Boyer lecture on public policy, that the huge tax cuts he proposed "cannot be put into place overnight without disrupting the economy, so I recommend they be phased in carefully."
He also admitted that the nearly $70 billion in tax cuts he advocates would jeopardize the chances of balancing the federal budget by the end of the decade - a goal that is shared by Ford and Carter, although Carter has targeted a balanced budget by fiscal 1981, which starts in late 1980.
Ford, like Carter, would target most of the tax cuts toward middle-income taxpayers, and the former President said he would also reserve a "healthy proportion" for American business "so that we can unlock the enormous reservoir of capital and put "it to work creating new jobs."
If that occurred, Ford assured his listeners, the tax revenues that would result from the new jobs (and therefore new taxpayers) would be far greater "than many economists would predict."
He said, however, that to the extent revenues fall short of desired expenditures, "it is imperative that the President and Congress hold down the growth of spending, so that we can still balance the budget and achieve stable, non-inflationary growth."
Ford did not specify how much of his proposed $68 billion would go to individuals and how much would be directed toward business.
As outlined by President Carter's advisers, the administration's tentative $25 billion to $26 billion package would contain about $6 billion to $7 billion in business income tax cuts, $2 billion in excise tax cuts and the rest in individual tax cuts.
Ford said that the economy must be viewed from the long-range perspective and its problems - high unemployment, high inflation - cannot be solved by overnight stimulants.
"In enacting tax cuts in 1978, then, let's not do it for the wrong reason - which is just to give the economy a quick but short-lived shot in the arm - but for the right reason, and the right season is that we need to restore the basic long-term health and vigor of our economy."
Ford hinted in the address - named after the long-time head of the Smith-Kline Corp., a major pharmaceutical company - that he is still interested in the 1980 Republican presidential nomination.
"Politically, I must confess that as I read about some of the troubles of this administration, my pulse sometimes quickens, but I also shiver just a bit thinking about the nation's welfare . . . Trying to get a leg up on Mr. Carter for 1980 is a lot less important that some politicans think - Republicans or Democrats, frankly - than trying to make it to 1980 in one piece."
The American Enterprise Institute is a non-partisan research foundation, that is generally considered slightly conservative. Former President Ford is a distinguished fellow of the institute. CAPTION: Picture, President Carter meets with Gerald Ford. Former President called for a $68 billion tax cut. Ap