Both the Carter administration and Congress still are leaning strongly against proposing a tax cut for 1980, despite widespread predictions of a recession and the start of a presidential election campaign.
Talks with top White House policymakers and influential members of Congress show surprising unanimity on the issue. There's no sign of any tax-cut fever yet at either end of Pennsylvania Avenue.
Moreover, key figures on both sides assert that if they do ultimately decide on a tax cut, the reduction would be small -- $15 billion or so rather than $25 billion -- and aimed largely at easing payroll taxes and spurring investment.
"As of now, I just can't see us going for a tax cut," says one high official with a good reading of President Carter's own views. Adds another key adviser, "We've got about three weeks to make up our mind, maybe four. If we had to decide tomorrow, I'd vote no -- that we shouldn't propose one now."
And the administration strategists concede privately they expect to see few new, more definitive economic statistics that might change their mind before the late-December decision day.
Such resistance is unusual, at least by traditional standards. With a recession now on the horizon, an election year ahead and Democrats controlling both branches, a tax cut for 1980 would seem all but inevitable.
Indeed, conventional wisdom still holds that there will be a tax cut next year, no matter what policymakers are saying now. Most leading economists have based their forecasts on the assumption that Congress will slash taxes.
But both sides still seem to be holding firm against a tax cut, with little sign that they will change their minds unless the unemployment rate suddenly begins to soar to 7.5 to 8 percent or higher -- not likely for the moment.
Strategists cite two reasons:
Uncertainty over the economic outlook. While virtually all analysts are predicting a recession, the economy still has not shown indisputable signs that it really will be a deep one.
And policymakers are edgy about previous misjudgments in which they erred on the liberal side.
The prevailing pressure from the voters still is for a tight fiscal policy to help fight inflation. If anthing, policymakers and congressional leaders say the electorate wants to balance the budget.
On Capitol Hill, tax-cut skepticism is pervasive except among some of the Democratic leadership. Many other influential lawmakers are reluctant to take the step.
Reps. Al Ullman (D-Ore.), chairman of the House Ways and Means Committee, and Robert N. Giaimo (D-Conn.), head of the House Budget Committee, flatly oppose such a move, and their Senate counterparts share that view.
So do more influential junior members, from moderate Reps. Richard Gephardt (D-Mo.) and Tim Wirth (D-Colo.) to liberals Leon Panetta (D-Calif.) and David Obey (D-Wis.) and conservative Phil Gramm (D-Tex.).
Moreover, virtually all agree that if Congress does decide to cut taxes, it should keep the package small and aimed primarily at encouraging investment rather than the traditional big income-tax cut for individuals.
Says Wisconsin's Obey: "I think there's more understanding on the part of the general public these days that a broad-based tax cut can be inflationary." Adds Wirth: "The politics of the broad-scale tax cut have been exhausted."
The lawmakers also appear solidly against the proposal for a 50-cent-a-gallon gasoline tax now being studied by the administration. "It wouldn't even get a hearing here," one astute lawmaker says.
And Congress still would almost certainly reject out of hand any move to impose mandatory wage-price controls on the economy. The administration also is flatly opposed to any such move.
To be sure, the current resistance to tax-cutting quickly could change if unemployment starts rising considerably more rapidly than expected. And, politics aside, there are some valid economic reasons for a cut, including oil prices.
Inflation is steadily increasing Americans' income tax burdens by pushing taxpayers into higher brackets. By some estimates, inflation will boost tax payments by about 8 percent in 1981, or about $18 billion to $20 billion. At the same time, Social Security payroll taxes are scheduled to rise sharply in 1981. The cost of both these: $33 billion to $35 billion in calendar 1981.
To top it all off, the government's budget and tax policy already is fairly restrictive, and is likely to become even more so as Carter continues his budgetary austerity into fiscal 1981.