The Carter administration told Congress yesterday the recession now seems to be reaching bottom more quickly than expected, and warned that enacting a tax-cut bill this year could exacerbate inflation.
In testimony before the House Budget Committee, chief presidential economist Charles L. Schultze pointed to "numerous signs" in recent weeks that "the recession is slowing and will bottom out before long."
At the same time, however, Schultze and Carter Budget Director James T. McIntyre cautioned that inflation is likely to remain high and could be intensified by any move to cut taxes sharply.
The two top Carter economic advisers made their remarks at a hearing as the Budget Committee began considering what to include in any revised congressional budget resolution.
McIntyre urged the panel to put off any provision for amajor tax bill this time around, and propose a third budget plan next spring if Congress wants to enact a 1983 tax reduction.
The hold-the-line testimony was warmly received by committee Chairman Robert N. Giaimo (D-Conn.), who complimented the administration for having "resisted the pressures to expand and stimulate in the near term."
However, the budget panel's Republicans lambasted the administration for shifting economic policy too often and for failing to support sizable tax cuts for individuals, which GOP presidential candidate Ronald Reagan is backing.
President Carter has proposed a package of tax cuts for 1981 -- primarily to encourage business investment -- but these would be relatively modest in cost at first, adding only $7 billion to fiscal 1981 deficit.
Schultze and McIntyre argued yesterday that Carter's proposals seek to bolster the economy over the long run without trying to stimulate consumer spending, which they said would aggravate inflation.