The chairman of the House Ways and Means Committee warned the Reagan administration yesterday that the president's tax plan for individuals could not win congressional approval. Treasury Secretary Donald T. Regan immediately called a press conference to defend the administration plan.
Rep. Dan Rostenkowski (D-Ill.) told reporters yesterday morning that he does not think there is support in Congress for a three-year, across-the-board cut in personal tax rates as proposed by the president. The Kemp-Roth proposals, named after their congressional sponsors, are thought by many Democrats to favor the rich at the expense of the poor and middle class and to carry the risk of worsening inflation.
Regan said he was "disappointed" at Rostenkowski's remarks, which he termed "most unfortunate," because they will set "an adverse tone for consideration of the witness testimony still to come. Public hearings on the bill began this week.
At the same time, 20 Republican senators, led by Sen. William Roth (D-Del.), appealed to President Reagan to veto any tax bill which does not include the 10 percent rate cuts over three years.
Congressional sources have thought for some time that the president's tax plan would be changed substantially in Congress. Rostenkowski indicated that he wants to get Kemp-Roth out of the way so he can get on with drafting a bipartisan bill in Ways and Means. He said he believes many Republicans would vote against the bill in a closed session.
Conservative Democrats have come out against the bill, and this means it cannot get through the House, Rostenkowski said.But Regan claimed that the administration still is talking about "details" with the conservative Democratic caucus.
Congress is not in the "mood" to vote a three-year proposal, Rostenkowski observed as he called for work to begin on a one-year consensus bill. This would include a reduction in the so-called marriage penalty, where some two-income families are taxed more heavily than if they were single and living together, rate cuts in all income brackets but skewed to help the middle-income and lower-income groups, and possibly a drop in the tax on capital gains and a reduction in the top rate of tax on unearned income from 70 percent to 50 percent.
He said he would like to get the Republicans on his committee to join with the Democrats in drafting a consensus bill along these lines. But he told reporters he would not mind if Ways and Means Republicans want a vote on the president's plan so they could record their support for it before turning to work on a consensus bill.
House Republicans aren't willing to stop backing the president's plan while the administration still is urging it on them. Rep. Barber Conable (R-N.Y.), ranking minority member of Ways and Means, said yesterday that the Kemp-Roth plan was not yet dead. However, he also expressed the hope that Republicans and Democrats on Ways and Means would write a bill together.
Ironically, the Treasury secretary yesterday accused Rostenkowski of moving too quickly in making up his mind against the president's particular tax cuts, whereas Republicans earlier had accused the House Democrats of wanting to drag their feet over enacting a tax cut.
Regan said that changing the president's tax proposals would damage the economy and lead to a higher-than-forecast inflation rate in later years.