Pressure, unsuccessful so far, on President Carter to scale down his tax reform has been heightened by discreet lobbying from a highly unusual source: Arthur Burns, chairman of the Federal Reserve Board.
Burns, a Republican who is not expected to be reappointed by the President as head of the nation's central bank when his term expires in January, has no great influence in the Carter White House. Nevertheless, he is privately so concerned about the nation's economic future that he sent Carter a long personal letter that was chilling in its import even though understated.
From what he has learned of the tax-reform package about to be unveiled, Burns warned, it threatens to undercut what little business support the Carter administration enjoys and kill hopes for economic expansion. In particular, Burns made clear that ending special tax rreatment for captial gains (as proposed by the President) could devastate business and investor confidence.
The President, who treats the prestigious 73-year-old Burns with great respect, immediately thanked him in a hand-written, hand-delivered letter. The chairman of the Fed replied last Wednesday with another letter, expanding his views.
The conservative Burns is fortified by liberals on the House Ways and Means Committee who have repeatedly warned the President against attempting broad-scale tax reform. In an Oct. 17 meeting between Treasury Secretary W. Michael Blumenthal and eight liberal Democratic members of the committee, Rep. Charles Vanik (D-Ohio) said Congrews will never pass the capital-gains proposal. While defending that scheme, Blumenthal did predict Carter "is ready to slow down a little" on tax reform.
But Treasury efforts to soften reform meet tough resistance from the President's Council of Economic Advisers and senior White House staffers. Moreover a higher tax on capital gains seems an unmovable feature of the reform bill.
That reinforces concerns of Burns that were diplomatically omitted from his letters to the President. According to friends, he views the Carter administration as uninformed about the "business mind" and guided in tax policy by "small-town populism." Burns believes the tax-reform proposals will reinforce business fears, thereby depressing new investment and threatening a real recession next year.
To close friends on Captiol Hill, Burns has been pouring out his woes with what one listener describes as "deep sadness" that the importance of venture capital is not understood in the White House. That prompted his letters to the President. But chances are the old economist's anxiety will increase, not lessen, in the weeks ahead.
Southern Democrats are pushing President Carter to name James T. McIntyre Jr. as director of the Office of Management and Budget - removing "acting" from his title - for one main reason: He used to work for the late, revered Sen. Richard B. Russell of Georgia.
Only 36 years old and not at all flamboyant, McIntyre is sometimes belittled as "just an accountant." But his standing is high among powerful Dixie senators such as Russell Long of Louisiana, who told us: "No one up here is going to complain about a budget director who used to work for Dick Russell."
Carter intends to aait until next year's budget is prepared before naming Bert Lance's permanent successor at OMB. But odds are growing that when he moves, the President will move with McIntyre, Lance's former deputy. Although he does not now enjoy a special intimacy with the President, McIntyre as a native Georgian is a possible recruit for the future Carter inner circle. Sen. James Abourezk, the South Dakota filibusterer whose drive to save President Carter from Senate-approved gas deregulation was undermined by parliamentary rulings of Vice President Mondale, backed out of introducing Mondale in Rapid City, S.D., Oct. 13.
Abourezk himself had helped get Mondale to address a statewide Democratic fundraiser that evening. But Mondale, without warning Abourezk or his fellow filibusterers, broke the filibuster with rulings dictated by Majority Leader Robert Byrd. Abourezk, more blunt than ever now that he is retiring from the Senate at age 46, canceled out of the Rapid City dinner.
Mondale told Abourezk privately during the emotional scene on the Senate floor Oct. 3 that he was only doing "what is right." Since then, not one word has passed between them.