President Carter will be lucky to gain congressional approval of about half his proposed tax "reform" program, House speaker Thomas P. (Tip) O'Neill Jr. (D-Mass.) said yesterday.
"If the president gets through about 60 percent of the reforms in the House, he does pretty well. I don't know what the Senate ultimately would do, but if he winds up with 50 percent of the reforms, he's done well," O'Neill said yesterday on "Face the Nation" (CBS, WTOP).
Saturday, Carter porposed to Congress $33.9 billion in tax cuts for individuals and businesses that would be offset by $9.4 billion in revenue-gathering "reforms." The net tax cut would be $24.5 billion.
O'Neill said yesterday that the "reforms" - specifically, those aimed at limiting deductions for business entertainment expenses and phasing out a $1.3 billion tax subsidy for exporters over a 3-year period - are expected to cause "a little difficulty for the Carter proposals on Capitol HIll.
But Treasury Secretary W. Michael Blumenthal said yesterday on "Issues and Answers" (ABC, WJLA) that the administration would fight for its "reforms" in order to have enough to support the tax cuts.
"There is going to have to be reform together with the tax cuts," Blumenthal said. "We really wouldn't have the money available to make the cuts for lower and middle to make the cuts for lower and middle income people and to give "tax incentives) to American business to create . . . jobs, if we wouldn't get some of these reforms."
The secretary said he is certain "there is going to be debate" about each proposal, and that it is premature to discuss what, if any, parts of the tax revision package the administration is willing to trade off.
Instead, he said Carter's proposal to limit deductions for business entertainment expenses to 50 per cent of cost is a "very important" part of the package - something Carter "talked about in the campaign," and something "we are going to fight for."
"It is unfair to allow some people to write off a lot of expenses that other people have to pay for out of after-tax income," Blumenthal said.
Still. O'Neill said, it's going to be a tough fight. Lobby groups are lining up - as they have in the past - to keep Congress from eliminating the tax break for exporters and trimming the deductions for business entertainment expenses, he said.
For example, the issue of the exporters' tax subsidy - enacted in 1971 - "has been before the House many times, and it's considered a major reform," O'Neill said. "But [because of] the power of the industries in every section of the country, it's a difficult piece of legislation to pass," he said.
On the issue of limiting entertainment expense deductions, restaurant and catering associations are saying that particular change could cost 200,000 jobs, said O'Neill.
"There's a tremendous amount of pressure on that" the Speaker said. "It's not that easy, because of pressure, to pass legislation of that type. We'll probably have to compromise on that one."
O'Neill said he expects Carter to win relatively easy congressional approval of proposals to repeal deductions allowed for state and local gasoline and sales taxes.As for himself, O'Neill said he "would, for the most part, so along with the president of the United States" on the tax cut-tax revision package.
Republican leaders yesterday had little to say about the "reform" elements of Carter's proposals. But one of them, House Minority Leader John J. Rhodes of Ariona, said on "Meet the Press" (NBC-WRC) that he believes the president's proposed net $24.5 billion tax cut is not enough.
"You need a tax cut large enough to make up for the Social Security tax increase and also for inflation . . .," Rhodes said. "In order to make up just for the inflation factor, you would have to have $31 billion instead of $25 billion" in tax reduction, he said.
"If we really wanted to accomplish all the things which I think are necessary for the economy, it would take a $51 billion tax cut," Rhodes said.
He said a cut tat size 'would actually result in dollar revenues to the federal government which might well be excess" of the $3.6 billion in additional tax revenue projected for the Carter tax code revision proposal, and that the larger cut "would not actually increase the deficit."