President Carter, seeking to rescue his already weakened tax-reduction and "tax reform" plan, indicated yesterday he may be willing to compromise with members of the House Ways and Means Committee who want to scale down the package.
Carter asked senior committee Democrats in a meeting at the White House to work with Vice President Mondale and administration policy-makers to develop recommendations for paring the tax plan to a point where it can be salvaged.
Publicly, the administration continued to stand behind Carter's original proposal for $25 billion in net tax reductions. Jody Powell, the White House press secretary, told reporters Carter foresaw a "serious" lull if the tax bill were to fail.
A few hours later, however, Mondale had lunch with Rep. Al Ullman (D-Ore.), chairman of the Ways and Means Committee, to discuss what Ullman called "the nuts and bolts" of a possible compromise. Ullman, who favors a smaller bill than Carter proposed, told reporters the two were "making progress" on "a possible alternative."
Ullman is expected to hold further strategy sessions with Mondale. Secretary of the Treasury W. Michael Blumenthal and Charles L. Schultze, the President's chief economic adviser. The President indicated he also plans to meet separately with key factions of the Ways and Means panel.
The developments came as Ways and Means continued its consideration of Carter's tax recommendations, voting to put off action on a proposal to lighten accounting methods for farmers, and insteadmoving to exempt more farmers from existing rules.
In the past four days, the committee as rejected a series of "reforms" on which Carter had been counting to bring in new revenues that would parally offset the tax reductions he is seeking. Now, many members of the panel are talking about reducing or scrapping his tax cuts as well.
The administration won a temporary reprieve on one potential problem yesterday as Ways and Means voted to postpone action on an amendment by Rep. William A. Steiger (R-Wis.) whose passage might lead liberals to vote to scuttle the entire bill.
The provision, would undo much of the "tax reform" enacted in 1969 and 1976 by exempting capital gains - profits from the sale of stocks or other assets - from the so-called minimum tax, and reducing the maximum tax rate in such gains to 25 percent.
Ways and Means liberals have warned that if the Steiger provision approved, they will vote to push through a proposal by Rep. Charles A. Vanik (D-Ohio) that would scrap Carter's entire plan and instead merely extend tax cuts enacted in 1976-77.
Vanik said yesterday he will push for a vote on his proposal early next week. He told reporters he had enough votes to win approval of his amendments. Committee sources also speculated the Steiger proposal would pass. That vote has been put off until May.
Carter told committee leaders yesterday he had been so preoccupied with the Panama Canal treaties he did not realize the tax bill was in trouble. The source said the President was surprised when he learned on Tuesday that his tax plan was getting a bad reception.
Rep. Barber B. Conable (N.Y.), the ranking Republican on Ways and Means, said he hoped the President would "sit down the the Democrats and figure out what he can do" to salvage the bill. "The trouble with Carter," Conable said, "is he's listening only to God - and God doesn't pay taxes."
Mondale's entry into the tax discussions was regarded as the first symbolic admission by the White House that the legislation is in jeopardy. Last week, Carter angrily denied reports that his advisers were considering proposals to scale down the tax cuts.
Mondale, who frequently serves as the White House troubleshooter on congressional matters, was briefed on the outlook for the legislation by administration lobbyists late Wednesday. Officials spent much of yesterday exploring ways to rescue the tax plan.
The debate over the tax cut plan spilled over yesterday into the House Democratic Policy Committee, where two prominent Democratic economists told members the tax reductions were important for the economy, but suggested that portions of the package might be postponed.
Walter W. Heller, chief economic adviser in the Kennedy administration, proposed reducing the size of the income tax cuts to allow for an $8 billion reduction in Social Security taxes. He also suggested deferring some of the tax cuts until 1979.
Heller's views generally were endorsed by Gardner Ackley, another former Kennedy economic adviser. However, Otto Eckstein, a member of the Council of Economic Advisers during the Johnson administration, called separately for paring the tax cuts to $20 billion, from Carter's $25 billion.
In their discussions with the President yesterday, Ways and Means members told him bluntly there was "no constituency for" his tax reform measures and even his tax cut proposals would be "difficult to sell" because of members' fears about inflation.
Sources described Carter as non-committal about a specific compromise, but willing to discuss the possibility of changing his stance on the tax proposal. "For once, I really do think he was listening to what we said," one participant noted later.
Along with Ullman, Carter spoke yesterday with Rep. Dan Rostenkowski (Ill.), second-ranking Democrat on the panel, and Rep. Joe D. Waggonner (D-La.), a key conservative. The three later briefed other members of the panel and House Democratic leaders.
The proposal the panel approved involving farmers' accounting methods would broaden the definition of a family farm to exempt more farms from stiffer accounting requirements. Sponsored by Rep. Jim Guy Tucker (D-Ark.), it was approved by informal vote.
Under present law, family farms include only those in which 50 percent of the farm is controlled by members of the same family. Tucker's provision would broaden this to include those in which two-thirds of the voting stock is held either by family members of a "closely held" firm.