After four days of concentrated warning from Capitol Hill that tax reform should be abandoned, President Carter revealed his fateful decision to the Cabinet. Monday: The program must be given top priority.
The pragmatic reason given by some presidential aides is that Carter can ill afford another retreat. There is also false optimism, bred by false analogy with the Panama Canal debate, about the president's ability to reverse public and congressional opinion.
But mostly, full speed ahead on tax reform reflects a recurrent problem of Carter in office. Having applied moral considerations to a non-moral issue, the president finds himself equating compromise with surrender. Rejecting advice from Congress and his own Cabinet, he must now invest time and effort to convince the nation of tax reform's moral validity.
Warnings against that course came early. The unlikely Paul Revere was Rep. Abner Mikva (D-III.), chairman of the liberal Democratic Study Group and a loyal Carter supporter on the House Ways and Means Committee. Mikva first told Carter last June that there was no constituency for tax reform, warning against proposing all the reforms then being considered.
Such advice from Mikva and other Ways and Means members had limited effect. A political leader who often substitutes morality for ideology, the president had transformed the economic trade-offs of the Internal Revenue code into a contest between the forces of darkness and light. He finally sent up a tax-reform package less ambitious than he wanted but far broader than Treasury Secretary W. Michael Blumenthal advised.
The fate of those proposals has been obvious on Capitol Hill for some time. Rep. Joe Waggonner, a conservative Democrat from Louisiana and key Ways and Means member, privately forecast the outcome to Blumenthal not as much tax reduction as the president asked; no tax crackdown on foreign business income; very little crackdown on expense accounts; no disproportionately heavy tax treatment of income over $25,000 a year. Not disagreeing, Blumenthal urged Waggonner to tell that to the president.
Warnings became reality April 17 when Ways and Means began dismantling the Carter tax reform, with unusual contempt for the president's wishes - contempt that grew larger when Carter responded by attacking "special interests." That produced a remarkable White Hose meeting April 20 between the president and three senior Ways and Means members: Chairman Al Ullman of Oregon, Dan Rostenkowski of Illinois (chief deputy majority whip of the House) and Waggonner.
They informed the president his program was all but dead. "I'm shocked," Carter replied when they disclosed true anti-reform sentiment in Ways and Means. Since that sentiment had been previewed for him 10 months earlier, suspicion was raised that the president listens but does not hear. Still, he argued that Democratic candidates need to face voters this fall in support of a tax-reform program.
Rostenkowski then suggested that tax reform was endangering tax reduction. If the bill ends up repealing tougher tax treatment of capital gains at a cost of nearly $3 billion, both Rosenkowski and Ullman, for fiscal reasons might end up opposing all new income-tax belows present levels.
Five liberal Democratic members of Ways and Means saw the president the next day, April 21, but brought on better news. Mikva put it bluntly: If the president pushes tax reform, he might lose his tax reduction to stimulate the economy.
On Sunday at a political meeting in Greenwood, La., Waggonner made the same pitch anti-inflation czar Robert Strauss. On ABC's "Issues and Answers" Sunday, Ullman repeated his warning to the president. "I know Mike Blumenthal agress with us, and I think Bob Strauss does," one congressional leader confided. "But does Jimmy Carter?"
What was the answer? It came at Monday's Cabinet session, reflecting the position of the president and his senior staff. "It would be very damaging for the president to change his mind so easily," one staff told us. Plans for a nationwide crusade are under way. While blaming the treasury for not starting this public lobbying while the White House was fighting the battle of Panama, one White House insider concedes tax reform never could have the establishment support enjoyed by the canal treaties.
Yet a common thread links these two wholly dismilar issues: As with OPanama, the president and his men must now consume inordinate energy on an issue marginal to great domestic and international questions. Having passed up his last easy opportunity to set aside tax reform, he now faces certain defeat in Congress, with little political balm even if he does marshal public opinion. Such are the yeilds of the politics of morality.