During a scathing critique of Ronald Reagan's accuracy on the campaign stump, the "CBS Evening News" of April 3 repeated an increasingly familiar accusation about a 16-year-old tax cut that has become a source of double trouble for Reagan as probable Republican presidential nominee.
The question seems ludicrous on its face: did Reagan exaggerate the size of the so-called Kennedy tax reduction passed by Congress in 1964? Behind this seeming irrelevancy are efforts both to blunt Reagan's most effective economic issue and portray him as a simpleton incapable of being president. What's more, the controversy is disrupting a campaign staff wracked by repeated purges.
New York lawyer William Casey, Reagan's campaign manager since the New Hampshire primary, is determined to end at least the internal side of the controversy. That is why he will dine here Tuesday with Rep. Jack Kemp, Reagan's policy coordinator and advocate of his tax-cut strategy.
A determined Casey, who was directing U.S. espionage agents in wartime Germany before many Russian political operatives were born, may impose order on the economic feudists. But his more important, more difficult mission is to prepare Reagan for tax and other adversarial questions that he is now muffing.
Kemp late last year sold Reagan on the Kemp-Roth tax bill, which would cut income tax rates 30 percent across the board over three years. But not until Reagan's back-to-the-wall campaign in New Hampshire did it become the cutting edge of TV spots prepared under Kemp's direction. One spot compares Kemp-Roth with President Kennedy's massive tax reduction; a burst of prosperity followed its passage in 1964 after JFK's death.
Only after Reagan's New Hampshire victory, where he won votes from blue-collar workers perhaps attracted by his invocation of Jack Kennedy's tax ideology, did this become contentious. His remaining Republican foes, George Bush and John Anderson, began blasting Reagan's tax policy as irresponsible.
On March 16 on ABChs "Issues and Answers," Reagan was asked about attributing the "30 percent tax cut to Kennedy. "I don't remember saying that because I honestly don't know what the rate of the Kennedy tax cut was," he replied. Soon thereafter, Time magazine reported "the actual Kennedy tax cut was only 20 percent." On March 24, Democratic Sen. William Proxmire claimed the Kennedy tax cut "provided the basis for the worst inflation this nation has ever suffered."
A much larger audience was exposed to more of this on the April 3 "CBS Evening News." The Treasury was quoted at putting the 1964 tax cut by 19 percent, not at 30 percent -- a double thrust at Reagan's veracity and economic sense.
All this riled up senior Reagan supporters suspicious of Kemp personally and of Kemp-Roth ideologically. Casey wanted to know what that Kennedy tax cut was -- 30 percent? 20 percent? 18 percent? Sen. Paul Laxalt of Nevada, Reagan's national chairman, was disturbed by Proxmire's attack and wanted Kemp's reply.
Computing the size of the Kennedy tax cut has become an exercise in how to make Reagan look bad. Carefully briefed after his bobble on "Issues and Answers," he did on April 3 correctly state that the 1964 cut was 23 percent in the top bracket and 30 percent in the lowest bracket. CBS came back with the Treasury's 19 percent figure. In fact, that figure is a meaningless average; JFK tax-bracket cuts ranged from 30 percent to 13.6 percent (thought for very poor taxpayers, cut off the rolls, the tax cut was 100 percent).
More relevant is the economic connection between this long-ago tax reform and today's proposal. Responding to Laxalt about Proxmire's attack, Kemp said that blaming the inflationary 1968 budget deficit on the 1964 tax cut is "pure nonsense."
Nor do kemp's critics inside the Reagan campaign view tax reduction as an inflationary ogre. Rather, Reagan's old California hands would prefer to avoid controversy in a campaign they see flying high. It is younger operatives who regard the tax cut as Reagan's invaluable populistic weapon. Frank Donatelli, running the Wisconsin campaign, insisted that the Reagan-JFK tax cut spot -- shelved nationwide -- be televised before the primary there. Donatelli credits it with Reagan's victory.
Bill Casey's real problem is not to muzzle Kemp or Kemp's critics but to prepare Reagan to defend his tax proposals. While absurdly unable to remember how he himself had described the JFK tax cut, Reagan's greater sin was inability to handle the arguments of ABC's John Laurence on "Issues and Answers" that the Kennedy reduction came at "a different time" of economic recession.
In his reply to Laxalt, Kemp states the tax cut would be just as therapeutic now, pointing out there is "more slack in the economy now than there was in the early 1960s." Unless Reagan becomes familiar with such defenses, his campaign's cutting edge will be blunted and White House strategists will come closer to switching the spotlight from Jimmy Carter's compromise to Ronald Regan's brains.