The Reagan administration yesterday made its second effort to deflect potential criticism that its forthcoming economic program will ask less sacrifice of the rich than of the poor. It announced that President Reagan had put off, at least for now, a tax measure that would benefit investors.
Reagan disregarded the advice of his top economic counselors in the interest of keeping the program of tax cuts and spending reductions he will announce Wednesday fair to all Americans, according to the picture presented to reporters by White House press secretary James S. Brady.
Two factors blur that portrait, however.
The investors' measure, a cut in the maximum tax rate on unearned income from 70 to 50 percent, had been described by administration officials not as a part of the first tax cut, which they want to limit to Reagan's central campaign promise of a 10 percent tax cut in each of the next three years plus accelerated depreciation for businesses, but as a possible part of a second tax bill.
Also, the 10 percent cuts to which Reagan is committed will have the effect of reducing the maximum rate on unearned income to 50 percent over three years.
While the Reagan administration's budget-cutting act has held the center ring (with Office of Management and Budget Director David A. Stockman as ringmaster) since the inauguration, there has been little indication of where cuts will be made that will make the wealthy bleed.
Consideration has been given to ending various tax provisions that benefit wealthy Americans, but a well-placed White House source said it has proved more difficult to reach a consensus on any of these than on reductions and eliminations of federal spending programs, most of which aid the less well-to-do.
The president promised that his economic program would not "balance the budget on the backs of the poor," and his advisers have repeatedly said that the total package will be "evenhanded."
Brady said that Treasury Secretary Donald T. Regan and Stockman urged the president to reduce the tax on unearned income soon in order to stimulate investment, and that Reagan agreed it would have a good impact on the economy.
Despite this unanimity of opinion, it was turned down because the president "felt it was very important that this package be evenhanded," Brady said.
Earlier this week, the administration sought to calm fears over its budget cuts by declaring that seven government benefit programs will not be reduced. Brady said this demonstrated that Reagan is keeping his promise not to remove support from the "truly needy."
The seven, however, included Social Security's basic retirement benefit, Medicare and basic veterans' benefits, which distribute federal aid across the economic spectrum rather than target dollars to the poor.
The president held three meetings with his top advisers yesterday, including a Cabinet meeting, before leaving in midafternoon for Camp David.
Among the issues decided was the effective date of the 10 percent tax cut for businesses and individuals, Brady said. He declined, however, to reveal the date. During the election campaign, Reagan advocated a cut as of Jan. 1, 1981, but there has been speculation that the cut for individuals will be pushed forward to July 1.
The budget-cutting sessions also established a level for foreign aid, Brady said. Stockman had proposed cutting foreign aid well below current levels, while Secretary of State Alexander M. Haig Jr. had argued for a much higher figure.
Brady quoted Haig as having told the president he is comfortable with the agreed-upon figure, which United Press International said would be $6.9 billion.
Decisions remain to be made on several programs, Brady said, and the president will confer with his advisers by telephone over the weekend. He also will work on the text of the speech he will deliver Wednesday night, Brady said.
The budget-cutters are continuing to find areas to trim, a White House source said, and the total reductions proposed to Congress may be as high as the $50 billion that Stockman talked about as his goal.
In addition to his budget meetings, Reagan telephoned French President Valery Giscard d'Estaing and spoke for five minutes, it was announced by the press office.