Congressional Democrats last night called President Reagan's tax cut proposal inflationary and "too great a gamble," and said they would press for a tax bill far different from the three-year across-the-board rate reductions he has asked.
While they expressed little opposition to Reagan's proposed spending cuts, three Democrats selected by their party to make a nationally televised reply to his Wednesday night economic address made clear that the 30 percent tax cut he has endorsed will face strong opposition. Some Republicans conceded that the Reagan plan is likely to be considerably changed by the House.
"I hope we can help [Reagan] form his tax plan," said Sen. Lawton Chiles (d-Fla.).
Sen. Gary Hart (D-Colo.) said he favors a one-year tax cut, as do many Democrats. That would let them vote for a second tax cut next year, an election year. They also fear giving away funds the government may need to finance spending programs.
Reagan's proposal is "just too great a gamble for the country to take at this time," Hart said. He said the Reagan theory. For that very reason, however, Reagan is likely to resist any revamping of the program. The theory holds that a sustained tax cut is essential to restore incentives to produce and bring about expansion.
House Majority Leader Jim Wright (D-Tex.) said, "We will alter the tax package so it won't be inflationary," and suggested that, instead of just cutting rates, as Reagan has proposed, the tax bill should include tuition tax credits and elimination of the so-called marriage penalty, under which some working couples pay more in taxes than they would with the same incomes if single.
Reagan favors both measures, but asked Congress to consider his across-the-board cuts first, then act on a second tax bill later in the year. The ranking Republican on the House Ways and Means Committee, Rep. Barber B. Conable (N.Y.), said he would support the president's plan but thinks it will be impossible to keep such special provisions from being added to the first tax bill.
Chiles, Hart and Wright appeared on NBC and ABC last night. The air time was free to provide the Democrats with an opportunity to reply to the president.
In general, the Democrats were subdued in their criticism, and Chiles took note of Reagan's landslide victory and continuing popularity. Reagan, he said, has been exercising strong leadership."
Ways and Means is to begin consideration of the Reagan tax proposals Tuesday, with testimony from Treasury Secretary Donald T. Reagan and budget director David A. Stockman.
Conable said changes by the House are "almost inevitable," but he said he warned Ways and Means Chairman Dan Rostenkowski (D-Ill.) that, "If I sense you're becoming an obstructionist I'm going to squawk a lot."
Congressional Democrats are wary of being called obstructionist with Reagan riding a high tide of popularity, and they want a tax cut of some sort this year.
Likely changes Ways and Means will make in the tax bill include:
A change from a three year to a shorter term bill. Rostenkowski opposes a three-year bill, and Senate sources said Sen. Lloyd M. Bentsen (D-Tex.) and other Senate Finance Committee plan, commonly called Kemp-Roth, would cost the Treasury too much.
Bigger cuts than Reagan proposed for lower- and middle-income taypayers, and smaller ones for the well-to-do. This could be done by increasing the familiar $1,000 pesonal exemption now granted to every taxpayer and dependent, and the so-called zero-bracket amount, below which no taxes are owed, while reducing Reagan's proposed rate reductions.
Rostenkowski and other Democrats say the Reagan rate reductions would give too much to taxpayers in the upper brackets. Reagan's advisers say it is necessary to aid such people, because they are the most likely to save and invest.
The addition of some of the special measures Reagan would prefer to see held for a second bill.
The administration's rationale for its large tax cut depends on the cuts being of the kind Reagan proposed. The president argues that cuts in the marginal tax rates which give large amounts of money back to the better off would increase investment and growth rather than fuel inflation. A different form of tax cut would not be consistent with this underlying rationale.
But Chapoton, assistant treasury secretary for tax policy, said the administration will "be fighting very hard" to keep the three-year commitment and the rate cuts.
Suggestions that the bill be limited to one year or otherwise altered showed a failure to understand the administration's new approach, he said.
Reagan is vacationing at his California ranch, but his top economic aides pressed the effort to sell Reagan's program in the House and Senate.
Joint Economic Committee Chairman Henry S. Reuss (D-Wis.) told Stockman that the poor would bear the burden of Reagan's program. Reuss suggested closing tax loopholes that benefit the rich.
"Rich oxen weren't really gored," Reuss said. Stockman replied that he had made "strenuous efforts in going through the budget to find rich oxen to gore. But I didn't find very many, because apparently over the last 10 or 15 years the Congress hasn't been voting much welfare for rich people."
Sen. Roger W. Jepsen (R-Iowa) asked why Reagan wants to end dairy farmer's subsidies but preserve similar benefits for tobacco, barley and oats growers.
"Does someone think beer and cigarettes are more healthful than milk?" Jepsen asked.
Stockman said the administration wanted to cut the worst first. "Clearly the dairy program is out of hand, costing about $1.5 billion a year," he said.
At a news conference, Agriculture Secretary John R. Block said he favors leaving the tobacco subsidy as it is. "The tobacco program is not an expensive program," he said. "It gets a bum rap sometimes."
Reagan defended the Reagan program before the Senate Budget Committee. He said the stock market dropped 14 points the day after the president revealed his economic plan, not because of the plan, but from investor's fears that Congress would gut the program.
"I must say I resent the suggestion the Congress of the United States had something to do with the stock market going down 14 points," Sen. Howard M. Metzenbaum (D-Ohio) replied.