In contrast to tactical defeats suffered before the Easter recess, President Reagan's economic program is on the brink of strategic victory in the Democratic controlled House as Congress reconvenes.
The preliminary head counts show a small but seemingly widening Reagan margin on the coming budget resolution, built by a coalition of the nearly solid Republican minority and 30 or more conservative Democrats. The psychological mementum of that pivotal victory would point toward a Republican triumph on the tax cut a few weeks hence.
Despite months of conjecture about deep trouble for the tax bill and the need for a general compromise, the truth is that victory is at hand or very close to it for Ronald Reagan's economic package. Unless the Democratic leadership discovers some way to retrieve the situation, effective control of the House on economic questions is being assumed by that bipartisan coalition.
Deteriorating support for the Democratic alternative budget fashioned by Budget Committee Chairman James Jones (less defense, more social welfare, thinner tax cuts) has produced at least 30 hard Democratic defections. There are no assured Republican defectors and the possibility of only a handful at the outside. That suggests a current House head count yielding about the net loss of 26 Democratic congressman needed for a Republican victory.
But the post-recess mood on Capitol Hill may produce much wider Democratic defections, going beyond the 44-member Conservative Democratic Forum -- the "Redneck Caucus." Such non-CDF Democrats as Reps. Eugene Atkinson of Pennsylvania (celebrated target of a Reagan telephone call), Elliott Levitas of Georgia and Charles Wilson of Texas are moving out of Democratic ranks into the conservative coalition. That fortifies prospects of a comfortable Reagan victory.
Democrats will not have to vote for a Reagan proposal but a "compromise" co-sponsored by Reps. Delbert Latta of Ohio, the Budget Committee's senior Republican, and a CDF member, Rep. Phil Gramm of Texas. The Gramm-Latta substitute is gleefully described by one White House aide as "103 percent of the Reagan budget" -- that is, what the president wants in budget cuts plus a little bit more.
Disaster looming for the regular Democratic leadership under Speaker Thomas P. O'Neill casts a long shadow on the tax struggle. Conservative Democrats are putting together a new tax package that will bring only smiles from the White House. Just as Gramm-Latta is more Reaganite than Reagan, so is the compromise tax package in embryonic form.
It includes an immediate end to the distinction between "unearned" and "earned" income with the top tax rate on "unearned" (interest and dividends) falling to 50 percent. Simultaneously, the effective rate on capital gains would be pushed from 28 percent all the way down to 15 percent. As a sweetener to the farm constituents of many CDF members, the inheritance tax would be repealed. None of this is contained in the president's package.
Among tax reductions that are in the Reagan package, the accelerated depreciation allowance would be retained. But the Kemp-Roth formula of 10 percent in annual across-the-board individual rate cuts for three years would be modified from 10-10-10 to 5-10-10 and the effective date delayed as well.
The delayed effective date would be hard to take for the White House, but the rest of this still-gestating alternative delights the president's men as superior to the original. Although Reagan in his Tuesday night address to Congress adhered to his no-compromise position, the time will come -- not far off -- when deals will be made.
The deal right now looks like 103 percent of Kemp-Roth, without a partisan Republican Kemp-Roth label that drives off Democrats (a prospect long recognized as inevitable by Rep. Jack Kemp). If such a bill emerged, perhaps bearing the names of Rep. Kent Hance of Texas, senior CDF member on the House Ways and Means Committee, and Rep. Barber Conable of New York, its senior Republican member, it would be endorsed by the president and go to the floor with irresistible appeal.
A Hance-Conable bill would pose severe problems for the new chairman of Ways and Means, Rep. Dan Rostenkowski of Illinois, who does not relish being rolled on the floor in his debut. If that is the fate of Jimmy Jones on his first budget resolution, Rostenkowski might be tempted to embrace a multi-year compromise in exchange for leading a grand alliance with Reagan.
The one sure means of the Democrats escaping retreat on all fronts is for Tip O'Neill to win the budget resolution (a prospect not helped Monday when he returned from Australia to announce that "many Democrats" had defected from the Jones budget). Another is for Ronald Reagan to make a serious blunder, an event congressional Democrats have been waiting for ever since Jan. 20.