House Democrats, under pressure from the White House to act on tax cut, moved yesterday toward accepting the "multiyear'' tax cut President Reagan wants, but remained divided over how to accomplish it.
Meeting in closed caucus, Democrats on the House Ways and Means Committee mustered a "loose consensus" for cutting taxes by 15 percent over two years, but were unable to agree how much should be "targeted" to middle-income groups.
At the same time, conservative southerners, who defected to give Reagan his victory on the budget, endorsed the president's proportionally equal tax cuts for all brackets, but split over whether they should be for two or three years.
Although the Ways and Means Democrats must meet today for further talks, the developments marked a major shift by the party toward Reagan's demand for a three-year tax reduction. Before, they had insisted that any cut be for only one year.
However, yesterday both House Majority Leader James C. Wright (D-Tex.) and Rep. Charles Stenholm (D-Tex.), speaking for the conservative southerners, publicly pronounced the one-year proposal dead.
Wright told reporters in a hallway news conference that efforts to confine the tax cut to one year would be "associated with the idea of just obstructing." And Stenholm said a one-year cut would be "unacceptable" to his group.
It was not immediately clear how the Ways and Means Democrats ultimately would shape their proposal. The White House has told Democratic leaders they must respond with their own alternative if compromise talks are to continue.
Sources said the committee Democrats could not decide yesterday how much of their 15 percent cut should be distributed proportionally among all tax brackets and how much should be tilted toward the $20,000 to $50,000 group.
Chairman Dan Rostenkowski (D-Ill.) said after the meeting, "I hope we can fashion a program that can be enjoyed by all Democrats." He also confirmed for the first time "we are talking about . . . a multiyear bill."
Although details still were not decided, sources said the Ways and Means measure also would include some proposal for faster business depreciation writeoffs to counter the one included by Reagan in his tax-cut plan.
The conservative Democrats said they were split between proposals to give Reagan a two-year tax cut -- 5 percent the first year and 10 percent the second -- or whether to go along with a third year tax cut of 10 percent, similar to the latest compromise Reagan has proposed.
The ranking Republican member of Ways and Means, Barber B. Conable Jr. (N.Y.), and Senate Finance Chairman Robert J. Dole (R-Kan.) threw barbs at the House Democrats during a White House press conference following their meeting with Reagan.
"I think to expect the president to compromise at this point simply because he can't tell which part of the Democratic Party to negotiate with, as long as they're in such disarray, is to expect the president to negotiate with himself," Conable said. He and Dole said, however, that Reagan was willing to consider a compromise if the Democrats came up with a proposal he could accept.
Dole said "I think [House Speaker Thomas P.] Tip O'Neil is so out of touch that he doesn't want the American people to have tax cuts. He'd rather the government keep the money."
O'Neill told reporters on Capitol Hill that the three-year, across-the-board tax-cut proposal is a "lemon." Recently he charged that Reagan doesn't know any people who depend on Social Security. Yesterday he said: "I don't think he knows anyone who makes only $20,000 a year, either."
Despite the barbs, Conable said the Republicans are trying to avoid "confrontation politics." Reagan has made it clear he would rather go forward with a compromise that would ally; the White House with Rostenkowski. "I think Rostenkowski would very much like to negotiate an agreement," Dole said.
If no compromise is reached, however, White House officials have made it clear that they will either seek an alliance with the conservative House Democrats, as they did on the budget-cutting plan, or try to start tax legislation in the Senate, which the GOP controls, by attaching it to a House-passed bill.
Rep. Phil Gramm (D-Tex.), one of the architects of the budget victory for Reagan in the House, said: "If it comes down to a fight, I think we are in as good shape or better as we were at a similar time on the budget."
As the Ways and Means members appeared to be moving to support a two-year plan, the Stenholm forum was divided between a three-year cut of 5 percent Oct. 1, 10 percent July 1, 1982, and 10 percent July 1, 1983; and a two-year bill that would leave out the third year's reduction.
Reagan has made it clear he would accept the three-year plan even though it is slightly less than the three-year cut of 10 percent a year that was the centerpiece of his presidential campaign.
The president has also agreed to accept a number of other tax-cut proposals as part of a bill, although initially he had asked for a bill uncluttered by special cuts.