As a House vote on the Senate-passed tax bill nears, a firestorm of criticism has erupted. President Reagan, the man who only last year guided the largest tax cut in history through Congress, is being chastised for inconsistency -- a stone that should be rarely thrown from the glass house atop Capitol Hill. He is being painted as some kind of Indian giver, taking back incentives to save and invest just a year after handing them out.
Not so. The president is acting to save the people's tax cut, not destroy it. He has agreed to a budget package that protects the individual tax rate reductions, the thrust of the business incentives and the entire indexing provision -- a shelter against inflation built into last year's bill.
Let's remember that this tax bill did not just sweep down out the blue. In June, after months of agonizing work, Congress passed and the president endorsed, a budget resolution designed to reduce interest rates by cutting back projected deficits. That resolution calls for Congress to reduce budget deficits by $378 billion over the next three years, $280 billion in outlay savings and $98 billion in revenue increases.
Passing the resolution was not the difficult part. Even in Washington, most politicians promise to vote against debt. The hard part comes now, in making the thing stick, in applying self-discipline to an inherently rebellious process.
President Reagan is determined that this government will live within its means. Forty years of big government and big spending sent our country, as the president said, careening toward catastrophe on a course of fiscal insanity. The giant deficits that are the hallmark of such irresponsibility created the record unemployment and strangling interest rates we are battling today.
Rather than raising taxes on working people, the bill will eliminate abuses, remove obsolete incentives and improve taxpayer compliance. It will not raise the income tax of the average American.
This bill insists that tax laws carry more weight than the paper they are written on. Three-quarters of it will have little or no effect on the average taxpayer -- the honest, hardworking, middle-income citizen who year in and year out honestly pays his taxes. Instead, it is aimed at those who have been taking advantage of unintended loopholes. It will ensure that everyone pays his fair share.
Collecting taxes already owed will not reduce incentive for saving. And elimination of obvious tax abuses will not represent a reversal of our economic program or philosophy. The typical American family will pay almost $400 less in income taxes this year because Ronald Reagan is president. Next year, even with this bill, that family will pay $788 less.
If this bill does pass, we will have made still more progress in closing the yawning gulf between what this government spends and the revenues it raises. Without this bill, the congressional budgetary process may sink permanently into irrelevance.
The president said he had to swallow very hard to support this bill, but it is necessary. He remains committed to still more individual tax and spending cuts in the future as a spur to our people and our economy. "I'm determined that we haven't had all the spending or tax cuts we're going to get," he said.
But the immediate choice, in his view, is very simple: would you rather reduce deficits in part by raising revenue from those who are not now paying their fair share or would you rather accept even larger, more gaping deficits with the high interest rates and spiraling unemployment that go along with them? The president has chosen the first because he will not accept the second.
Thirty-five years on Wall Street tell me he is right. If interest rates are to come down, if we are to sustain the recovery that has just begun, we must shoulder our responsibility as guardians of the nation's treasury. This government must show some sign that it will, in the near future, live within its means.
Members of the Senate have confronted the challenge and voted to comply with the budget resolution. It is now up to members of the House to find within themselves the courage to do likewise.