A proposal to tax unemployment benefits was abandoned by the White House today almost as quickly as it had surfaced after Democrats and organized labor deluged the Reagan administration with criticism that it was "cruel" and "callous" toward the jobless.
White House counselor Edwin Meese III said in an interview that the idea of taxing jobless benefits is "not under serious consideration." He said it was just one of eight options given President Reagan to help lower unemployment.
"The fact that they are undergoing serious consideration is not correct," Meese said. "This is the first pass at these ideas. None of them have been considered by the president. To be under serious consideration he would need to say which ones he is interested in . Until he chooses, they are not under serious consideration."
On a day in which the proposal came under fire as an example of administration insensitivity to the nation's 11.6 million unemployed, a senior White House official, who asked to remain anonymous, was even more blunt in discarding the scheme to tax unemployment insurance benefits.
"I seriously doubt whether this will be a proposal of the administration," the official said. He added that it was only an "ephemeral" idea now doomed by the chorus of protests, and that this view is shared by Meese and Reagan aide Michael K. Deaver.
The official also expressed concern that disclosure of the proposal would hurt Reagan because it "tends to contribute to an image of not caring" about the nation's 10.4 percent unemployment rate, the highest in 42 years. This image is "totally false," the official said.
The presidential adviser also reported today that Reagan is having doubts about asking Congress to accelerate the third stage of the personal income tax cut from next July to January. While Reagan would "like to do it," the official said, "he is weighing the impact on the deficit and the question of whether Congress would pass it."
The president, who is scheduled to meet with Republican congressional leaders next Tuesday to discuss the agenda of the lame-duck session of Congress that begins Monday, might decide not to request acceleration of the tax cut, the aide said, "if it unnecessarily encumbers the lame-duck session" and threatens action on appropriations bills that Reagan has said are his first priorities.
Reagan will telephone members of Congress this weekend to gauge sentiment about the tax-cut acceleration. "But it's not something he's lobbying in the sense he's made the decision" to request it, the official said.
With Reagan demanding action on appropriations bills and expecting that Congress will approve a 5-cent gasoline tax increase to fix roads and bridges, the White House is concerned that it could overburden the three-week session by adding the tax-cut speedup to the agenda. Republican congressional leaders have already told Reagan he lacks the votes to pass the proposal.
Coming at a time when White House officials had expected an uneventful holiday weekend as Reagan relaxed at his 688-acre Rancho del Cielo, the controversy over taxing jobless benefits caught administration officials by surprise. "The story seemed to have gotten a life of its own," said one official.
Meese, the only member of the senior White House staff staying in Santa Barbara near the vacationing president, said he hadn't even read the list of eight options to alleviate unemployment. They were contained in a 16-page paper that the Cabinet Council on Economic Affairs was supposed to have considered last Tuesday. However, it was bumped from the agenda at the last minute because the meeting instead was to be devoted to the gasoline tax increase that Reagan announced Tuesday morning.
According to White House officials, the routine procedure is for such option papers to be distributed in advance to the president and members of the White House staff. This was the case with the package of options on unemployment, the official said, but Reagan never received a presentation on the document, nor did he discuss it with his staff.
Other options outlined in the paper included a lower minimum wage for teen-agers to encourage employers to hire young people during summer months, retraining and relocating of so-called "structually unemployed" workers, and tax "incentives" for companies that provide new jobs.
Another proposal would allow unemployed workers to take part-time jobs while still collecting unemployment benefits, to keep their skills sharp. Still another would give vouchers to employers who cooperate in hiring the long-term unemployed.
"There were a lot of very good ideas" in the document in addition to the proposal to tax unemployment benefits, the White House official said.
Questioned today about the option of taxing jobless benefits, White House spokesman Larry Speakes confirmed that Reagan was considering it. But White House officials said the option was never destined for serious consideration because of Reagan's political problems on the unemployment issue.
Speakes would not respond to criticism from Democrats that the proposal illustrated the administration's lack of sensitivity to the unemployed. When reporters pressed Speakes to talk about the proposal, he said, "Well, I don't think I can help you make a second-day story on that."
Democrats, however, had a field day. Rep. Henry S. Reuss (D-Wis.), chairman of the Joint Economic Committee, called the proposal "a slander on 11 million unemployed Americans" and said Reagan should "dump it into the Santa Barbara Channel at once."
Taxing unemployment benefits, Reuss said, would leave the impression the administration thought the jobless were "lazy" and "goldbricks."
Sen. Carl Levin (D-Mich.), whose auto-producing state has suffered the highest unemployment rate in the nation, called the proposals "cynical and ludicrous," charging that a tax on unemployment benefits was "just one more in a long line of callous and insensitive proposals from President Reagan that deride and demean millions of men and women."
Rep. Thomas S. Foley (D-Wash.) said, "It is unbelievable that the administration wants to shoot itself in the foot with a proposal that has no chance in Congress and furthers their image of insensitivity--an image which they say over and again is unfair."
Sen. Gary Hart (D-Colo.) called the plan a "callous" attempt to shift the blame for the nation's economic woes to "the backs of America's unemployed workers" at a time "when many Americans have just endured the bleakest Thanksgiving holiday since the Depression."
Politicians were scattered across the country for the long Thanksgiving weekend, but Democrats leaped into the fray while Republican congressional leaders used the holiday to remain conspicuously silent. Attempts to reach Republican leaders for reaction went without reply.
Labor leaders also greeted the proposals with predictably strong condemnations.
Murray Seeger, director of information for the 15-million member AFL-CIO, said that "to attempt to raise more revenue from the ranks of the unemployed is to punish twice the chief victims of Reaganomics."
He also said the AFL-CIO would strongly oppose any tampering with the minimum wage, which has not been raised from its $3.35-an-hour level in two years. "The minimum wage has already been eroded by two years of inflation to reduce real income to the poorest workers," he said.
Rex Hardesty, another spokesman for the AFL-CIO, said, "We hope President Reagan would not support anything so callous as to tax people who did not cause unemployment and are not to blame for their plight."
Staff writer Bill Prochnau contributed to this report.