President Reagan, nearing a final decision about whether to ask Congress to accelerate the third stage of his income tax cut, has received differing internal advice on the political and economic merit of the idea, administration officials said today.
A group of top officials in the White House and the administration are said to have urged Reagan to seek the tax cut acceleration in a memo to the president last week. But others, including Office of Management and Budget Director David A. Stockman and Martin Feldstein, chairman of the Council of Economic Advisers, expressed doubts about it, an administration source said.
Reagan was reported not to have reached a decision as he spent the last day of his Thanksgiving holiday at fog-shrouded Rancho del Cielo, his mountain ranch near here. The president leaves Monday for a speech to the National League of Cities convention in Los Angeles before returning to Washington in the evening.
White House officials said the president will make a decision on the tax cut acceleration by Tuesday morning, when he meets with Republican congressional leaders before departing for his five-day Latin American tour.
Those Republican leaders, Sen. Howard H. Baker Jr. (Tenn.) and Rep. Robert H. Michel (Ill.), recently told Reagan that he lacks the votes for the tax cut acceleration in the lame-duck session of Congress that begins Monday.
But a senior White House official, who asked not to be identified, said Reagan feels that his 25 percent, across-the-board tax cuts still carry a stimulative punch despite the disappointing performance of the economy over the last two years.
The official added that Reagan also strongly believes he must protect the third installment of the tax cut, 10 percent due next July. A "major priority" of the White House will be to fend off anticipated efforts by congressional Democrats to eliminate or modify the third phase of the tax cut, the official said.
In the view of some White House officials, Reagan should ask Congress for a six-month acceleration in the tax cut as a tactical move. Even if it had little chance of congressional approval, these officials believe it would stake out a strong position showing the importance Reagan attaches to the third stage. "It's better to move ahead than sit back," said one official who believes Reagan will make such a move.
All other factors aside, Reagan is said to believe that advancing the tax cut would make sense as a means of stimulating the economy, and he said recently that such a proposal is "appealing" on that basis.
But enthusiasm for speeding up the tax cut among White House officials is said to be tempered by other concerns that make it uncertain which direction Reagan will go. The president is said to be weighing the possibility that debate over the tax cut acceleration would overburden the agenda of the lame-duck session and threaten progress on other administration priorities, such as the unfinished appropriations bill.
The officials are also concerned that accelerating the tax cut would further aggravate a federal deficit that is already expected to surpass $150 billion this fiscal year.