Congress appears unlikely to adopt President Reagan's proposal for standby tax increases beginning in 1986 and will find some other way to raise extra revenue, possibly by repealing the provision to index the income tax that it voted in 1981, congressional leaders said yesterday.
Under indexation, tax brackets and other provisions would be adjusted automatically each year to offset inflation and avoid tax increases that otherwise occur as wages rise and people move into higher tax brackets.
Chairman Dan Rostenkowski (D-Ill.) of the House Ways and Means Committee predicted that Congress will not approve the standby taxes--an income surtax and excise tax on oil--which would take effect in 1986 if the deficit seemed unlikely to come down by then to stipulated levels.
Interviewed on "This Week With David Brinkley" (ABC, WJLA), Rostenkowski complained that President Reagan "is asking us to raise taxes at the same time we're cutting taxes under the program that we adopted last year and the year before."
Instead of proposing new tax increases, Rostenkowski suggested, the administration should consider rescinding cuts made earlier.
He mentioned not only indexation, which he said Democrats are "very serious" about repealing, but also cuts in gift and estate taxes and income from oil.
Rostenkowski also suggested, as have other leading Democrats, restricting this summer's scheduled third installment of the income tax cut Reagan pushed through Congress two years ago. Under such a restriction, no taxpayer could gain more than $700.
Senate Budget Committee Chairman Pete V. Domenici (R-N.M.) also expressed lack of enthusiasm yesterday for indexing taxes.
Although he said that the standby tax "makes good sense to me," Domenici also said he would just as soon defer indexation for two or three years, which would provide "pretty close to the dollar number needed" to ease the deficit.
"I have no preference," he said on "Meet the Press" (NBC, WRC).
However, Domenici praised Reagan's budget for its reliance on realistic economic assumptions, in contrast to the administration's first two budgets, which rested on overly rosy economic pictures. "It's not a political document," he said. "It's a very credible budget."
The portion of the budget dealing with social programs "is eminently fair," Domenici said, adding that programs such as food stamps and welfare would grow 12 percent over five years instead of 14 percent.
The compromise package on Social Security, Domenici predicted, will arouse "a very heated debate" in Congress, particularly on the provision to include federal employes in the system.
On that issue, however, Rostenkowski, whose committee opens hearings Tuesday on Social Security, predicted that "we will pass the short-term solution and get into heated debate on how the long-term fix can take place." The bipartisan compromise, a combination of benefit cuts and tax increases, would solve the revenue problem only through 1990.
Rostenkowski predicted that a proposal to raise the retirement age from 65 to 68 would be "a red flag that most congressmen feel they'd like to avoid."
Meanwhile, Sen. Paul Laxalt (Nev.), general chairman of the Republican Party, said Reagan has "a responsibility" to run for a second term in order to finish "the job he came here to do." Laxalt was interviewed on "Face the Nation" (CBS, WDVM).
Asked about his party's low standing among women, blacks and the poor, Laxalt said, "When you consider the difficult political decisions that this president has made . . . for him to maintain the level of support, as he is in most all the polls now, 40 to 45 percent, is miraculous.
"It's a wonder that he isn't in the 20s . . . I think right now he is very near the low point in terms of public esteem in these polls, and he is going to go up from there."
Asked whether high unemployment and interest rates should be a factor in Reagan's decision on whether to seek reelection, Laxalt said, "It's a factor, of course. We've got to determine here, some time during the year, as to whether this presidency is viable. Ronald Reagan, myself, and nobody else, is going to take the Republican Party or the country over the cliff. We're just not going to do that."
Laxalt added, "I feel better at this point concerning the viability of the Reagan program than at any time since he has been in office . . . . I am convinced that we finally have the blocks in place and are going to move forward."