The Senate's two most influential committee chairmen on taxing and spending, Sens. Pete V. Domenici (R-N.M.) and Bob Dole (R-Kan.), said yesterday that the economic recovery will be strong and sustained as long as Congress manages to stay out of its way.
"So long as we don't do things that are truly dumb," Domenici, chairman of the Senate Budget Committee, told a luncheon meeting of the National Association of Counties (NACO), "we have a real chance to see long-term prosperity at low inflation and at ever decreasing interest rates."
Earlier, Dole, chairman of the Senate Finance Committee, had sounded the same theme.
"We can have a sustained recovery like we haven't seen in a long time," he said. "There are a lot of good signs . . . . The big 'if' is will the Congress do what it should do: get those deficits in the out future years from the $200-to-$300 billion range to under $100 billion."
Dole and Domenici advocated a mix of policies to promote recovery, including cuts in military spending, tax increases beginning in 1985 or 1986, and cuts in such non-means-tested entitlement programs as Medicare, where costs have been increasing at the rate of 14 percent a year, and federal pension benefits.
Domenici said that two years of deep cuts in means-tested entitlement programs, along with the devastating impact of the recession on the nation's poor, have put such programs off limits to further cuts.
"We're just not going to cut them any more," he said.
Both senators gave their full support to the federal program that is nearest and dearest to the association: this year's scheduled reauthorization of general revenue sharing.
The administration's proposed 1984 budget calls for revenue sharing to be combined with the community development block-grant program.
The boldest suggestion to emerge from yesterday's NACO legislative conference came from Sen. David F. Durenberger (R-Minn.), who plans to introduce a bill that would expand revenue sharing from its current $4.6 billion to $11.5 billion by using a new pool of revenue that would be created by limiting deductions of state and local taxes from the federal income tax.
At present, the federal government forgoes$31 billion annually by allowing deductions for local taxes. Durenberger, who is chairman of the Senate subcommittee on intergovernmental relations, proposes excluding from deductibility a percentage of each individual's state and local taxes.