The nation's governors opened their annual summer meeting today with concern over the U.S. trade and budget deficits stealing the spotlight away from discussion of President Reagan's proposal to end federal deductions for state and local taxes.
"This is not a conference where there is necessarily going to be much new in policy," Kansas Gov. John Carlin (D), chairman of the National Governors' Association, said. Several Democratic and Republican governors generally agreed in interviews, especially on tax revision.
As the governors settled down to business in a new conference center on the banks of the Boise River, however, Democratic governors were planning a new effort to seize the offensive on the increasingly sensitive trade issue.
During a two-hour session this afternoon, the governors politely but firmly pressed their case for more open trade policies with Nobuo Matsunaga, the Japanese ambassador to the United States.
And some Democratic governors were chafing over a recent fund-raising letter from Reagan that attacks Democratic governors for raising taxes and labels them "the last unchallenged stronghold of the liberal 'tax-and-spend' philosophy that nearly brought America to her knees."
Blocking repeal of the deduction for state and local taxes has become a rallying cry for governors, mayors, legislators and county officials throughout the nation. Carlin said it would be a "focus" of the three-day conference here.
The organization's members are divided, however, with some favoring repeal of the provision, others supporting full retention and most, including Carlin, looking for a compromise but uncertain that any middle-ground recommendation could be developed here.
Several Democratic governors criticized the administration for rushing into consideration of tax revision without paying sufficient attention to what South Carolina Gov. Richard W. Riley (D) termed the nation's "chief economic problem -- the deficit."
The budget deficit also figured in discussions today about international trade, officially the major theme of the conference. Many governors consider the budget deficit a contributor to the overvalued U.S. dollar and blame the dollar, in part, for thwarting exports from their states.
Political analyst Kevin P. Phillips told the governors this morning, however, that a "post-industrial revolution" changing the interrelationships of world economies was more at fault and warned against isolated, short-term approaches stemming from a "circle-the-wagons" mentality.
Arizona Gov. Bruce Babbitt (D), chairman of the Democratic Governors' Association, said he will ask Democratic governors to support a recommendation for an immediate world conference to rewrite the General Agreement on Trade and Tariffs, which he called an "obsolete document."
Babbitt's proposal would further urge the White House to engage in negotiations with some trading partners. And he also proposed a limit on the U.S.-Japanese trade deficit, currently larger than that with any other nation, as a way to "deal forcefully with the Japanese in the most general and least protectionist way."
The political letter from Reagan that raised the ire of the Democrats was sent on behalf of the Republican Governors' Association, which is planning a major effort in the 1986 elections to reverse the Democrats' 2-to-1 edge in governorships.
In the letter, Reagan said that while the administration had cut taxes 25 percent in the past four years "many Democratic governors turned right around and increased state sales and income taxes, wiping out the tax cut given to you by our administration."
Democratic governors here pointed out that both Democratic and Republican governors had raised taxes during that period, in part because of what one Democrat termed "the Reagan recession" and in part to finance educational improvements urged by the Reagan administration.
"We've tried to work with the White House on a bipartisan basis, and now we find we're being gutted for doing what he asked us to do," complained Arkansas Gov. Bill Clinton (D).