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White House would like Democrats to share tax cut praise -- or blame

An elaborate bargaining rite is being enacted in Washington over tax strategy. The House Democrats, who last week rejected the so-called Dole tax compromise , suspect the White House may be bluffing about wanting to mount another all-out drive to sell its three-year, across-the-board tax cut package.

What the White House really wants, they think, is to draw them into "bipartisan" responsibility for a somewhat watered-down version of the Republican bill.

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They see the White House as weakened by its aborted social security reform proposal, which the Republican-controlled Senate renounced by a 96-to-0 vote.

Many Republicans -- including some in the White House -- do not like the three-year, 10 percent-a-year Kemp-Roth proposal on which President Reagan's package is based. Southern conservative Democrats see the threat of huge budget deficits in the White House bill.

Some Democrats call the Dole "compromise" proposal a "Kemp-Roth clone." The Dole alternative would trim the Kemp-Roth 30 percent cut to 25 percent, but would add another 5 percent of tax cuts including elimination of the so-called marriage penalty and reduction of taxes on retirement savings.

The President could perhaps win passage of his Kemp-Roth tax program, the way he did his "bipartisan" Gramm-Latta budget- slashing bill, the Democrats reason. But he wants them to help soften Kemp-Roth's hard edges.

In high-level Washington bargaining, the tax maneuvering echoes last fall's long jockeying over the presidential debates, when neither the Carter nor Reagan sides actually wanted to debate until the very end, they later acknowledged.

"The White House, understandably, says 'we can play hardball and go back to the same constituency we had with the budget vote,'" says Robert Neuman, Democratic National Committee spokesman. "But they don't have that same constituency, and they know it.

"When the give and take comes, the White House is going to have to give," Mr. Neuman says. "If he [Mr. Reagan] raises the stakes and goes to the people on this -- goes on TV -- it's going to be very interesting. This time the Democrats are much more organized to bring him an intelligible and cohesive response. I think we [Democrats and Republicans in Congress] may come to some agreement. But I'm not sure the White House is prepared to give."

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The House Democrats have enough time to wait out the White House for a few weeks, says Rep. Don J. Pease (D) of Ohio, a member of the House Ways and Means Committee.

"The Republicans, who wantm a compromise, tried to promote one," Congressman Pease told the Monitor. "But the feeling of Democrats in the Ways and Means Committee was we ought to stick to a one-year bill, report it out of committee, and go to the floor for full House vote on that. And if we lose, we lose.

"Let the Republicans be the sponsors of Kemp-Roth," Pease says. "And a year from now, if things work out, they get the credit. If not, let them take the blame."

Pease concedes Rep. Dan Rostenkowski (D) of Illinois is being pressed to risk a loss on his first major test as Ways and Means Committee chairman. Congressman Rostenkowski is thought a possible successor to House Speaker Thomas P. O'Neill Jr.

"We can start to mark up a tax bill, with the easier elements like a marriage penalty and depreciation acceleration," Pease says of the House Democrats' strategy. "They can join us later on a one-year provision if they want to. Certainly we ought to have a bill passed before the August recess -- even by the July recess.

"The Republicans and the White House don't need our votes," Pease says. "Logic says they could pick off some 25 or 30 conservative Democrats they need and pass Kemp- Roth. They don't really want Kemp-Roth to pass. If something close to it passes, they don't want to take the full blame for it."

Meanwhile, conservative Democrats, moderate Republicans, and independent analysts persist in worrying about the possible deficit impact of the Reagan tax approach.

"In their own view, the Reagan team have some hope they can balance the budget in 1984," says Rudolf Penner, a former Ford administration budget official and now a tax policy analyst for the American Enterprise Institute.

"I see a very different economic path. I see a very large deficit throughout the entire Reagan term."

For the fiscal year starting this October, Mr. Penner sees actual federal outlays reaching $730 billion or more -- well above the Reagan $695 fiscal 1982 budget target passed last month. "There will be some weakness in the resolve to cut spending as the year goes on," Penner predicts. "The economy will be fairly weak. With outlays around $730 billion, and receipts in the $660 billion to $ 670 billion range, the deficit would be $60 billion to $70 billion. The administration is talking about a $45 billion deficit."

Officials within the Reagan administration also are concerned with the likelihood that federal spending will elude Reagan efforts to contain it. They report a hunt for further cuts, which they cannot disclose without frustrating passage of the tax bill.

"On the other hand," says a Washington budget analyst, "if they can get the tax bill through, and if the budget reconciliation resolution is passed by Aug. 1, then there's time for the administration to come around with another package of cuts in the fall. They're going crazy just trying to meet the last round of cuts. If they dumped the new cuts now, it could derail a tax bill."

The budget deficit issue could prove decisive in holding enough "boll weevils" (conservative Southern Democrats) in line on the tax bill for a second major Reagan victory.

For Rep. Kent Hance (D) of Texas, a conservative leader, the budget deficit is the key to fitting the entire tax package together. "The budget and tax bills are two different questions," Congressman Hance says. He wants the President's predicted $45 billion deficit for next year lowered, and he wants faster progress toward a balanced budget than the Re aganites have scheduled.

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