Pro-Reagan Chamber of Commerce splits with President on tax increase

US business, through one of its primary Washington representatives, is turning its back on economic proposals President Reagan has accepted.

Richard Lesher, president of the US Chamber of Commerce, said at a breakfast with reporters that ''in all likelihood, we will not be able to support'' a Senate Budget Committee plan calling for $95 billion in tax increases and $319 billion in spending cuts over the next three years. ''We think it's a tragic mistake to increase taxes substantially,'' said Mr. Lesher.

A White House spokesman has said ''the President completely supports the package.''

A supply-side economics stronghold, the US Chamber has in the past been one of Mr. Reagan's strongest supporters and most influential advisers. Before the President's first State of the Union address last January, when many of Reagan's aides were calling for more taxes, a panel of chamber-led executives sat down in the Oval Office and talked him out of significant increases.

Now the trade group, which operates from a dignified gray suit of a building on Lafayette Square here, seems to have lost a chunk of its influence. It did not learn of the compromise between Reagan and budget committee Republicans until it was done.

Have they fallen from favor?

''I'm sure a lot of people will interpret it that way,'' says Mr. Lesher. ''The short answer is you can't win them all. Now people have persuaded (Reagan) to step back.''

The chamber is also opposed to large deficits. A Republican congressional aide, however, says it is next to impossible to bring the deficit for 1983 down to around $100 billion without substantial tax increases.

The deficit-tax trade-off involves ''hard choices,'' admits Lesher. In the end, he says, ''we would take living with large deficits'' rather than major tax increases.

A $95 billion tax hike would have to include new business taxes, or some type of major energy tax, says the chamber's chief economist, Richard Rahn.

''Most of the proposals made, such as the corporate minimum tax, are tax increases on capital,'' he says, ''and that's just the sort of tax'' that will discourage needed investment.

One controversial section of the budget compromise calls for $40 billion in savings, over three years, from unnamed changes in the social security system.

A chamber-sponsored Gallup poll, whose details are to be released May 7, concluded much of the social security issue's political sensitivity may stem from lack of understanding, say chamber officials.

''There's an enormous amount of ignorance about our social security system,'' says Mr. Rahn.

The poll found a majority wanted cost-of-living adjustments to remain untouched, though they didn't fully understand them, or know that most private pension plans aren't indexed to inflation.

Must the public be educated about the need for cuts in social security? ''Yes ,'' says Lesher.

Previously, the chamber has endorsed a one-year freeze on automatic cost-of-living increases for some 70 federal programs, including social security , veterans pensions, and federal retirement pensions.

You've read  of  free articles. Subscribe to continue.
QR Code to Pro-Reagan Chamber of Commerce splits with President on tax increase
Read this article in
https://www.csmonitor.com/1982/0507/050751.html
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe