Tax bill: any way you cut it, Reagan has edge

Under almost any remaining scenario, President Reagan holds the edge to winning his second major political battle -- the tax cut. The Democrats in the House of Representatives, which initiates tax action, have moved so far in the President's direction that to take a stand on any remaining ground and win would not look like much of a victory to the public, they concede.

The contest itself could prove close, or it could end in a rout like the budget vote. The conservative Democrats the President needs for a winning margin remain evenly divided. And some Republican House members might break from the solid party line stance they took on the budget vote.

But the President's advantage seemed clear as he began his "full- court press" on the tax issue June 4, after rejecting a Democratic counter- proposal. The Democrats sought to retain their control of the structure of a floor vote by offering a two-year tax plan and by inviting an amendment for an alternative three-year version -- the Reagan plan -- for a floor face- off.

Thus, a week of the most strenuous private and public negotiating between White House and Hill resulted in a relatively modest shift in the basic negotiating line. A week ago, the White House approved of a compromise put forward by conservative Rep. Kent Hance (D) of Texas and championed by Sen. Bob Dole (R) of Kansas, calling for a three-year tax cut -- 5 percent this October, 10 percent in 1982, and 10 percent in 1983 -- plus marriage penalty and other changes.

A week later, in effect, the Democrats had bought all but the third-year cut. What remained to be decided was whether the White House would win the support of enough conservative Democrats to win a floor fight for its three-year version.

Rep. Phil Gramm (D) of Texas, co-author of the administration's Gramm-Latta "bipartisan" budget bill that prevailed against the House Democratic leadership's version on the House floor, says the President is ahead of his pace on the budget fight in courting conservative Democratic votes on the tax issue. Reagan started the budget battle with only three conservative Democrats, Congressman Gramm says, and he is starting the tax fight with at least 20.

"We won't give up anything more," says Rep. Don J. Pease (D) of Ohio, a member of the House Ways and Means Committee. "Committee chairman [Illinois Democrat] Dan Rostenkowski feels he can hold our losses to fewer than 26 among the conservatives. But he has no assurance of that."

"The Democrats have lost," Congressman Pease concedes, whether or not they hold out on the House floor in a vote for a two-year tax cut. "The President can get his three-year plan in the Senate. In committee, it comes out as a 2 1/ 2-year plan."

"My own personal feeling is any outcome leaves us as not being major obstructionists," Pease says. "We've given so much, it would be hard for the President to say he didn't get what he wanted. If the economic results a year from now are poor, he'll say, 'The Democrats went along with it. They gave me 95 percent of it."

Strategically, the Democrats in the House find the same difficulty in the tax bill that they found in the budget: Their version is so close to the President's that a majority may decide they might just as well let the President have his way as insist on a partisan show of loyalty.

The seeds of the Reagan advantage, analysts here suggest, lie outside the maneuvering in Washington -- outside any failure on the part of the Demoratic leadership to lead, or the disciplined White House approach to Capitol Hill, although there was evidence of both in the congressional tax and budget battles.

With a broad stroke, the public last November decided to fire their chief executive, Jimmy Carter, and his management team because the economy, among other things, was functioning poorly. Congress apparently senses the public wants it to go along with the new manager, Ronald Reagan, his team, and his management strategy -- although polls show the public remains skeptical about the impact of his policies.

If the Reagan approach fails, the public will vote him out of office, too. But it wants to give him a chance.

Privately, Democrats and their leaders say it is difficult to find a place to take a stand in this political climate.

"Tip [House Speaker Thomas P. O'Neill Jr.] was acting on his instincts," one Democrat observed. "He wanted to fight this for a one-year cut," and he was willing to lose it on the floor.

"Rostenkowski desperately wanted to avoid losing on the floor," he continued. "He and Tip are good friends, and Tip would not impose his will on committee chairman or a friend like Rostenkowski.

"The rank and file last week were ready to fight it out. At a meeting, Tip and Rostenkowski and [majority whip] Jim Wright were talking favorably about a two- year bill, but they ran into a firestorm of opposition from members. Then Tip got his backbone up again."

Democratic leaders went along with Ways and Means chairman Rostenkowski for the two-year compromise.

"Rostenkowski made all the concessions to keep the Boll Weevils [conservative Southern Democrats] on the reservation, but he got nothing in return," one Democrat concludes. "But at least he may avoid Jim Jones's fate." Congressman Jones (D) of Oklahoma led the Democrats' losing attempt to soften the President's earlier budget -cutting drive.