Tax politics
Anyone who has ever had difficulty getting back into the flow of things at work after a vacation can sympathize with Congress. The nation's lawmakers have returned to Washington following a recess for the Democratic convention.
What is important is that Congress - and the Reagan administration - work together to complete action on as many legislative priorities as possible. Presidential election-year politics notwithstanding, there is no reason why lawmakers should not resume a substantial degree of the bipartisanship that prevailed before San Francisco. That lawmakers were able to agree on a $62 billion budget-cut, tax-hike package to reduce the deficit shows that congressional unity can be achieved when the agenda is full enough and the national interest is great enough.
Simply put, the congressional agenda is full. And the national need is great. Why? Because of the soaring federal deficit. Net interest on the debt is expected to total $110 billion this year and perhaps $135 billion in 1985. Its course is upward. Assets that could be used for substantive programs - domestic or defense-related - are being eaten up by federal interest payments.
Congress, to its credit, has tended to narrow its focus this year to issues that warrant legislative attention (such as measures relating to the economy), and issues of overriding national scope (the Simpson-Mazzoli immigration bill). If lawmakers will bring the same degree of selectivity and diligence to their work during the next three weeks (until recess for the GOP convention), then this session should prove productive. What would be unwise would be to become diverted by peripheral issues.
In a sense, the continuing upbeat news about the economy tends to work against the determination needed in Congress. One may be tempted to wonder what all the fuss is about in resolving federal fiscal policy when it is reported (as the Commerce Department did yesterday) that the economy grew at a 7.5 percent yearly rate in the second quarter of this year, up from the department's previous ''flash'' estimate of 5.7 percent. Taken together with the first-quarter growth of 10.1 percent, the latest figures show that the economy is still sizzling.
The urgency, however, is to keep that recovery humming as long as possible - right into 1985 and beyond. But to do that, the deficits will have to be reduced to ease federal borrowing, which imposes heavy upward pressure on interest rates. High interest rates work against continuing recovery.
That is why bipartisanship - and focusing on the main legislative priorities - is so important. Congress should clear as many appropriations measures as possible. Defense spending, in particular, should be brought down, closer to the 5 percent increase in real growth suggested by House leaders than the 7.8 percent increase voted by the Senate. On the MX, the House plan also makes sense , namely, to fund 15 missiles, although with strings attached on production. Renewed aid to Nicaraguan insurgents seems unlikely, since the administration, despite public calls for new funds, has backed off for the moment. Some additional defense aid for Jose Napoleon Duarte's El Salvador seems reasonable.
Meantime, lawmakers are surely justified in planning ahead to 1985, when comprehensive action will have to be taken on the deficits. Waltger Mondale says the next president will raise taxes, and that he, for sure, will. Vice-President George Bush says that Republicans ''are not running on raising the people's taxes.'' But Bush knows that taxes will have to go up. Taxes just did, in the bill signed (with little fanfare, for obvious reasons) by President Reagan. The deeper issue for lawmakers to ponder is which taxes will go up, and how the taxes will be fairly levied so as not to put a disproportionate burden on middle-class and lower-income Americans.
