The Economy: Revolt on the Hill

Traditionally, when asked to raise taxes, Congressmen heft their axes. This year, under heavy Administration pressure to approve a 10% surcharge on personal and corporate income taxes, the mood of Congress is that nothing will be done until the President wields a hatchet himself. In a humiliating rebuff to its Democratic leadership and Lyndon Johnson, the House of Representatives last week bluntly told the Administration that it should either make immediate and specific plans to cut federal spending or else jettison all hope of its urgently needed tax boost.

Congress itself, of course, has ample power to check spending through the appropriation process. The House is stymied nonetheless because the Senate is more openhanded with cash than the lower chamber, and most Representatives want to dodge responsibility for retrenching important domestic programs. For its part, the Administration has said that it intends to slice perhaps $2 billion out of the current year's budget—but only after it knows how much Congress is appropriating overall. This is too little, too late and too vague for many House members.

Political Flimflam. The Ways and Means Committee, chaired by Arkansas' Wilbur Mills, has spent its closed hearings until now debating not the tax proposal before it, but possibilities of paring the budget. From top Administration officials, notably Treasury Secretary Henry Fowler and Budget Director Charles Schultze, it received no satisfaction. Instead, Schultze taunted the committee with talk of wholesale cuts that would inevitably cripple popular programs such as health services. This the committee regarded as political flimflam. Rumors circulated of a direct offer from the White House—apparently unknown to Fowler and Schultze—to match any tax increase with spending cuts up to some $7 billion. Mills is known to be skeptical that any such proposition will materialize.

Meanwhile Mills allowed his committee to consider an unprecedented scheme that would grant a tax increase but rescind it during any month in which spending exceeded a predetermined figure. Rebels on the Appropriations Committee acted to more purpose. Led by Ohio Republican Frank Bow, they forced a committee vote on a measure that would limit spending during the current fiscal year to $131.5 billion—$5 billion less than the President's administrative budget estimate —with nonmilitary programs bearing the burden of the cut. Appropriations Chairman George Mahon, a Johnson supporter and fellow Texan, managed to defeat the measure in committee.