An Election-Year Tax Increase?

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Confounding cynics, Congress weighs a $21.1 billion boost

It is widely thought to be one of those political impossibilities, like voting against a resolution in praise of the flag. Nonetheless, there is a growing chance that Congress really will raise taxes in an election year, just as it said it would when the budget was approved in June.

The budget resolution declared that taxes ought to be raised by $20.9 billion during fiscal 1983, which starts Oct. 1, in order to keep the prospective federal deficit from exceeding $104 billion. The crucial questions of whose taxes should be raised and by how much were left to be answered by later legislation, which many cynics doubted would ever be drafted.

Shortly before the July 4 recess, however, Senate Finance Committee Chairman Robert Dole of Kansas got the Republican-controlled unit to approve, by a party-line vote of 11 to 9, a bill that would raise taxes for individuals and businesses by $21.1 billion in fiscal 1983, and by $98.6 billion over the next three years. President Reagan last week gave his blessing; White House Spokesman Larry Speakes said the bill preserved "the basics of our economic program." Members of both parties expect that the Senate will pass the bill virtually intact shortly after it reconvenes this week.

That, in turn, will put pressure on the Ways and Means Committee in the Democrat-controlled House to report out a similar bill. Like several other committee members, Massachusetts Democrat James Shannon sees "a good chance" that this will happen, but quickly adds that there is no guarantee of passage. The catch: no one can predict the outcome of the battle on the House floor.

New York Republican Barber Conable sums up the conflicting pressures. On one hand, legislators know that unless they raise taxes enough to give some real hope that budget deficits can be kept from spiraling out of control, interest rates are likely to stay high and choke off a recovery from the lingering recession. Says Conable: "Wall Street is watching us very closely to see if we are serious or just playing games." But when the House takes up its version of the Dole bill, it is certain to be pounced upon by lobbyists for an extraordinary array of powerful interests: doctors, lawyers, airlines, aerospace contractors, banks, tobacco farmers and cigarette makers. Says Conable: "The Senate caught them napping, but now they have to take all these proposals seriously." The bill's fate might well be determined by the attitude of the White House. Says Shannon: "If the Administration wants to push hard, it can pass." If not, the House might reject any tax increase.