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.

Telling the President. On the House floor, Bow introduced his proposal as an amendment to a routine financing resolution necessary to authorize normal spending by the majority of departments for which formal appropriations are still pending. House Speaker John McCormack quashed the amendment as irrelevant. The Republican riposte was to move that the financing resolution be sent back to committee. "We are going to tell the President," declared Minority Leader Gerald Ford, "to make reductions at the demand of Congress. This is what we should do as a legislative body." Majority Leader Carl Albert scurried about the floor trying to hold wavering Democrats in line. He spoke to some 30, but won over only three. In the end, the House voted 202 to 182 to recommit the resolution to committee. Thirty-four Democrats, including Mills, helped the Republicans trounce the Administration.

The threat to Government operations was largely illusory. A temporary compromise was in prospect for this week that would permit bills and payrolls to be met. The real significance of the vote was that it demonstrated the depth of anti-tax feeling in the House. Although Mills was silent, his message was all too loud: the President would have to unlimber his blue pencil.

One of Thousands. Where to cut? Most members of Congress oppose amputation of major programs. Instead, critics insist that the Administration can judiciously defer or slow down spending in nonessential areas and still save $5 billion or more. Most often mentioned are military construction in the U.S., the supersonic transport project, the space program, research and development in all fields (which now amounts to $17 billion), and such frills as highway beautification. Last week Wisconsin's John Byrnes, senior Republican on Ways and Means, got a call from the Interior Department informing him of a $2,000 grant for picnic facilities in his district. "That's only one of thousands," fumed Byrnes. "It's a nice thing, but it can be postponed."

What cannot be postponed indefinitely is a decision on the tax increase. Overwhelmingly, the economic indicators reflect strong and mounting inflationary pressures. Industrial production, housing starts, personal income and employment were all thrusting upwards in late summer, while inventories dwindled.

Last week the Bureau of Labor Statistics reported that consumer prices rose by 0.3% in August, reversing the normal trend for that month. Wholesale prices also rose by 0.3%. If Congress fails to pass a tax rise, the independent Federal Reserve Board may well restrict credit--as it did in similar circumstances last year--and perhaps make tight money an even bigger election-year issue than higher taxes. Fast-rising prices do not make for friendly voters either. As obnoxious as these alternatives may be in Washington, they have yet to exert any lubricating effect on the stalemate between Lyndon Johnson and the House of Representatives.

This file is automatically generated by a robot program, so reader's discretion is required.