Democrats Tell Bush to Change Script on Taxes

WASHINGTON —  As President-elect George Bush returned to work Sunday from his Thanksgiving holiday in Maine, leading Democrats put him on notice that he will have to abandon his favorite scenario for handling the federal budget deficit.

The scenario is one Bush repeated constantly during the presidential campaign: Congress, he predicted, would push for higher taxes, and he would say no. Congress would push again, and again he would refuse. Congress would push a third time, and he would, he said, tell them to “read my lips. No new taxes.”

Wrong script, congressional leaders say. For Democrats to propose tax increases “would be the height of foolishness,” Sen. George J. Mitchell (D-Me.) said Sunday.

“We’re not going to do like last time and give you the money and let you get the credit and let you blame us for being for high taxes,” concurred Louisiana’s Sen. J. Bennett Johnston, appearing with Mitchell and Sen. Daniel K. Inouye (D-Hawaii) on NBC’s “Meet the Press.” The three are rivals for the Senate majority leadership.

This fencing is the first scene of what promises to be the leading production on the Capitol stage over the next year--a drama in many acts that Bush aides hope will earn the title “All’s Well That Ends Well,” but that could just as easily become a political version of “Waiting for Godot”--Samuel Beckett’s masterpiece in which two actors stand around expecting something to happen that never occurs.

Of the three candidates vying to be Senate majority leader, only Inouye was willing to specify budget measures he would support.

“The time has come for all of us to bite the bullet and look into the possibility of (an) increase in corporate taxes, increase in personal income taxes,” he said, adding that raising the current 28% top income tax rate was a “possibility.”

“Everything has to be on the table,” Inouye said.

The other two quickly backed away from that idea. “We’ll see what happens when the President-elect comes up with his plan, and when he does, at that point we’ll look at it,” Mitchell said.

“We’re not going to propose taxes or raise taxes,” Johnston said.

Gray Prods Bush

And on the House side, Rep. William H. Gray III (D-Pa.), the current chairman of the Budget Committee, continued Sunday to prod Bush into making the first move on the budget. Gray and House Speaker Jim Wright (D-Tex.) both have been saying that Bush should submit his own complete fiscal plan for the year in January, rather than defer to President Reagan, as Bush aides say they plan to do. Gray was interviewed Sunday on ABC’s “This Week With David Brinkley.”

As the first act of the Bush drama has begun to unfold, Reagan Administration officials have cheerfully taken on the role of temporary villain, proposing unpopular measures they hope will win applause for Bush when he disavows them. Bush and the Democrats, meanwhile, have circled each other warily, delivering speeches designed to establish the nature of their characters for the vast and fitfully attentive national audience.

For Bush, the goal for now is to look decisive and presidential while, at the same time, avoiding too many specific decisions that could get him into trouble later on. President Reagan has made that easier since the election by making a number of decisions--on the budget as well as other issues--which have pleased Republican constituencies but upset others Bush needs to woo.

On the budget, Reagan Budget Director Joseph Wright Jr. said just before Thanksgiving that the Administration plans to submit a fiscal plan in January that would increase defense spending faster than the rate of inflation, sharply cut some social programs and reduce “middle class” entitlements such as Medicare, the government program that helps the elderly with medical bills. The budget would carry a $100-billion deficit, a large sum, but $35 billion less than the amount in earlier spending plans.

The Medicare cuts could be particularly controversial. Gray noted Sunday that Reagan had proposed a similar plan earlier in his Administration that was rapidly abandoned by both Democrats and Republicans.

Takes Several Steps

Beyond the budget, the Administration recently has taken several other steps that might have been controversial had they been taken before the election: new rules designed to help the electric power industry open new nuclear plants; a brief urging the Supreme Court once again to consider making abortion illegal; a veto of a government ethics bill that several potential Bush appointees found overly stringent; and “recess appointments” given to several officials, some of them conservative activists, whose path to office appeared to have been blocked by opposition in the Senate.

Bush now has the opportunity to gain popularity by at least partially reversing some or all of those Reagan moves. He already has said he will submit a new ethics bill once he becomes President. Aides suggest he will move rapidly away from Reagan’s budget numbers--scaling down the defense budget increases and increasing spending for education and other “children’s programs,” for example--when he begins negotiations with Congress over deficit reductions. And just after the recess appointments were announced, Bush spokeswoman Sheila Tate issued a lightly veiled hint that some of the new appointees would probably be out of a job come Inauguration Day.

The next scene in the budget negotiations opens today when Bush meets for lunch with Senate Minority Leader Bob Dole (R-Kan.), the first meeting of the two men since the election. Dole played a key role for Reagan for the last eight years, proposing budget compromises that both the White House and congressional Democrats could attack publicly and agree on privately.

But Dole may be less willing to bail out Bush, for when Bush and Dole vied for the GOP presidential nomination, the tax increases and Social Security cuts that Dole had backed in the interests of budget compromise were key items in Bush’s campaign against him.

Meanwhile, Bush aides will be meeting this week to prepare lists of budget alternatives. Bush said during his holiday that he has asked Treasury Secretary Nicholas F. Brady, who will keep that post in the new Administration, and Budget Director-designate Richard G. Darman to give him by the end of the week a list of choices on how the budget deficit might be reduced.