Senators Put Deficit Over Tax Cut: Dole : Boschwitz Circulates Letter Urging Reagan to Change Priorities

WASHINGTON —  Senate Majority Leader Bob Dole said today that most senators believe there should be action on reducing budget deficits before the chamber turns to President Reagan’s cherished tax overhaul initiative.

“Most Republicans and, I assume, a number of Democrats think we ought to address the deficit first,” the Kansas Republican told reporters.

Dole spoke a day after White House Chief of Staff Donald T. Regan was unable to head off a letter to the President making the same point.

At a Capitol Hill meeting with Dole and Sens. Pete V. Domenici (R-N.M.) and Rudy Boschwitz (R-Minn.), Regan said there was no need for Boschwitz to continue circulating a letter telling the President there must be action to reduce the budget deficit before the Senate considers tax overhaul legislation.

‘What Does It Hurt?’

“My answer was . . . what does it hurt?” Domenici said he told the President’s top aide.

“They weren’t too thrilled with the letter,” Boschwitz said after the meeting with Regan.

Nonetheless, he added, “I think we’re going to go forward with the letter.”

Some Senate tax writers and Administration officials have suggested it may be necessary to add an oil import fee or an increased gasoline tax to the pending tax overhaul legislation to make up for some revenues lost in the version of the tax bill the House passed late last year.

The idea is that the tax overhaul measure should neither increase nor decrease the government’s overall revenues.

Cut Taxes or Deficit?

Reagan has said he wants any additional revenues generated by tax overhaul to be applied to lowering individual tax rates. But Domenici and other senators say additional revenue should be applied to lowering the deficit.

Critics of the Boschwitz letter have said they think it is simply an effort to derail the tax overhaul effort.

Boschwitz conceded, “While I certainly feel the budget has to be dealt with first . . . I have a little less feeling of sympathy for the whole idea of tax reform. And implicit in that letter was a feeling that if tax reform doesn’t materialize, I certainly won’t feel too badly.”

He said he was concerned that budget-cutting will be slowing the economy and also that in changing certain tax rules such as those governing investment tax credits, the write-off of plant and machinery and capital gains, “you may have a further dampening impact on the economy, and the effect of both those could be most damaging.”

Signatures Collected

Although Boschwitz refused to say how many signatures he has collected, he said, “I spent an hour on the floor of the Senate and got four committee chairmen and (some) members of the (tax writing) Finance Committee.”

Dole said he was not directly involved in the effort on the Boschwitz letter, but said, “I think he’s expressing the view of a majority of senators.”