The Michigan Daily-Friday, June 12, 1981-Page 11 Reagan rules out compromise on tax cut program WASHINGTON (UPI) - President Reagan, s mmoning leaders of business and labor to the White House to begin a new drive for his tax cut program, vowed yesterday not to com- promise on his call for a three-year, 25 percent reduction. But deputy press secretary Larry Speakes indicated the administration has retreated from its "no com- promise" stance on replacing federal grants for specific projects with block grants that would give the states spen- ding discretion. REAGAN HELD a morning meeting with 14 labor union presidents, in- cluding indicted Teamsters Union President Roy Williams, and scheduled a late afternoon reception for business and government leaders. He also met with his Council of Economic Advisers to discuss the tax package and international trade, among other items. Meanwhile, House Democrats at- tacked President Reagan's tax cut proposal, charging low-income workers would actually pay more money next year while some wealthy Americans would save more than $20,000. AN ADMINISTRATION spokesman conceded the tax cut in its first year would have such a disproportionate ef- fect, but he maintained all tax brackets would be reduced in the second and third years of the plan. For the second consecutive day, Democrats on the tax-writing Ways and Means Committee questioned John Chapotan, assistant treasury secretary for tax policy, about the Reagan proposal. The panel's 12 Republicans were conspicuously silent. Chairman Dan Rostenkowski, (D- Ill.), announced the panel will begin drafting a tax cut bill next week for passage by August. DEMOCRATS FAVOR a two-year, 15 percent reduction with cuts aimed at workers earning between $20,000 and $50,000 a year. Reagan proposes a 33- month, 25 percent across-the-board cut in individual income tax rates. The Democrats complained the across-the-board approach would be unfair to the poor, because they would still feel the effect of rising Social Security taxes. On the average, workers earning between $5,000 and $10,000 a year would receive a $58 income tax cut in 1982 un- der the president's plan, said Rep. Donald Pease, (D-Ohio). But when in- creased Social Security taxes are in- cluded, he estimated the net effect would be a $42 tax increase next year. AP Photo Waiting behind an 8-foot-tall fence, some of the more than 1,200 Haitian refugees wait under the watchful eye of immigration officials. Today, a federal judge will hear legal arguments about deportation proceedings which could tell the fate of these hopeful refugees. $80nm LANSING (UPI) - Legislative leaders and Gov. William Milliken argued yesterday over ways to cover an expected $80 million deficit in the current budget, with one lawmaker suggesting the state again raid a recreational trust fund. Prospects for a general budget- cutting order - originally under serious consideration by state officials - dimmed as key Democrats strongly opposed the directive. Rep. David Hollister, (D-Lansing), who heads the House subcommittee on social services, said the governor told the group he wants to avoid taking that action. MILLIKEN LAST issued an executive order in May 1980. The governor met with the leaders and members of the House Ap- propriations Committee behind closed doors for about three hours. The group hopes to come up with a solution to the budget mess within 10 days. "We said we aren't going to rush into anything," said Appropriations Com- mittee Chairman Dominic Jacobetti, (D-Negaunee). HOLDING UP action is the disparity between House Fiscal Agency and state budget figures. House aides feel the state will have about $40 million more on hand at the end of the fiscal year than state budget officials. "We don't think we're too far off," Jacobetti said, however. Of the $80 million deficit, about $57 million is caused by skyrocketing welfare caseloads resulting from the state's continued high unemployment rate. LAST MONTH, officiajs cut June illion deficit jolts state welfare payments five percent, saving Jacobetti proposed making up the from the fund to cover about $3.5 million. Aid to Dependent remaining deficit through bookkeeping budget deficit. Children and general assistance changes and taking money from the "People have to eat, yo payments already had been cut five Kammer Recreational Trust Fund. are we going to ge percent below 1980levels. Jacobetti said the fund - originally recreitional areas whe One option discussed was continuing created to purchase park land - is eat?" said Jacobetti, a lo the five percent welfare cut through the being unexpectedly fattened by state environmental group end of the fiscal year Sept. 30. Jacobetti revenues from gas and oil leases in nor- "After you take ca backed this idea but Hollister would not thern Michigan. (welfare recipients,) the yet go for it. THE STATE borrowed $26 million about recreation." r last year's u know. How t land for n you can't ng-time foe of Ps. re of them n you worry Congress approves cuts WASHINGTON (AP)-House and Senate commit- tees have approved deep slashes in education and social programs, including cutbacks in student loans, school lunches and special impact aid for school districts containing federal installations. A reluctant House Education and Labor Commit- tee, struggling to come up with a total of $12 billion in cuts for fiscal 1982, tightened eligibility for guaran- teed student loans, currently available to students from families at all income levels. THE MEASURE approved by the committee would make such loans available only to students whose families have annual incomes no higher than $25,000. The Senate Committee on Labor and Human Resources, also working to meet the goal of $12 billion in cuts set by the Congressional Budget Office, would allow loans to students whose families have more than $25,000 income only if they can demonstrate need. Experts on the House committee said its measure would reduce student loan spending from the current $7.9 billion to $3.6 billion. It would make ineligible about 1 million of the 3 million students who currently receive such loans. "TODAY MAY BE remembered by, hundreds of thousands of students around the country as the Pearl Harbor Day of education in the United States," said Rep. Peter Peyser (D-N.Y.). Democrats on the House panel made it clear they would attempt to undo on the floor some of the cuts they approved in committee. "We are meeting against our wills, and we are meeting with a gun pointed at our heads," said Rep. Carl Perkins (D-Ky.), chairman of the committee. "The majority of this committee does not want to make these drastic cutbacks which are going to hurt so many of our citizens. We are only making these cuts because the House Budget Committee has said that if we don't, they will." "AND THE MAJORITY of this committee has decided that we would rather fashion the cutbacks so as to be least harmful, rather than to rely on the hard- hearted actions of those who brought us to this situation in the first place," Perkins said. Perkins said he had received "an absolute guaran- tee" from House Speaker Thomas O'Neill Jr. (D- Mass.) and House Rules. Committee Chairman Richard Bolling (D-Mo.) "that we will be ellowed several votes on the House floor in order to reverse some of the worst cuts." While the Republican-controlled Senate committee adopted the block-grant approach proposed by President Reagan, in which federal control is loosened, it_ exempted most major education programs and insisted that funds be earmarked for several big health programs.