Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: WEDNESDAY, May 9, 1990                   TAG: 9005090431
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A1   EDITION: METRO 
SOURCE: The Baltimore Sun
DATELINE: WASHINGTON                                LENGTH: Medium

BUSINESS GROUPS DIVIDED

Two groups that had enthusiastically embraced President Bush's "read my lips" pledge from the 1988 campaign - the U.S. Chamber of Commerce and the National Federation of Independent Business - expressed grave disappointment that the White House had reopened the issue.

But the National Association of Manufacturers, which has given deficit reduction top priority, was more open to new taxes as part of a broad-based package that included spending cuts.

"If new taxes are on the table, then many sacred cows such as Social Security COLAs should be there, too," said Paul Huart, NAM's vice president for taxation and fiscal policy, referring to cost of living allowances.

Other business groups said they were dismayed with the White House's repeated comments that it had demanded "no preconditions" for deficit reduction talks with Congress.

"It looks like a trial balloon, and we want to shoot it down as quickly as possible," said Lawrence Hunter, deputy chief economist at the Chamber of Commerce. Hunter said the anti-tax business group, Coalition for Fiscal Restraint, was planning a public assault on the idea of higher taxes.

"There is no way we are going along with a tax increase," said Terry Hill, a spokesman for the National Federation of Independent Business. "The government has got plenty of revenue. The problem is spending."

Hunter has compiled a three-page list of what he calls "unequivocal, unambiguous" campaign commitments against tax increases made by Bush from April 1987 to December 1988.

A highlight on the list was Bush's appearance at the 1988 Republican convention to accept its presidential nomination, when he predicted the day would come when he would be pressed on the tax issue.

"And the Congress will push me to raise taxes," Bush said, "and I'll say no. And they'll push, and I'll say no, and they'll push again and I'll say no to them. Read my lips: No new taxes."

Crisscrossing the country, Bush made similar or identical anti-tax statements, according to Hunter's list.

Interestingly, the Congress is not pushing Bush this time.

The president appears to be motivated by forecasts from budget director Richard Darman that the budget deficit for the fiscal year starting Oct. 1 may require reductions of more than $56 billion, rather than the previously estimated $36 billion, to reach the target of the Gramm-Rudman budget balancing law.

A slower-than-expected economy, higher interest rates and the ballooning cost of the savings-and-loan bailout are putting pressure on the budget deficit.

But business groups opposed to new taxes insist that the deficit must be reduced solely by cutting spending, since revenues are forecast to climb by about $70 billion in the coming fiscal year.

At the manufacturers' association, Huart played down the tax issue by welcoming the president's revived effort to give priority to deficit reduction.