Darman Examines Fees as Way to Hike Revenue : Bush Advisers Considering Assessing Charges Against Polluters, Auctioning Radio Channels

WASHINGTON —  Richard G. Darman, President-elect Bush’s incoming budget director, is examining a variety of revenue-raising measures that would skirt Bush’s pledge against higher taxes by carrying the label “user fees” and by collecting more money through regulatory changes.

Among the measures Bush’s advisers are considering, sources said Monday, are auctioning the rights to use certain assets that the government previously has given away and to engage in practices that the government has tried to curb through regulation.

Bush’s aides are looking at a proposal, for example, that would reduce environmental damage--and generate revenues--by requiring firms to pay fees when they spew pollutants into the air or water.

Darman is also expected to adopt a Reagan Administration proposal that would raise $2.3 billion next year by selling the rights to use certain radio frequencies for air-to-ground radio, cellular radio and other similar uses.

Darman and other Bush budget experts, who are now poring over the Reagan Administration’s last budget proposal, are seeking out the so-called “back-door” revenue-raising measures because of the particularly difficult challenge posed by next year’s $100-billion ceiling on the federal budget deficit.

With Bush’s no-tax vow still firm, more funds from non-tax sources will be needed if the Administration is to offer any expanded social programs to support his theme of a “kinder and gentler” America.

“The big question mark all along is how Bush defines ‘read my lips,’ ” said Rep. Leon E. Panetta (D-Monterey), chairman of the House Budget Committee. “If he goes along with some of these recommendations on revenues, perhaps to finance his programmatic initiatives, it gives us the opportunity for a compromise over the budget.”

Although Darman has not commented publicly since Bush named him to head the Office of Management and Budget in the new Administration, he has provided a glimpse of his views on user fees in written responses to questions from lawmakers.

Darman opened the door a crack to certain types of excise tax increases--such as those on gasoline, cigarettes and liquor--if they can be classified as user fees, which the government charges for some of its services.

“In some circumstances (depending on the application of the funds),” Darman wrote last week in one response, “a gasoline tax might be considered a ‘user fee’--as might alcohol and tobacco excises.”

Darman’s comments help amplify some of Bush’s earlier remarks explaining why he thinks last year’s sharp tax hike on many elderly people does not run afoul of his pledge. The tax pays for expanded Medicare coverage that the elderly would receive.

The implication of some of Darman’s private statements, officials said, is that some taxes could be raised as long as they are used to pay for specific programs. One Bush aide, for instance, has recommended a hike in the cigarette tax to help pay for an expansion of the federal anti-drug effort.

But Darman, despite his own willingness to stretch the definition of taxes, has made it clear that Bush’s opposition to tax increases will depend on public perceptions.

“Applying the old if-it-looks-like-a-duck rule,” he wrote in his reply to lawmakers, “if it looks like a ‘tax’ to most Americans, it’s a tax.”

Darman’s written statements to lawmakers began circulating on Capitol Hill over the weekend after key parts appeared Friday in a trade publication of the Bureau of National Affairs.

Bush is also being urged by some advisers to consider a proposal under which the federal government would switch away from trade quotas, which simply limit the number of certain types of imported goods allowed into the United States, to tariffs, which would accomplish the same goal but would add billions of dollars to the government’s coffers by requiring importers to pay for the right to bring in restricted goods such as garments.

Other regulatory changes suggested, such as reducing the tax deduction for interest payments on certain junk bonds, might be used to raise revenues that would help his Administration produce a modified Reagan budget designed to meet the $100-billion deficit target called for next year under the Gramm-Rudman budget law.

In a press conference last Thursday, Bush suggested that he may propose tax measures aimed at discouraging the unbridled use of high-yield, high-risk bonds to finance corporate takeovers and the recent spate of leveraged buyouts.

Treasury Secretary Nicholas F. Brady has been studying measures designed to curb the increasing buildup of corporate debt and has expressed worries that leveraged buyouts force some firms to cut back on research and other measures needed to achieve long-run growth.

Darman, according to one GOP adviser, is also interested in limiting the tax advantages of corporate debt as part of what the adviser called a “populist movement to go after all the bad guys on Wall Street. These kinds of things will be absolutely necessary if we also are going to be raising the taxes on Joe Six-Pack’s beer and cigarettes, and they will sell well even if we don’t.”

Perhaps the most novel of the revenue-raising measures under consideration, however, is the pollution “tax.” It could generate large revenues by requiring firms to pay fees when they spew into the air pollutants that cause acid rain or when they dump certain wastes into rivers and oceans.

A number of economists, business executives and environmentalists, under the sponsorship of Sen. Timothy E. Wirth (D-Colo.) and Sen. John Heinz (R-Pa.), have recommended such an approach to environmental policy in a recent report, entitled “Project 88: Harnessing Market Forces to Protect Our Environment.”

The report makes 36 recommendations to use market forces instead of traditional regulation to accomplish a number of environmental goals.

Such an approach would expand significantly on a little-noticed provision in President Reagan’s final budget that proposes to implement last year’s international ozone treaty by selling to the highest bidders the limited U.S. rights to produce or import fluorocarbon substances that deplete the atmosphere’s ozone.

The plan, aimed at sharply cutting the use of fluorocarbons in refrigeration and many important industrial practices, would raise an estimated $400 million next year and $1.4 billion in 1991.