The Public Policy: Growth Democrats

...Her purpose in all this is quite explicit: D.C...

...ANDREW S. KNIGHT Morgan Hill, CaliforniaGrowth Democrats (Continued from page 65) unacceptable deficit, its solution was no longer to be sought in fiscal policies inimical to growth...

...residents from the (progressive) federal income tax, subjecting them instead to, in effect, a flat tax with a top rate of 15 percent...

...Although outright Republican repudiations of the Reagan years were few, by the time of the late Bush administration, a revisionist view had taken hold...

...Then came legislation introduced by the supremely liberal House delegate from the District of Columbia, Eleanor Holmes Norton...

...Now Norton, too, has done an about-face...

...JOHN C. LEMON, M.D...

...But if you are going to balance the budget and cut taxes, it's only a small step to re-thinking which taxes to cut...

...Welch, the state policeman, testified that an FBI agent from Fort Smith even asked him once for an informal briefing on the investigation...

...It was a critical distinction because, Republicans argued, the Democrats' tax increases would have a negative effect on economic growth...

...Distributionist concerns and class-warfare rhetoric continue to animate many Democrats and to frighten a number of Republicans...

...In the past few years (since Clinton...

...With the Republicans in charge, she has emerged as a realist, a Democrat who wants to work with the GOP leadership to get things done...

...Five days before the September 1990 election in which she won the Democratic nomination for D.C...

...The political pressure forced Clinton to respond that, of course, he too wanted a balanced budget—but maybe in ten years, or nine, or eight...

...I particularly enjoy Ben Stein's Diary, Last Call, and the legal opinions of Solitary, Poor, Nasty, Brutish & Short (shades of W.C...

...A phenomenon whose time has finally come...

...They should have been selling a bigger theme, something to get ordinary Americans excited in a way that wrangling over the "current services" baseline does not—or so, at least, the self-criticism held...

...But liberals weren't about to acknowledge Reagan's success...

...Tax relief for District residents...

...Eventually, after protracted political struggle, this would be codified as an unprecedented agreement between Democrats and Republicans to balance the budget in seven years according to the "scoring" of the Congressional Budget Office...

...It was never clear why the Hot Springs office even handled the case, since Mena lies in the jurisdiction of the FBI's Fort Smith office...

...My reading time for our local liberal mouthpiece, the San Jose Mercury News, is now a quick scan of the headlines and straight to the business section...

...But despite the failure of budget negotiations, it's striking what the Republican Congress and Democratic White House agreed on...

...Instead, they developed two main lines of attack on the legitimacy of the economy's high performance...

...In view of the recent convictions and the Clintons' recent payment of back taxes, it could be a cruncher...

...Now, maybe all Norton and the Post are interested in is helping the locals...

...Which is to say that the Rohatyn-Norton tendency is certainly not widespread among Washington Democrats...

...He goes on to advocate sharply reduced rates of taxation on capital, regardless of the distributionist effects...

...It easily trumped the Keynesian economic "stimulus" package of pork-barrel spending and political payoffs the administration also proposed...

...In fact, the liberal about-face has arisen partly in response to the critique of the Reagan years...

...for liberals, it was a standing rebuke to Reagan's fiscal policies...

...The two men have held long-time positions in the Hot Springs office, even though the FBI usually rotates its field agents frequently...

...They didn't like the deficit, so politicians quickly followed suit...

...Why subject myself to liberal polls, biased editorials, and global warming announcements...

...The budget would be balanced by spending cuts, not by tax increases —period...

...But, of course, there was no final agreement, and Republicans got most of the blame for the failure...

...In effect, the Contract acquiesced in the top-rate increases that had taken effect since the 1986 tax reform...

...In fact, the Contract With America itself is, at least in part, a product of the revisionist view of the 1980's...

...The wealthiest Americans got pasted as the biggest beneficiaries of tax cuts...

...The experience of the last two decades, with the advent of the global economy, has very much shaken that view...

...bution tables and charts showing who paid how much in taxes told a different story...

...budget battle, the administration focused on and promoted a $50o billion five-year package of spending cuts and tax increases—including symbolically important income-tax increases on those earning most—in the name of reducing the deficit...

...In other words: tax increases...

...64 July 19 9 6 • The American Spectator And, surprise of surprises, who should happen to love it but the Washington Post...

...Now, having fully matured, I await with great anticipation each new issue of The American Spectator...

...The change has resulted largely from the election of a Republican Congress, though not in the way some might caricature it — hard-body Reaganauts flexing their new legislative muscle...

...As he put it in the Journal: TOD LINDBERG is editorial page editor of the Washington Times...

...they also agreed to do so while cutting taxes...

...soon everybody was "against" the deficit...

...In the cases of Rohatyn, Norton, and the Post, we have indications that for some Democrats, very real distributionist concerns —the top agenda item of so many Democrats for so long—are yielding pride of place to growth economics...

...Hot Springs is the home town of Bill Clinton...

...This tax proposal is designed precisely to promote growth and attract business and residents...

...Ross came calling two days later, apparently renewing his inquiries of the previous April...

...The Contract did call for a reduction in the capital-gains tax rate, an essential element of a growth agenda...

...Irvine, California The American Spectator has become my "Reality Check" against the "media elites" which provide me with my daily news fodder...

...Yet the legislation she introduced April 15 (about which she'd been consulting with Jack Kemp) is a fabulous exercise in growth economics and empowerment-think...

...The GOP answer to the Clinton deficit reduction program was a plan that cut thedeficit by the same $500 billion without raising taxes...

...But what happened to the bold, tax-cutting Republicans of yore...

...She was instrumental in crafting the legislation that imposed a financial control board on the profligate D.C...

...But maybe also provide tax cuts targeted at economic growth...

...But she won't call it a flat tax...

...The balanced budget amendment may have failed, but the GOP made budget-balancing its top priority, and Republicans declared as much, loudly and often...

...Such a thing was simply impossible, given the city's tremendous demands for social services, a freeloading federal government that never faced up to its obligations under home rule, the absence of statehood, etc...

...Continued on page 82) The American Spectator • July r 9 9 6 79...

...She proposed exempting D.C...

...When he finally proposed his seven-year balanced budget, it included a (modest) tax cut...

...Fields...

...And if distributionist concerns can be overcome in relation to residents of the District, why should such concerns stand in the way of higher economic growth for all Americans...

...And soon after came a Washington Post editorial proclaiming the liberal newspaper's support for Norton's plan...

...TERRENCE E. MARTAU Lakewood, Ohio As a new subscriber to TAS I have nothing to compare with your new design and format, but your present presentation looks great...

...Continued from page 63) visit to the Board of Private Investigators...

...Still, it's not easy to escape the implications of the arguments they are advancing: If the Norton plan would indeed promote economic growth in the District, wouldn't its provisions, applied nationally, also promote growth...

...It's a little premature to claim revenge for Ronald Reagan, but the debate over growth economics has shifted dramatically...

...She would also eliminate the capital-gains tax on investments made in the District by its residents...

...So not only did the major players agree to balance the budget by cutting spending...

...Kudos and thanks for keeping the tradition alive...

...Then, in 1994, he returned to it...

...The Lazard Freres & Co...

...Give something to the "middle class," "working families," "those who work hard and play by the rules...

...0* Who Is FBI Agent Tom Ross...

...Fairness does not require the redistribution of wealth...

...And that was the end of the link between cutting taxes and higher deficits—the end, in other words, of the first major attack on Reaganomics...

...First was a long Wall Street Journal op-ed in April by investment banker Felix Rohatyn...

...In other words, interest rates would fall and the economy would grow...

...What about the second attack, the one focused on the alleged unfairness of Reagan-style fiscal policy...

...government, where fiscal discipline had long been alien to locally elected pols...

...Many Republicans, to be sure, took these arguments about fairness and the deficit to heart...

...The second attack was on distributionist grounds...

...One such case is the joint federal-state investigation of drugmoney laundering at Mena, Arkansas, which closed down with a curious lack of indictments in 1985...

...delegate—the District's nonvoting member of the House of Representatives—she had to 'fess up to failing to pay D.C...

...In order to create a massive pool of private investment, Rohatyn also calls for the gradual privatization of Social Security...

...The long period of high economic growth during the 1980's was a remarkable achievement...

...She blamed her husband for failing to file the returns, and promised to fork over thousands in back taxes, interest, and penalties...

...Perhaps what's most remarkable about Ross's apparent interest in TAS's researcher is that he's no ordinary FBI agent...

...taxes on hundreds of thousands of dollars in income during the 1980's...

...The administration was divided internally over the matter, but when the time came for the FY 1994...

...The GOP relentlessly tried to pin him down...

...Her little oversight didn't sit very well with white Washington, where Norton had hitherto been running strong...

...That may be true...

...They were no longer paying their "fair share...

...After all —or so many Democrats said—this was the Decade of Greed, during which the rich got richer and the poor got poorer...

...Its two components were an unwillingness to defend lower top tax rates against political attack and a consuming focus on the elimination of the budget deficit...

...But Norton's support in the much-larger black community was enough to carry her into office...

...The coincidence was too obvious to miss...

...This is emphatically not Dick Gephardt's America...

...To survive, it must reverse the exodus...

...Rohatyn, whom Mother Jones recently flagged as one of the biggest contributors to the Democratic Party, has for years been a stalwart supporter of a big government agenda, financed by high taxes and a steeply progressive tax code...

...But he abandoned that promise for the sake of "deficit reduction" in his first budget on taking office...

...This was a tribute to the salience of the issue...

...But there had to be something in it for Democrats' troubles in inflicting $500 billion in pain...

...Now the "stimulus"— in other words, the economic growth the Clinton plan promised—would come from a favorable reaction from the bond market...

...Maybe so...

...Some of them, with the benefit of hindsight, became critical of the GOP's focus on bean-counting and deficit economics...

...You've got to start somewhere—and proponents of growth economics could do a lot worse than having Felix Rohatyn, Eleanor Holmes Norton, and the Washington Post editorial page supporting their agenda...

...Not hitherto receptive to the idea that lowering taxes creates growth incentives—the paper has long condemned the supply-side 1980's — the Post is now saying that "the prospects for a sturdy tax base are slim to none without some incentive for residents and businesses to stay and for others to come in...

...For the right, it was the product of a Democratic Congress unwilling to cut spending...

...every issue of that magazine has had an article that I believe would successfully pass the scrutiny of your editorial staff...

...As the GOP took power on Capitol Hill and the time came to implement their Contract, Republicans interpreted it to require bringing spending into line with forecast revenues...

...ROBERT PFEFFER, M.D...

...Usually when Russell and I were going to conduct some credible interviews," Duncan said, "Tom Ross, from the Hot Springs FBI office, would suddenly appear on the scene...

...They were mostly missing from the debate...

...Apart from that little boo-boo, however, Norton has never exactly had a reputation as a supply-sider, let alone a taxprotester...

...When Democrats took hold of the White House in 1993, the overriding goal of the Clinton administration became deficit reduction...

...Oh, and by the way: Death to the New Deal...

...The first of these focused on the reduction in both marginal and capital-gains tax rates as the direct cause of the ensuing high deficits...

...The Post even suggested it might be a fine model for revitalizing other depressed urban centers...

...In nerve, verve, and unsurpassed smart-assery the Spectator rules...

...According to the polls, though, Americans saw the issue differently...

...Even more curiously, Ross and Hayes have been connected to several sensitive cases, each time playing a role that is hard to define...

...managing partner (and Democratic Party maximum guru) renounced his redistributionist past and called for tax cuts to stimulate economic growth...

...As a traditional Democrat, I have always believed that freedom, fairness and wealth, basic to modern democracy, required an essentially redistributionist philosophy of wealth, that a fairly steeply graduated income tax was required as a matter of fairness and that lower deficits would guarantee adequate growth and a fair distribution of wealth...

...The format reminds me of the only other magazine I read from cover to cover, the New Yorker...

...Back in the days when Democrats were in charge, she was a tireless promoter of a commuter tax—a levy on the income of Virginia and Maryland residents who work in the District—as the premier solution to the city's financial mess...

...Norton's proposal would retain the deductions for mortgage interest and charitable contributions...

...Englewood, Colorado Mad About You As a boy I eagerly scanned the supermarket magazine racks in search of the next glorious issue of Mad magazine...

...But liberals kept up their charge of basic unfairness...

...it requires the creation of wealth...

...If the Spectator went to a weekly news format with a business section, "media elite" circulation and news broadcast percentages would take a real hit...

...In my teens I graduated to the more sophisticated National Lampoon...

...The two principal investigators, IRS criminal agent William C. Duncan and Arkansas state policeman Russell Franklin Welch, later gave sworn depositions to the state attorney general, describing the ambiguous role Ross played as the FBI agent assigned to the joint investigation...

...Well, okay—but it's the sort of progressive Dick Armey loves...

...And the economic growth of the period did not "trickle down," in the commonplace pejorative, to the poor or even the middle class...

...To be sure, most Democrats hammered Republicans throughout 1994-95 for cutting spending on the poor to pay for unfair tax cuts on the rich...

...THE PUBLIC POLICY by Tod Lindberg Growth Democrats just when you think you've got the rules of politics figured out—that liberal Democrats won't give up the theory, rhetoric, and practice of class warfare, for example, until you pry their cold, dead fingers from the wallets of the rich—along comes a one-two-three punch to send you reeling...

...It's progressive, she insists, because the rich pay more...

...It appears the two FBI outposts communicated very little...

...Conservatives responded that this was mere "class warfare" rhetoric, and that income distri44 In fact, the liberal about-face has arisen partly in response to the critique of the Reagan years...

...Instead of the old, progressive code, there would be a single rate of individual income taxation of 15 percent, coupled with generous exemptions ($15,000 for single filers, $25,000 for head-of-household filers, $30,000 for married joint filers...

...has been losing residents and business...

...But the centerpiece of its tax cutting was a $500 per child tax credit—not any broad-based cut in rates...

...Many supply-siders were at first indifferent to the economic consequences— if they saw any at all—of the rising deficit...

...Clinton had campaigned in 1992 on a middle-class tax cut of the kind subsequently embraced in the GOP's Contract...

...Eleanor Holmes Norton's case is not as spectacular, but it is every bit as dramatic and certainly more amusing...

...along with his colleague Floyd Hayes, he raises eyebrows in law enforcement circles throughout the state...

...Now, it seems, Rohatyn has bid farewell to all that...

...Thus, if a problem with the growth-based fiscal policies of the 1980's was an (Continued on page 79) The American Spectator • July 1996 65 Just an idea for you: Suggest, or kindly request, that the remarkable Ben Stein do a Whitewater recap along the lines of his excellent few paragraphs of your issue of March 1994...