Fear Not the Tax Cut
the weekly Standard Fear Not the Tax Cut Like the hero in an old Hollywood war epic, Bob Dole leads his battered GOP platoon through the mud, searching for a fiscal-policy highway to 1996...
...But if such a cut were somehow applied to payroll as well as income taxes, it would correct this ghastly anomaly...
...Solved...
...The map from the brain trust at Republican headquarters suggests a right turn is in order: broad and deep income-tax cuts...
...It's a narrowly targeted tax advantage that will, by increasing demand for higher education, likely raise tuitions a corresponding amount...
...The path ahead divides in two...
...Why, then, should Dole throw aside the deficit-cutting principles he has "championed for years" and lose his "credibility" (and, by implication, the election) in the process...
...And if Dole would take a closer look at that friendly MP he would discover his true identity: Clinton-sympathizing Wall Street Journal fifth-columnist Albert R. Hunt...
...Overall economic growth is relatively weak: weaker than the post-World War II average, weaker than in the last five economic expansions, weaker than in the 1980s, and weaker than in the final year of George Bush's presidency...
...We've seen this movie before, so we know our protagonist is being set up for an ambush...
...It is the perfect "respectable" gloss on the Clinton administration's likely critique of any broad-scale Dole tax proposal...
...But what exactly are they talking about...
...But a freshly posted road sign points left, not right...
...It would be a "considerable redistribution of income to the more affluent," he writes, and would "sock it to the middle class...
...And it is financially pinched...
...This is where the Clinton White House and Hunt finally part company...
...President Clinton doesn't think so...
...Federal taxes, now effectively double what they were for the average family in the early 1960s, absorbed a virtually unprecedented 20.4 percent of gross domestic product in 1995...
...But it is not so evident, as Hunt implies, that President Clinton and his party deserve the lion's share of credit for these accomplishments...
...The "fairness" issue...
...And room already included for tax cuts in the balanced budgets approved by the current Republican Congress would make up most of the rest...
...Or worse...
...The partisan effect...
...And immediately save each middle-income family a minimum of several thousand dollars each year...
...Median household income has declined since 1992 if you adjust for inflation...
...High taxes depress growth...
...Big tax cuts are budgetbusters, the MP says, and unnecessary in today's vibrant economy...
...Clinton-era American incomes remain famously stagnant...
...Is that not a legitimate "economic rationale" for federal tax cuts...
...For when Al Hunt attempts to ambush him with such friendly counsel, Dole must really be onto something...
...And as time goes by this summer, that critique is certain to be echoed and amplified by "sophisticated" journalists everywhere, schooled as they are to dump on any election-year tax idea as a mere gimmick...
...The road sign is backwards...
...The economic rationale...
...Poll data refute Hunt, too...
...Slightly...
...Obviously, then, a Dole tax cut that promised palpable benefits to as many Americans as possible would help his presidential prospects this year...
...But if it increased GDP growth by just one percentage point-one-fourth of the average annual growth that occurred after the Reagan and Kennedy tax cuts-the Treasury would, by most expert estimates, recover well over half that "lost" revenue...
...And if everyone gets a cut, how could anyone be getting "socked...
...Professional Democrats do not pretend to be concerned for Dole's political future or his immortal soul...
...McCurry, of course, is unfamiliar with that particular church...
...Dole should politely reject those of his "well wishers" who advise him otherwise...
...There is no rationale, says Mr...
...The deficit...
...In April, Gallup asked respondents whether they thought their federal income taxes were "too high" or "about right...
...There's nothing particularly "fair" about the federal tax-rate schedule Clinton inherited from Bush (and has now made even more "progressive...
...Real "total compensation"-average wages, salaries, and benefits- went up just 0.4 percent in 1995, the worst such number in more than 14 years...
...Hunt, with ostentatious disingenuousness, worries over both...
...Low growth depresses income...
...Median family income is flat...
...As a share of gross domestic product, taxes (federal, state, and local all together) hit a historic high last year...
...Al Hunt makes great sport of the 15 percent, across-the-board federal income-tax cut now under discussion inside the Dole campaign...
...And it is certainly untrue, despite administration cheerleading, that the American economy Clinton has supervised is "the healthiest in nearly three decades...
...That typical family now spends more on total taxes than it does on food, clothing, and shelter combined...
...In other words, tax cuts are a political loser...
...In a January Gallup poll, 83 percent of respondents said that federal taxes were a "top priority," a "high priority," or "very important" in their decision about whom to choose for president...
...Dole's putative 15 percent cut would cost the government about $90 billion a year...
...But read him carefully first, for Hunt's June 6 Journal essay called "The Tax Cut Trap" actually does the Dole campaign a genuine service...
...Earnings exempted from taxation aren't "redistributed" anywhere, strictly speaking...
...And there are no serious policy grounds on which to object to such a tax cut...
...The answer was "too high" by almost two to one...
...That typical family is overtaxed...
...Taxes "are not a high priority for the vast majority of Americans," he writes...
...People will like it...
...He wants us to believe, as he recently proclaimed at Princeton University (annual tuition, room, and board: $29,000), that this munificence will grant "every single solitary soul in this country the chance to be most fully alive...
...Hopes for a balanced budget, Hunt says, would entirely disappear...
...Dole's tax-cut map is accurate...
...Look...
...If the Republican party no longer worships on the altar of the balanced budget," Clinton press secretary Mike McCurry quips, "that's news...
...No Dole partisan pretends that such a cut would "pay for itself...
...David Tell, for the Editors...
...It's true, as he points out, that inflation, unemployment, and interest rates are now quite low and that the federal deficit has been sharply reduced since 1993...
...The White House loves this argument...
...He should move soon, and swiftly, and decisively...
...And Clinton's advancement of it indicates that Hunt is completely, fabulously wrong when he insists that taxes aren't a big issue for voters...
...Hunt, only discredited supply-side "snake oil...
...Most Americans would not...
...He has just proposed a means-tested, two-year, $1,500 tax credit for higher-education expenses...
...The details of Bob Dole's possible 15 percent cut have yet to be revealed...
...Hunt may sniff at such sums as paltry...
...It won't, of course...
...Taxes are not irrelevant to these problems...
...Stop, think hard, and go the other way, Captain Dole, before rash irresponsibility gets you killed by offended swing voters...
...The Clintonistas predictably talk like this too...
...Americans with taxable incomes between roughly $23,000 and $57,000 pay an effective federal tax rate higher than the one paid by people earning more than twice as much (if you count payroll taxes...
...And a friendly MP at the intersection tells Dole his map is wrong...
...And higher marginal rates penalize income growth directly...
...Democrats visit only as tourists...
...Here's the Hunt-style case against tax cuts...
...Still, Clinton's tax credit sounds good...
...Ignore him, Bob...
...the weekly Standard Fear Not the Tax Cut Like the hero in an old Hollywood war epic, Bob Dole leads his battered GOP platoon through the mud, searching for a fiscal-policy highway to 1996 electoral victory...
Vol. 1 • June 1996 • No. 39
