Bush Catches Democrats in the Tax Trap


By Howard Gleckman Another Tax Day has come and gone. And if any American is celebrating, it's George W. Bush. Not that Bush likes taxes -- he surely does not. He loves having the tax issue to wield against Democrats, however. And he has shrewdly left Democrats speechless when it comes to the subject. As a result, the party of the New Deal, the New Frontier, and the Great Society has no coherent economic message for the coming 2002 elections.

Over the past week, Democratic Presidential hopefuls have had a chance to strut their stuff. A half-dozen White House wannabes, including ex-Veep Al Gore, plus Senators John Kerry (D-Mass.) and John Edwards (D-N.C.), took the stump at the Florida Democratic Party convention Apr. 13-14. Meanwhile, House Democratic Leader Dick Gephardt (D-Mo.) recently blasted Bush-o-nomics at the Washington meeting of Campaign for America's future -- a liberal coalition representing women's groups, environmentalists, organized labor, and civil rights organizations.

You couldn't find two more enthusiastic audiences, and the speakers were more than happy to toss out rhetorical red meat -- or at least spicy tofu. They blasted Bush for pandering to Big Business, for tolerating Enron-like corruption, and for running the economy into the ground. They ripped the tax-cut bill Bush jammed through Congress a year ago.

SILENT ON SOLUTIONS. But there, they bump into a huge problem: None of them would address what they will do about the tax cut that has put the nation back into deficit spending and that threatens many programs precious to Democratic partisans. In 2002, it seems, Democrats dare not whisper what they fervently believe -- that big chunks of the tax cut need to be rolled back. Actually, one did say that -- Vermont Governor Howard Dean. And, yes, you're permitted to ask, "Howard who?"

Why are Dems so mum? Their polling tells them Bush would crush them if they were to raise the subject. You can almost hear Republicans parroting that old Ronald Reagan refrain, "there they go again -- tax-and-spend Democrats." The President said last winter that Democrats would raise taxes "over my dead body." Of course, no elected Democrat really wants to raise taxes. They just want to repeal tax cuts that are not scheduled to take effect for three, four, or even seven years. And they want to repeal them only for the very wealthy.

No matter. Bush has Democrats in a corner. They can blast the President for blowing the budget surplus until the cows come home, but without talking about taxes, they can't say what they'll do to fix the problem. They darkly warn that critical domestic spending for education and environmental protection will be scaled back. But they can't say how they would pay for these programs without throwing country deeper in debt -- unless they talk about taxes.

MAYBE IN 2004. Al From, president of the Democratic Leadership Council, thinks that, sooner or later, the party must tackle this issue head-on. Yet, even he concedes it won't happen in 2002. Democrats just don't want to confront the GOP over taxes in this year's congressional races. Maybe in 2004, From says wistfully. But not now.

From is no tax-and-spend Democrat. In fact, he has argued for years that his party must wear the mantle of fiscal responsibility. He thinks the Democrats must stand for wise fiscal management, showing both spending restraint and the courage to speak out for tax revenues sufficient to keep the country out of the red.

He and former Clinton economic adviser Gene Sperling believe that they have the right message for New Economy Democrats: Tax cuts are bad for high tech. Why? Because they lead to deficits, which lead to higher interest rates, which lead to higher capital costs for tech companies, and eventually, to less innovation.

BAD BUMPER STICKER. It's an interesting argument. Alas, it's way too complicated for the average voter. The Democrats can't squeeze that one on a bumper sticker. By contrast, "over my dead body" fits nicely, thank you.

The bottom line: Until the Democrats address the tax issue, they can't really mount a national campaign for the congressional races this year. They can't talk about domestic policy, and taking on Bush over foreign policy, especially with a war going on, remains much too explosive for most Hill candidates.

Maybe the Democrats can still win back the House and keep control of the Senate. But they'll have to do it the hard way -- seat by seat, with no consistent message to catapult them into the 2004 race. That's one strike against them already. Gleckman is a senior correspondent in BusinessWeek's Washington bureau. Follow his views every Tuesday in Washington Watch, only on BusinessWeek Online


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