Democrats Rally Against Tax Cuts For The Rich
December 27, 2001
By DAVID LIGHTMAN, Washington Bureau Chief
WASHINGTON -- The biggest tax debate of 2002, and thus one of the year's most
divisive election issues, is likely to center on whether to increase taxes for the
wealthy.
Democrats have been talking for weeks about a tax freeze or increase for the
richest taxpayers, and appear ready to discuss it seriously when Congress
returns in January.
"The top 1 percent of
taxpayers do not need a
tax cut," said Sen.
Joseph I. Lieberman,
D-Conn.
"What we need is more
help for working
people," added House
Minority Whip David
Bonior, D-Mich., who is
leaving that job in
January to run for
governor of Michigan.
Their views echo a
rallying cry for
Democrats that's likely
to reverberate through
November. Aware that
the usual mid-year
election target - the president - is unlikely to be available for demonization, party
members have started building a case to show why Republicans are heartless
and overly friendly to the wealthy.
"The president is doing a good job on the war and Democrats ought to support
him on the war," Democratic consultant James Carville said. "That doesn't mean
that this translates into support of his domestic policies."
That theme surfaced repeatedly in December as Congress' economic stimulus
plan stalled. The Democrats' chief complaint was that Republicans were too
willing to give tax breaks to the rich at the expense of everyone else.
Senate Majority Leader Thomas A. Daschle, D-S.D., for instance, routinely spiced
his arguments against the GOP tax-cut plan with reminders of how much it could
benefit IBM, Enron and other big companies.
He cited the latest federal budget estimates, which say deficits are likely this year
and in the years ahead, and cited tax breaks for the wealthy as a key reason for
the fresh red ink.
"How is it possible we could be using Social Security and Medicare dollars for an
economic recovery program that largely benefits the largest and richest
corporations in the country?" Daschle asked. "That's what the Republicans want
us to do, and we just can't accept that."
The next move for the Democrats is an attempt to roll back the recent reduction in
the top tax rate. The rate, previously at 39.6 percent, dropped to 38.6 percent this
summer and eventually will be 35 percent by 2006.
Republicans say there will be no change.
"One of the worst things we could do is to repeal any part of the tax cut," said Karl
Rove, political adviser to President Bush. "It would stop whatever growth we have
right in its tracks."
But it's not entirely out of the question, and there is precedent for such a move. In
1982, a similar scenario was shaping up. Republicans, with minimal Democratic
support, had pushed through a massive tax cut in 1981, only to see an economic
recession deepen in 1982.
Critics of the tax cut blamed it for helping to create record federal budget deficits
that worried financial markets. As a result, lawmakers, led by the
Republican-dominated Senate, passed a massive tax increase, legislation that
Ronald Reagan - who had been as adamant in his embrace of tax cuts as Bush
is now - signed.
The current economic situation is loosely similar. The 2001 economy has been in
a recession since March, and this summer's tax rebate checks appear to have
done little to help. Estimates are that less than 10 percent was spent; the rest
went into savings or investments.
Many economists predict a rebound this spring or summer, but the government
faces a fiscal crunch not unlike that of 1982. The recession invariably means
more spending on social programs and less revenue, and Washington is
expected to need more money to fight the war against terrorism.
All that, say Democrats and their supporters, is a good argument for restoring the
top tax rate.
"Would we have passed a tax cut of that magnitude if we had had the data
available that we have today? I don't think so," economist Joseph Stiglitz said
recently at a Washington press conference. "We need to recognize now the
adverse effects these proposals will have on our long-term budgetary position."
"Nothing's ever been demonstrated to me that tax cuts in the richest brackets were
any kind of economic stimulus," Sen. Dianne Feinstein, D-Calif., said, "and we're
now finding we have different needs for the money."
How all this will play politically is unclear. Republicans lost 26 House seats in the
1982 election, and analysts blamed not the tax increase, but the recession, as
well as the party's talk about cutting Social Security.
But polls so far show that the GOP is not being widely blamed for this economic
downturn; in fact, an American Research Group survey on Dec. 16-19 found that
63 percent of those polled nationwide approved of how Bush is handling the
economy. A Gallup poll on Dec. 14-16 found that 62 percent assigned some or a
great deal of blame for the downtown to the Clinton administration, while 44
percent blamed the current White House.
For that reason, Republicans are in no hurry to embrace the Democrats' ideas -
but they are also wise enough to know the political climate can change quickly, so
they do not rule anything out.
"People don't feel Republican policies caused this recession," said House
Republican campaign Chairman Thomas M. Davis III, R-Va. "But what they [will]
think in a year is a different matter. Nobody knows."
sunspot.net
E-mail story |
