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Jewish World Review Jan. 14, 2003 / 11 Shevat, 5763

Bill Schneider

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Dems can't afford to be bold | Class politics is back. Rich versus poor. Haves versus have-nots. The coupon-clippers versus the horny-handed sons of toil. Does it mean "Happy Days are Here Again'' for Democrats?

President Bush's economic plan overwhelmingly favors the wealthiest Americans. The President is up front about it. "There's no better way to help our economy to grow than to leave more money in the hands of the men and women who earned it,'' Bush said in Chicago on January 7.

Democrats are aghast at the brazenness of the President's proposal. "This plan is obscene,'' Senate Democratic leader Tom Daschle said. "It is wrong in how it is directed to the wealthy. It is wrong in how it is timed to benefit the rich, not just this year, but years beyond.'' Mr. Bush's response: there they go again. "If some would like to turn this into class warfare, that's not how I think,'' the President said.

In fact, Democrats have gone there many times. Way back in 1896, William Jennings Bryan lambasted the rich at the Democratic convention: "Thou shalt not crucify mankind upon a cross of gold!'' As recently as 2000, Al Gore ran for President on the theme, "the people versus the powerful.'' Funny thing though. Both of them lost.

But now, President Bush has come up with a plan so blatantly skewed toward the rich, Democrats see a juicy target. Former Vermont Governor, and current presidential candidate, Howard Dean charged, "Clearly it is the Republicans practicing class warfare because it is for one class of people, and that is not us.''

The centerpiece of the President's plan is his proposal to stop taxing income from dividends. According to an analysis by the Tax Policy Center, nearly two thirds of that tax cut would go to the wealthiest five percent of taxpayers. Remember the "supply side'' economists? They're the guys who convinced President Reagan back in the '80s that you could cut taxes and still balance the budget. It didn't quite work out that way. Because Congress refused to cut domestic spending, they said.

Supply siders like Club for Growth president Stephen Moore and former Reagan economic adviser Lawrence Kudlow have been railing against the dividend tax for years. They hate the idea that money can be taxed twice. Corporations pay tax on profits. Then shareholders pay a tax on dividends. Outrageous! Even though lots of money is taxed twice. Like income: first the income tax, then sales taxes.

Insiders point to a key moment at the White House Economic Forum in Waco last August. Business leader Charles Schwab was addressing a panel as President Bush took furious notes. "They ought to reduce the double taxation of dividends,'' Schwab said, "encourage companies to pay more in dividends and reward long-term investors.'' President Bush commented a few minutes later, "I love your ideas about the double taxation of dividends. That makes a lot of sense.''

Why is this suddenly the right time for a dividend tax cut? Because the stock market has been dropping for two years now. The idea can be sold, not as a tax cut for the wealthy -- which it is -- but as a way to boost stock prices -- which it could be. "By ending the double taxation of dividends, we will increase the return on investing, which will draw more money into the markets,'' Bush said in his speech announcing the plan. As Club for Growth President Moore put it, "98 million Americans who are investors are going to benefit from this. Anyone who owns stock is going to see an increase in the valuation of their stock.''

That would be good news for millions of Americans who hold stocks in their pension plans. They won't get a tax cut, however, because their dividends are not taxed now. They'll still have to pay income taxes when they retire and take the money out. But that's years from now.

Democrats know class politics paid off big time for them in the 1930s, when President Roosevelt attacked opponents of the New Deal. "These economic royalists complain that we seek to overthrow the institutions of America,'' FDR thundered to the 1936 Democratic convention. "What they really complain of is that we seek to take away their power.'' Notice how it happened: President Roosevelt was doing soomething to turn the economy around. Republicans were resisting.

Class politics did not work for Democrats in the 1980s, when they accused Ronald Reagan of favoring the rich. That's because the tables were turned. Reagan was doing something to turn the economy around. Democrats were resisting.

Now President Bush is proposing a big, ambitious plan to turn the economy around. He knows what happened when his father failed to do that in 1992. "I proposed a bold plan because the need for this plan is urgent,'' Bush said. Meanwhile Democrats are resisting. "It's an enormous budget buster,'' Sen. John Edwards (D-N.C.) complained. "The President has presented no plan to get us back to a balanced budget, back to surpluses. This is going to deepen our hole on deficit spending.''

See what's happened? Democrats have taken up the cause of fiscal responsibility. The same hopeless cause that Republicans defended in the 1930s. House Democrats have come up with their own economic plan, but it's far more modest than President Bush's. In fact, Bush's plan is five times larger.

Democrats can't afford to be bold. That's their problem.

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01/08/03:: How Bush will reclaim suburban swing voters: The evolution of a political party
12/19/02: Why Gore dropped out --- he never grasped one of politics' most important lessons
12/12/02: The emerging 'tough Democrat'?
12/06/02: Hispanic voting surprises
11/08/02: "President select" no longer: What have the Dems learned?
10/31/02: Can a party without a message or a messenger still win?
10/24/02: Fright Night may come twice this year!
09/24/02: The politically loaded question: "Why now?''
09/19/02: Pundits in the crosswinds
09/10/02: Has Bush lost his momentum?
09/04/02: Bush's European problem
08/13/02: Overdosing on prescription drug promises
08/06/02: The Dems' secret weapon
08/01/02: Time for prez to let Cheney go
07/30/02: GOPers, feeling scared, get realistic
07/18/02: Soccer Moms, say hello to NASCAR Dads
07/11/02: Israel via Alabama
06/20/02: Does the solution fit the problem?
06/13/02: Triggering unintended consequences
06/11/02: Democracy won, the president is saying to our enemies. You got a problem with that?
06/06/02: White House warnings were effective tactical move
05/23/02: Giving the Dems an education on education
05/16/02: Power to the swing voters
04/23/02: The secret formula
04/09/02: Politics Remain Stalemated
03/31/02: Values and gas mileage?
03/25/02: Truly oppressed minorities
03/14/02: Reciprocal hostility
03/07/02: Bush's prudence
02/28/02: Is the 'clash of civilizations' becoming a political reality?
02/28/02: 'Cowboy' or not, Bush has the 'axis of evil' running scared
02/20/02: Could it be that the era of Big Government really is over?
01/31/02: 'Daddy issues' grab center stage
01/15/02: And, they're off
01/09/02: Three 'War Stars' are born
01/04/02: California cluelessness?
12/17/01: Congress' life or death issue
11/27/01: Our reinvigorated spendthrift Congress
11/27/01: Out of War, Peace?
11/14/01: The other war --- the one for public opinion
11/09/01: The mayor of New Yawk and the King of the World
11/07/01: An insurance policy on America
11/02/01: A nation of defiant optimists
10/30/01: Has Bush has flip-flopped on 'nation-building'?
10/23/01: The new political world
10/16/01: The return of big government
10/08/01: On political war
10/01/01: The "born-again" president
09/25/01: Making America squirm
09/14/01: The American spirit will not wane
09/10/01: What Dubya knows about the budget
08/13/01: Japan becomes the latest country to see its politics become personalized
08/09/01: Bush backers out to remake prez yet again
07/30/01: Will the GOP's mandate of 1994 finally runs out?
07/23/01: Both political parties are full of ....
07/16/01: Empowered moderate Republicans
07/09/01: As goes New Jersey, so goes the nation?
07/02/01: Dubya: Like father, like son?
06/15/01: The new soccer moms
06/05/01: Deals or deadlock?
05/29/01: The War Between the States is heating up again
05/21/01: The answer is men
05/10/01: Bush v. Carter?


© 2002, William Schneider