Jewish World Review Dec. 18, 2001 / 3 Teves, 5762

Jack Kemp

Jack Kemp
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Consumer Reports

'Tis the season for Daschle to compromise -- WHEN the economy does well, class warriors in Sen. Tom Daschle's wing of the Democratic Party want to increase tax rates on successful people on the grounds that they should "share the wealth." When times get bad, these same class warriors argue that higher tax rates on upper-income people are required to pay for increased government benefits to those suffering from the economic downturn.

But Daschle and company are not hurting the rich, they're hurting the poor -- preventing low-income people from climbing the economic ladder and giving high-income people a good economic reason to work less, save less, risk less and consume more, and perpetuating the economic misery they decry. It's difficult to argue you are for working men and women when your policies prevent them from working by destroying the businesses that would employ them.

To help lift the economy from recession, President George W. Bush has, among other things, asked Congress to accelerate the tax-rate reductions enacted earlier this year, which currently are slated to phase in slowly over the next five years. Daschle adamantly refuses to give the president's program a chance, yet is able to posture himself in the political "middle" with Sen. Hillary Clinton out on the fringe proposing that Congress actually raise taxes by delaying the tax-rate reductions. Raise taxes in a recession? Not since Herbert Hoover have we seen such counterproductive ideas.

The White House has played right into Daschle's hands by rushing in to offer yet another "compromise" stimulus package that gives the Daschle wing more concessions while receiving no apparent concessions in exchange. The administration has signaled that it is willing to pay almost any price to get a deal. In response to the administration's new offer -- more spending increases, no retroactive relief from the Alternative Minimum Tax and no acceleration of rate cuts above 25 percent -- Daschle said that such a proposal contained "the makings of a deal" but only if Republicans drop their plans to accelerate any of the income tax-rate cuts in favor of a one-month holiday from Social Security payroll tax.

The payroll tax rebates in the president's original stimulus proposal were not his preference but rather the White House staff's conception of what Daschle Democrats wanted. When it became clear that the rebate checks would take too long to send out and would be difficult to administer, Republican Sen. Pete Domenici proposed a Social Security tax holiday to replace the rebate proposal since it could be done easily and immediately. There was never any intention to supplant the president's proposal for accelerated tax-rate reductions with a Social Security tax holiday.

The administration has offered three major compromises since early October, while the Democrats have obstinately refused to budge. First, the president agreed to send a letter to Capitol Hill requesting an increase in discretionary spending almost three times what he felt necessary, which the Democrats accepted and promptly demanded more.

Then, after extensive "pre-negotiation" with Hill Democrats, the president put a stimulus package on the table that did not reflect his most preferred policies but rather included proposals administration officials believed the Daschle wing of the Democratic Party would accept -- such as more rebate checks and higher spending on entitlement programs -- and excluded proposals they thought the Democrats would reject, such as capital gains tax-rate reductions. Wrong again. Rather than crafting a bill that could pass the Senate and then negotiating a compromise between it, the president's proposal and the House bill, Daschle has continually used his position of power to prevent a Senate bipartisan majority from passing a bill.

Daschle is the obstacle to a real "growth" initiative. He is prepared to continue raising the ante on Bush until the administration demonstrates that it is perfectly willing to take no bill rather than sign a bad bill into law. By rushing in prematurely with this third compromise, the administration has only whetted Daschle's appetite for more concessions rather than producing willingness on his part to compromise.

Daschle has the chutzpa to demand that any bill be able to garner two-thirds support from Senate Democrats, which means Bush would have to give up virtually every remaining component from his package that he holds dear. The president now must let Daschle know he is through compromising. It is time for the left to yield or else have an increasingly bad stimulus bill vetoed and take the case for "growth" to the American people in 2002.

Jack Kemp is co-director of Empower America and Distinguished Fellow of the Competitive Enterprise Institute. Comment by clicking here.


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