- The Washington Times - Sunday, January 26, 2003

The White House and its Republican allies say they do not believe the Democrats' class-warfare attacks against tax cuts for upper-income earners carry the political firepower they once did.
Even some Democratic officials argue that such attacks by their party's leaders, pitting lower- to middle-income groups against the rich, do not work and have not worked for several election cycles.
Economists who have been advising the White House and Republican leaders say President Bush and his strategists no longer fear Democratic assertions that across-the-board tax cuts mostly benefit the wealthy. They have concluded that the tactic has little or no effect on most voters.
"There is much greater confidence in dealing with class warfare now than there was, say, 10 or 12 years ago. There is a sense now that this is not the biggest threat to the president's tax-cut plan," said economist Dan Mitchell of the Heritage Foundation, who has sat in on some Republican strategy sessions on Capitol Hill.
"Most Republicans on the Hill recognize the need to address the issue, but there is the feeling that economic growth trumps class warfare because we have a bigger investor class now," he said. "The size and boldness of the president's tax cuts, especially the dividend-tax elimination, is indicative of this new confidence."
Pollsters, too, say the long-used tactic of Democrats does not work in an era of upwardly mobile middle-income earners and two-income couples, many of whom believe they will be climbing into higher tax brackets, brackets Mr. Bush also wants to bring down to boost investment, economic growth and the number of jobs.
"The Democrats are dead wrong about class warfare. Remember, 66 percent of likely voters in a general election are investors. They have a vested interest in making sure that the stock market is sound and corporations healthy," pollster John Zogby said.
Mr. Zogby said his polls in Iowa recently found that class warfare is "the kind of red meat that could help Democratic presidential candidates in the Iowa party caucuses next year among hard-core Democrats. But if you are looking for a winning national strategy, you have to go beyond your base, and this strategy is no way to do it."
White House advisers who have been monitoring how Mr. Bush's tax-cut proposals are playing among lawmakers in their states and districts are finding that "there is more concern about how the tax cuts will affect the federal deficit and state revenues but little mention about the wealth factor," said a key economic adviser to the administration.
Even so, the Democrats have been flogging the class-warfare issue for all it's worth since Mr. Bush announced his proposals to accelerate his income-tax rate cuts for all taxpayers this year and end the taxation of investor dividends.
"Never in the field of economics have so few been given so much at the expense of so many," Sen. Hillary Rodham Clinton, New York Democrat, said last week.
House Democratic leader Nancy Pelosi said Mr. Bush's economic-stimulus plan is an attempt "to boost the economy with tax cuts that focus on the wealthy." Former New York Gov. Mario Cuomo said Mr. Bush was "going to give all the money to the rich."
"If it looks like a tax cut for the rich, if it walks like a tax cut for the rich, it is in fact a tax cut for the rich," said Sen. John Edwards of North Carolina, a Democratic presidential contender.
But even some Democrats are saying that such class-warfare rhetoric is a turnoff for voters who do not like pitting class against class.
"Superficially, you'd think that the old rich-versus-poor class argument would work. But I think it has been proven over the last several election cycles that voters just don't respond to it," said Jim Pederson, the Democratic state chairman of Arizona.
Several factors have led to the White House's increasing confidence that old populist attacks against the rich will not have much of an effect in the coming legislative battle over Mr. Bush's tax-cut stimulus plan.
Democratic campaign committees spent millions of dollars on TV ads attacking Republican tax policies in last year's elections, only to see Republicans strengthen their House majority and retake the Senate. This election mandate emboldened the president to double the size of the tax-cut package he was considering, advisers say.
The success of earlier tax battles that favored upper-income groups, especially the estate-tax repeal in the president's 2001 tax cuts, also showed that the Democrats' class rhetoric has lost much of its political punch in recent years, strategists say.
"The way the 'death-tax' debate developed and matured showed Republicans that you can beat class warfare," Mr. Mitchell said. "When people started working on 'death-tax' repeal five or six years ago, most of us were remotely optimistic about how this issue would play out."
"With the top 1 percent reaping an enormous percentage in benefits, this was an issue tailor-made for the class-warfare argument. But the American people responded to the moral argument that we shouldn't double-tax people because they die," he said.
Another factor, says John Cogan, an economist at the Hoover Institution and a close adviser to the White House, is the dramatic demographic changes that have occurred in the U.S. economy.
"Americans are very mobile incomewise, and they are very optimistic about their future. The income data shows that many of them climb the income ladder quickly and incomes continue to rise, pushing people into higher income-tax brackets," Mr. Cogan said.
"With 50 percent of Americans now owning stock, and with 10 million retirees getting much of their income from stock dividends, the old class-warfare demagoguery against the rich does not work anymore," he said.


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