- The Washington Times - Wednesday, May 14, 2003

The emerging power of the investor class was clearly evident last week in a new poll that shows growing support for President Bush’s tax-cutting stimulus plan.

A USA Today/CNN/Gallup poll reported that 52 percent of Americans now believe cutting taxes is “a good idea.” This represents a 10-point jump in the number of people who said this two weeks ago.

Despite the intensified, daily bashing from the Democrats, Mr. Bush’s plan to accelerate the 2001 tax cuts and reduce taxes on stock dividends is gaining public support.

Several things are contributing to this dramatic shift that could be an omen of what is in store for the Democrats in next year’s elections.

First, the growing political power of the Investor Class is weighing in — big time. More than half of all Americans own stock. Dividends is not a dirty word to them. That’s what many retirees live on. Millions of workers plow their dividends back into their mutual funds to build future retirement wealth.

When investors hear the Democrats’ tired, old mantra, “tax cuts for the rich,” they tune out. They associate investments with wealth. If they are not wealthy now, most hope to become so. They know you need capital to grow the economy, and cutting taxes on capital yields more capital for business expansion and jobs.

Second, the power of the president’s bully-pulpit and a full-blown White House lobbying campaign across the country appears to be blunting the Democrats’ class-warfare attacks. Mr. Bush, a half-dozen Cabinet secretaries and two dozen other administration officials have been criss-crossing the country, telling anyone who will listen that the tax cut stimulus plan is about three things: “Jobs, jobs, jobs,” as Commerce Secretary Don Evans says at every stop.

Apparently it’s working because the Democrats are sounding frustrated. “It’s been difficult for the Democrats to have a debate focused on their proposals. The president has a larger megaphone,” AFL-CIO lobbyist Bill Samuel told me this week.

Third, the Democrats’ plan has been virtually invisible. Even when parts of it do get through to the public, it sounds more like an old New Deal era, government spending plan than a 21st-century market-oriented strategy to unlock investment capital, increase take-home pay and encourage more entrepreneurial risk-taking.

You won’t see any of these upward mobility terms in the Democrat’s House and Senate plans. “That’s not what our base wants to hear,” one Democratic adviser told me.

There are some small, targeted tax cuts for those at or near the bottom of the income ladder and some other tiny tax breaks, but the Democrats’ heaviest emphasis is on expanding social welfare and big public works programs, not on boosting private sector wealth and growth.

Thus, there is more money for extended unemployment compensation, $18 billion more for Medicaid, $26 billion more for transportation projects, more for school funding.

Sen. Jay Rockefeller, the ultra-liberal West Virginia Democrat, wants “at least” $30 billion more for aid to state governments that have spent their way into debt.

But more public works spending and grants to the states will not pull the U.S. out of what Treasury Secretary John Snow calls a “soggy” economy. Nor will hand-wringing over deficits which are the result of anemic growth.

Another reason why Democrats are failing to rally the country behind their pump-priming nostrums is their fundamental misunderstanding about the people who are in the top income brackets. They lump them together under one term — “the rich” — when many are not really that rich.

Two out of every three income tax filers in the highest tax brackets are people who run small businesses, often mom and pop operations. They file 1040 tax returns as individuals, not as corporations. Their six-figure or near six-figure earnings may seem large, but most plow a lot of it back into their businesses and that’s what they would do with their tax cuts.

Yet they are among the filthy rich that the Democrats are demonizing, small businesses struggling to survive in a tough economy and who, by the way, are responsible for most of the job creation in this country.

Many of the so-called “rich” — people making, say, $100,000 or more — are made up of married working couples. The Tax Foundation reports that 85 percent of the tax filers in the top 20 percent of income earners file their taxes jointly.

A husband and wife each making $50,000 a year, who have two kids, do not think of themselves as “rich.” But these are among the working people who would lose their tax cuts under the Democrats’ plans to gut Mr. Bush’s stimulus package.

When will the Democrats understand that the pursuit of wealth is what drives our economy and creates better-paying jobs?

Wealth is what ambitious, hard-working Americans aspire to achieve, for themselves and their families. It is at the heart of the American dream. And it is why Mr. Bush is slowly but surely winning the political battle for lower tax rates to fuel future long-term growth.

Donald Lambro, chief political correspondent for The Washington Times, is a nationally syndicated columnist.


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