Monday, June 25, 2007


One of the fiercest policy battles among the Republican presidential front-runners has been over who has staked out the toughest budget-cutting, tax-reduction agenda and signed up the best economic advisers to put it together.

With polls showing that 70 percent of Americans say the economy is getting worse, cutting taxes and spending has become the central fiscal battleground of the Republican campaign for the 2008 nomination, and the candidates have been signing up economic heavyweights to help them design plans to appeal to the party”s conservative base.

Former New York City Mayor Rudolph W. Giuliani, who has made cutting wasteful spending one of the centerpieces of his campaign, named an economic policy board last week that included President Reagan”s chief domestic policy adviser, Martin Anderson; magazine publisher Steve Forbes, who has championed the flat tax and Social Security investment accounts; and economist Michael Boskin, a senior fellow at the Hoover Institution who chaired the President”s Council of Economic Advisers under President George Bush.

Mr. Anderson, also a senior fellow at Hoover and a biographer of Mr. Reagan”s presidential legacy, said he was impressed with Mr. Giuliani”s emphasis on “getting control of spending” during a four-hour meeting with 40 Republican leaders in San Francisco “who grilled him on all the issues, from gun control to taxes.”

“Basically, he has the same views as Ronald Reagan on economics. He said once you control spending, then you can cut taxes. But the other candidates haven”t got it yet,” Mr. Anderson said Friday.

“He talked about making the tax rates ‘flatter,” lowering the rates by cutting them across the board just as Reagan did,” he said. “But he also wants to make President Bush”s tax cuts permanent.”

In his 12-point agenda to “restore fiscal discipline and cut wasteful spending,” issued this month, Mr. Giuliani said he would reduce the federal civilian work force by 20 percent and require federal agencies to “identify at least 5 percent to 20 percent in spending reductions.”

Former Massachusetts Gov. Mitt Romney, who began running TV ads this weekend in Iowa and New Hampshire on cutting taxes and spending, also has a well-known team of conservative economic advisers. They include former Rep. Vin Weber of Minnesota, its chairman; Glenn Hubbard, who chaired President Bush”s Council of Economic Advisers; Hoover economist John Cogan, who served on Mr. Bush”s Social Security reform commission; and Cesar Conda, who was Vice President Dick Cheney”s domestic policy adviser.

“Romney has proposed a spending cap on non-defense discretionary spending that would limit it to the rate of inflation minus 1 percent, and he has pledged to veto appropriation bills that exceed that overall limit,” Mr. Conda said.

“On taxes, he favors making the Bush tax cuts permanent, but he wants to go beyond that and pass a very Reagan-style, across-the-board cut in the marginal tax rates, though he has not yet specified what the rates would be,” he said.

Mr. Romney also has called for lowering the corporate tax rate and wants to abolish federal taxes on capital gains, dividends and interest for middle-income taxpayers.

Sen. John McCain of Arizona has assembled a team headed by economist Douglas Holtz-Eakin, a former director of the Congressional Budget Office who also chaired Mr. Bush”s Council of Economic Advisers. The panel includes Kevin Hassett of the American Enterprise Institute and former U.S. Treasury Undersecretary John Taylor, also a Hoover senior fellow.

Mr. McCain”s first priority as president would be an attack on pork-barrel earmarks in spending bills.

“Earmarks corrupt the spending process and he wants to strip this out and get spending under control and keep taxes low,” Mr. Holtz-Eakin said.

But Mr. McCain,who voted against Mr. Bush”s tax cuts, has since revised his position. When he cast his “no” vote on the president”s $1.35 trillion plan in 2001, he said at the time, “I cannot in good conscience support a tax cut in which so many of the benefits go to the most fortunate among us.”

This year, he is supporting Mr. Bush”s push to make his tax cuts permanent and would require a three-fifths majority in Congress to raise taxes.

“At the time, he was concerned that we had left our armed forces underfunded and was unhappy with how [the Bush plan] was targeted and was too expensive,” Mr. Holtz-Eakin said.

As for further reducing tax rates, he added, the senator has not said “what his goal would be.”

Former Sen. Fred Thompson of Tennessee, who is polling at third place or higher in surveys and is still exploring a candidacy, has not formed a team of advisers. But he has named Larry Lindsey, Mr. Bush”s former White House economic adviser, to head the group.

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