Thursday, June 28, 2007

Rudolph Giuliani scored a coup last week when Martin Anderson, President Reagan’s influential domestic policy chief, joined the former New York mayor’s campaign team of economic advisers.

In the race for the Republican presidential nomination, the competition among the top contenders to sign up economic heavyweights has been fierce as each candidate strives to stake out the toughest budget and tax cut policies to win the hearts of the GOP’s conservative base.

Certainly Mr. Anderson, a senior fellow at the Hoover Institution, Mr. Reagan’s closest policy adviser and, now, chief biographer of the Reagan legacy, adds professional cachet to Mr. Giuliani’s team, which includes a number of other top conservatives. Among them, former presidential candidate and magazine publisher Steve Forbes who has championed the flat tax and private Social Security investment accounts.

While debate in Washington has been dominated by the immigration battle, reining in spending and slaying the tax monster are still the core issues at the party’s grass roots.

That’s what drew Mr. Anderson to Mr. Giuliani candidacy. He was impressed “with his emphasis on getting control of spending” at a long, four-hour meeting with a group of 40 Republican leaders in San Francisco “who grilled him on all the issues, from gun control to taxes,” Mr. Anderson told me. “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.”

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

To reinforce his economic credentials (as New York City’s mayor, he cut taxes nearly two-dozen times), Mr. Giuliani recently put out a 12-point agenda to “restore fiscal discipline and cut wasteful spending.” Among his priorities, 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.”

Another senior Hoover fellow, economist Michael Boskin, who chaired the Council of Economic Advisers under former President George H. W. Bush, also is advising Mr. Giuliani. But their support is not shared by other colleagues at the prestigious conservative policy institute on the Stanford campus.

John Cogan, who served on President Bush’s Social Security reform panel, backs former Massachusetts Gov. Mitt Romney. Former U.S. Treasury assistant secretary John Taylor, also a Hoover fellow, backs Arizona’s Sen. John McCain.

But the other candidates have also assembled stellar economic teams, whose credentials are decidedly right wing — pro-tax cut and pro-spending cuts.

Mr. Romney, who ran TV ads last week in New Hampshire and Iowa on taxes and spending, has one of the strongest teams in place. It includes former Minnesota Rep. Vin Weber, its chairman, Glenn Hubbard, who chaired President Bush’s Council of Economic Advisers (CEA), plus Mr. Cogan, and Cesar Conda, who was Vice President Dick Cheney’s domestic policy adviser.

“Romney has proposed a spending cap on nondefense discretionary pending that would limit it to the rate of inflation minus 1 percent, and he has pledged to veto appropriations bills that exceed that overall limit,” Mr. Conda told me.

“On taxes, Romney 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,” he said.

How deeply would Mr. Romney cut the rates? Mr. Reagan pushed the top rate down to 28 percent, compared to today’s 35 percent top marginal tax rate. Insiders say his goal is to make “substantial reductions” but he hasn’t said how deeply he would go.

He has called for lowering the corporate tax rate and ending taxes on capital gains, dividends and interest for middle-income taxpayers.

Heading up Mr. McCain’s advisory panel is economist Douglas Holtz-Eakin, former director of the Congressional Budget Office who also chaired Mr. Bush’s CEA. The team includes economist Kevin Hassett of the American Enterprise Institute and Hoover’s John Taylor.

Mr. McCain’s highest fiscal priority will be an attack on wasteful pork barrel earmarks. “He wants to strip them out, get spending under control and keep taxes low,” Mr. Holtz-Eakin said.

But Mr. McCain’s tax cut credentials are suspect. He voted against Mr. Bush’s tax cuts which are responsible for the economy’s comeback and the wave of revenues that have sharply reduced the deficits.

Mr. McCain flip-flopped last year and supports making tax cuts permanent. But as far as further cuts in the rates, the maverick senator “has not said what his goal would be,” Mr. Holtz-Eakin said.

Former Tennessee Sen. Fred Thompson, who hasn’t declared his candidacy yet, has not revealed what his fiscal policies would be. But he has asked former Federal Reserve Board governor Larry Lindsey, the chief architect of Mr. Bush’s tax-cut plan, to advise him.

Other economic gurus are likely to join these teams in the future. The big question, said the chief adviser to one of the GOP’s front-runners, “is who signs up Alan Greenspan?”

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

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