Government Executive - Authors - William Schneider

A Tax Cut Conundrum for Dole

William Schneider — Mon, 12 Aug 1996 00:00:00 -0400

Bob Dole's economic plan is bold, dramatic and ambitious. It's also four and a half years late.

Dole's Aug. 5 speech was the speech that voters were waiting to hear in January 1992. Remember the big buildup to George Bush's final State of the Union address? The economy was in crisis, and the whole country was waiting to hear whether President Bush had a plan to turn it around. He didn't--and he lost his bid for reelection that very night.

The cornerstone of Dole's plan is a tax cut. That's the issue that has always paid off for the GOP. The plan is targeted directly at the crucial suburban vote--middle-class, homeowning, taxpaying voters who now make up a majority of the electorate. The suburbs voted 60-40 for Bush over Democrat Michael S. Dukakis in 1988. In 1992, the Republican vote in the suburbs collapsed: 40 per cent for Bush, 40 per cent for Bill Clinton and 20 per cent for Ross Perot.

The latest polls show President Clinton leading Dole by 10 points among suburban voters. Dole has got to reclaim that vote. And as any suburban officeholder will tell you, the three big issues in the suburbs are taxes, taxes and taxes.

Dole was careful to propose an across-the-board tax cut that doesn't look like a tax cut for the rich. ``I'm going to give tax relief to every single taxpayer in America,'' he said in Chicago. And to show how serious he was about making taxes the centerpiece of his campaign, he put Jack F. Kemp, the patron saint of supply- siders, on the ticket.

How is Dole planning to pay for his tax cut? He expects only a quarter of the cost to be covered by revenues generated from new economic growth. So he's not relying on ``rosy scenarios.'' They're more like blushing pink.

The bulk of the cost will be paid for by spending cuts. Dole can make a stronger case for spending cuts than Bush or Ronald Reagan ever could. That's because Dole has the advantage of a Republican Congress, one that has already started to reduce spending. With a Republican President, Congress could reduce spending even more. Unlike the 1980s, spending cuts could keep pace with the tax cuts, and the deficit would not go up.

In his Aug. 5 speech, Dole said, ``I will return to [Reagan's policy of] tax cuts, this time balancing the budget with a Republican Congress and finishing the job Ronald Reagan started so brilliantly but could not complete because the Democrats refused as usual to reduce spending.''

But would Dole have a Republican Congress? Almost certainly, if he wins. The country would have wall-to-wall Republican control of government for the first time since 1954.

The Republican Congress also creates a problem for Dole, however. Before 1994, Republicans could talk about cutting spending in the abstract. Then they took over Congress. And many of the actual cuts they proposed turned out to be highly controversial.

So Dole is under pressure to spell out exactly what additional spending cuts he would make, beyond those already proposed by Congress. Now, unlike the 1980s, voters understand that deep spending cuts are likely to involve real pain.

Moreover, voters are not sure they trust Dole to do what he says. In last week's Gallup Organization Inc. poll for CNN and USA Today, a 52-43 per cent majority said they did not trust him to keep the promises he makes in his economic plan. After all, Clinton broke his promise to pass a middle-class tax cut, and Bush broke his ``no new taxes'' promise. How can Dole convince voters he's different? Putting Kemp on the ticket is a good start.

But the biggest problem Dole faces is timing. It's not clear that the voters are looking for a bold new economic plan the way they were in January 1992. After two disastrous experiences-- first health care reform, then the Contract With America--there doesn't seem to be much of a market for big new agendas this year.

In last week's poll, 53 per cent of the voters said they thought the economy was moving in the right direction and ``needs only minor changes.'' They outnumbered the 43 per cent who felt the economy is moving in the wrong direction and needs major changes. It's kind of hard to sell change when the President's job approval rating is 58 per cent and more than 60 per cent say things are going well in the country. Dole's economic plan looks like too much solution for too little problem.

That's why Dole had to devote a considerable part of his speech to making the case that things are not going well--that growth is too slow, that too many ``forgotten workers'' have dropped out of the labor force, that millions of Americans suffer from ``job lock'' and a ``squeeze economy.'' Bush wouldn't have had to take one minute to explain how bad things were in 1992. That's Dole's problem: It isn't 1992.

It's 1996, and something else has changed. There's been a noticeable turnaround in the public's view of Congress. Disapproval of Congress in last week's poll dropped below a majority for the first time since 1994. It was quite a drop: from 65 per cent disapproval in May to 49 per cent in August.

In the last week before recess, Congress passed three extremely popular measures--welfare reform, a minimum-wage hike and health care reform. Those were the most contentious issues on the national agenda for the past three years.

Congress is finally getting things done. And it's getting the credit. For the first time this year, more voters are calling the Republican Congress a success (49 per cent) than a failure (42 per cent). Of course, Congress has to share credit with the President, who says he'll sign all three measures. An even larger number--64 per cent--say President Clinton's first term has been a success.

Bottom line: The voters are pretty happy with the status quo. They think the Democratic President's doing fine. And they're much happier with the Republican Congress. Good news for everybody--except Bob Dole, who's trying to market change.

The irony is, Dole got out of Congress to keep from being tainted by that institution's negative image. Now Congress is looking better, and it's not doing Dole a bit of good.

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Perot Still Influences Campaign

National Journal and William Schneider — Sat, 10 Aug 1996 00:00:00 -0400

Republicans are underdogs this year--not just because President Clinton is popular, but also because Ross Perot makes life much more difficult for the GOP. The problem is that Republicans don't seem to know how to run an underdog campaign.

For the past 30 years, Republicans have run only two kinds of presidential campaigns: as incumbents or against weak and discredited Democrats. Running against a popular Democratic incumbent with a good economy on his side is a whole new experience. It requires the tactics of an underdog--guerrilla tactics: surprise, rapid response, catching your opponent off guard and provoking him into making a mistake.

Instead, it's the Republicans who have been making all the mistakes. They're letting the Democrats claim what's supposed to be Republican territory--such issues as values, deficit reduction and welfare reform. They're telling themselves that the race has to tighten because Republicans are the superior force. Didn't the GOP win a spectacular victory just two years ago?

Yes, but it encouraged overconfidence. Sure, the country has a conservative majority. But that doesn't guarantee a Republican victory. Why not? Because Democrats know it, too, and are not about to make the mistake of running as liberals.

And because overconfident conservatives are splitting the GOP. Political correctness is no longer a problem for Democrats. But let Robert Dole waver from the conservative line, and the Right denounces him.

And because all the talk about realignment and revolution caused congressional Republicans to overplay their hand. They threatened popular government programs and brought the Democrats' pro-government coalition, long given up for dead, back to life.

Republicans need to run an underdog campaign this year, something they haven't had to do since the 1964 Goldwater campaign. They weren't very good at it then. And they're not very good at it now.

The other danger Republicans face is from Perot. What's driving the Perot vote this year? Here's a clue from the CNN-Time magazine Election Monitor, which has been interviewing the same panel of voters since November. Most Dole and Clinton voters say they aren't worried about maintaining their standard of living over the next five years. But most Perot supporters are. Moreover, they are likelier than even Dole voters to endorse the view that the country is in deep and serious trouble.

In 1992, Perot split the ``change'' vote with Clinton. This year, however, Perot has that vote all to himself. If voters suddenly become anxious or pessimistic, if they begin to sour on Clinton, Perot is well positioned to pick up support. Not Dole, who is too much identified with the status quo. So if the voters turn against Clinton, Perot will very likely split the anti-Clinton vote with Dole.

How would they split it? Perot voters and Dole voters are both antigovernment, but in different ways. In the CNN-Time poll, most Dole and Perot voters endorsed the view that Washington is doing too many things that should be left to individuals and business. Only 39 per cent of Clinton voters agreed. That's the core definition of Republican economic philosophy, and it includes both Dole and Perot voters.

The survey also asked people, ``Do you believe the federal government has become so large and powerful that it poses a threat to the rights and freedoms of ordinary citizens?'' Resentment of the federal government has become so widespread that almost half of Clinton voters agreed. And the Democrats are the pro-government party!

You'd expect even more Republicans to distrust the federal government, and they do: 62 per cent of Dole voters say it's become a threat to ordinary Americans. But Perot voters are even more resentful of government than Republicans--71 per cent.

Perot and Dole voters part company on social issues, however. Only Dole voters felt that government should do more to promote traditional values. Most Clinton and Perot voters endorsed the alternative view, that government should not favor one set of values over another.

The differences were even more striking on the abortion issue. Most Dole voters said they opposed abortion--although 40 per cent said they favored abortion rights, which is why Dole is calling for tolerance. About 60 per cent of Clinton voters said they were for abortion rights--and so did about 60 per cent of Perot voters.

Perot voters are libertarians. On economic issues, they share the conservative antigovernment views of Republicans. On social issues such as abortion, they share the antigovernment views of liberal Democrats.

So does Perot take votes from Dole? Yes. Here's why. If you ask Perot voters whom they would vote for between Clinton and Dole, they split evenly. Perot doesn't change the outcome. Among non-Perot voters, however, Clinton has a big lead. Dole does better among Perot voters than in the rest of the electorate. If Perot were not running, the election would be closer. Bottom line: Perot hurts Dole.

What happens to the Perot vote in congressional races, where there are no Perot candidates? In 1992, Perot voters split 50-50 between Democrats and Republicans for Congress. In 1994, Perot asked his supporters to vote Republican--and they did. They helped the GOP take over Congress.

In the CNN-Time survey, Perot voters still tilt Republican for Congress, by 50-38 per cent. That's why the congressional vote this year is a lot closer than the presidential vote. But this year, Perot's Reform Party says that it will endorse congressional candidates district by district. It could end up endorsing a lot of Democrats.

Perot may not affect the outcome of the presidential race, but his followers probably hold the key to determining which party will control Congress.

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