Once Again, Tax Cuts Are Major Issue

At a crucial point in his presidential campaign, Bob Dole is turning to a tactic that has paid big dividends for Republicans in the past - an economic program with a major tax cut.

Along with his vice presidential choice and his acceptance speech at the GOP national convention in San Diego this month, Dole hopes the plan can jump-start his lagging White House bid.

History suggests it will help. In each of the last four elections, the candidate who most aggressively took the side of tax cuts has been elected.

But Democrats aren’t conceding the field in ‘96. President Clinton has proposed several smaller, more targeted tax cuts.

“We’re going to be comparing approaches to tax cuts - not one person saying, ‘Cut taxes,’ and another person saying, ‘No, don’t cut taxes,”’ said White House economic council chairwoman Laura Tyson.

The big questions facing Dole are whether the recent emphasis on cutting the federal deficit has changed the political landscape and whether he can persuade voters he can cut both taxes and the deficit.

But it is clear that past tax cuts have resonated with voters.

In 1980, Ronald Reagan won the presidency in part by advocating an across-the-board 30 percent tax cut.

He said economic growth, spending cuts and a reduction of government waste would offset lost revenue. Though independent candidate John Anderson said Reagan could cut taxes, raise defense spending and balance the budget only “with mirrors,” voters bought the idea anyway.

Four years later, after the deficit had soared, the issue was tax increases, not cuts. Democrat Walter Mondale argued that an increase was necessary, but voters resoundingly rejected him.

By 1988, as pressure had risen to raise taxes to cut the deficit, GOP nominee George Bush vowed, “Read my lips: no new taxes.” It helped him win, but it led to big political trouble when he was forced in 1990 to accept a deficit-reduction plan containing tax hikes.

So, in 1992, the Democrats claimed the tax-cut issue. Clinton proposed a middle-class tax cut along with increased taxes for the wealthy. Once in office, he achieved the latter but abandoned the former.

Then, in their 1994 “Contract With America,” Republicans proposed tax cuts featuring a $500 tax credit for most children.

But when the GOP captured control of Congress, the president countered with targeted tax cuts including a $10,000 tax deduction for college tuition. More recently, he proposed a $1,500 tax credit for college or trade school tuition.

But both parties’ proposals have stalled amid the budgetary gridlock.

Now, Dole hopes to seize the initiative, reportedly with either a 15 percent across-the-board cut or the repeal of increases contained in the 1990 and 1993 deficit-reduction plans.

But much has changed.

Thanks to economic good times, Clinton’s 1993 economic plan and reduced spending by Congress, this is the fourth straight year of deficit reduction, something that hasn’t happened since the 1940s.

And recent surveys raise doubts about whether the public prefers a tax cut over continued progress in cutting the deficit.

A CBS News/New York Times poll in June showed voters evenly split between cutting the deficit and cutting taxes. A later NBC News/Wall Street Journal poll showed a 51 percent to 35 percent margin for major deficit reduction over an across-the board tax cut. A heavy majority agreed Dole’s proposed 15 percent cut is “a political gimmick.”

Democrats contend the public prefers a targeted tax cut that favors the middle class rather than an across-the-board cut that includes substantial relief for the wealthy.

“The kind of tax cuts we’re talking about are more popular than to go across the board,” House Minority Leader Dick Gephardt, D-Mo., said last week.

But he conceded that tax cuts remain popular, “like offering someone in the desert some water.”

Republicans, meanwhile, argue more sweeping cuts would spur an economy they claim has grown too slowly. Initial GOP estimates are that under Dole’s proposal, 35 percent to 40 percent of the revenue needed to offset tax cuts would come from expanded growth.

“You cannot balance the budget in a weak economy,” Jack Kemp, former secretary of housing and urban development, said Wednesday. “The only way to get the budget in balance is to keep a restraint on spending and to expand the size of the pie, … get the economy growing again.”

But Senate Minority Leader Tom Daschle, D-S.D., labeled the GOP plan “Deja Voodoo II,” a 1990s version of the cuts that Bush once called “voodoo economics.”

The debate will continue until Election Day.

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