A Tax Cut Conundrum for Dole

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.