The Political Wheels Are Spinning Jude Wanniski February 9, 2000

We never should expect anything important to be accomplished on tax and budget policy in a presidential election year. By this time, the President is too far from the mandate he thought he may have received four years ago. And as a lame duck about to retire, all he can do now is posture, with the intent of helping his party hold on to power in November. Given the political landscape at the moment, with total confusion within Republican ranks about their presidential nominee, it is preferable that as little as possible be done. Without a leader, the cards are stacked in favor of the programmatic Democrats. It now is highly unlikely that meaningful tax legislation will be signed into law this year, with no stomach in the GOP for pushing supply-side tax cuts -- even the feeble rate cuts espoused by George W. Bush. They may have had some leverage with the minimum wage legislation the Democrats want, but essentially agreed to it without getting anything in return. The President put forward a giant package of goodies in his $1.9 trillion budget, but that too is mere posturing. Unless he gets what he wants, which he won't, he will blame the GOP for inaction, but it is doubtful the electorate will care much anyway. The national mood seems to be, if these folks can't come up with better ideas on how to deal with the budget surplus, let's pay down debt and wait until something better comes along.

The GOP figures that fixing the marriage-tax penalty is the best hope it has, because it seems to pass the smell tests of the focus groups and pollsters. But to fix it correctly -- in a way that would have marginal supply-side benefits -- would leave Republicans open to the charge that most of the benefits go to rich couples. And Republicans now are fearful the electorate would punish them for anything that smacks of tax cuts for the rich. Of course, the establishment candidate, George W. Bush, set the tone when he stripped out of his own tax plan any mention of a lower capital-gains tax. By losing to John McCain big-time in New Hampshire, Bush has infected conventional wisdom with the idea that voters now reject "supply-side economics," a political problem being compounded as folks like Jack Kemp and Larry Kudlow try to rally support for Bush on the grounds that he is the "most" supply-side of the remaining field. In dropping out today, Steve Forbes furthers the impression that the electorate is happy with the status quo on tax policy, when in fact his campaign was hard-wired for failure from the start.

Polls taken yesterday in South Carolina, before his poor showing in Delaware that led to his decision to drop out, showed Forbes with 2% of the vote. The big push by conservative leaders to drive Forbes out of the race in order to help Bush's flagging campaign thus means little. As many people who were attracted to Forbes's flat-tax idea will turn to McCain as they will to Bush, because many were just as attracted to Forbes as being the outsider, the reformer, not the organization man. The match-up now is Organization vs. Outsider. As far as I can see, McCain is not making any mistakes in his skirmishes with Bush, whom he now narrowly leads in both South Carolina and Michigan. The NYTimes this morning has a front-page piece with the headline: "McCain, Sure on Military Issues, Is Less Certain on Domestic Ones." I'm sure the Bushies will read it approvingly, on the theory that voters want more certainty, not less. This is only true, though, when a candidate is more certain and wrong about what he thinks the voters are looking for. By waving his hand in the general direction, not pointing a finger specifically in one policy direction, McCain is following in the footsteps of Jimmy Carter, who never quite could make up his mind in his campaign for the Democratic nomination in 1976. It was Carter's "fuzziness" that persuaded voters he was not an ideologue, while the rest of the field, all reading the same polls, were advocating higher taxes and public ownership of the oil companies.

In my mind, McCain's ultimate weakness is that he is specific on "military issues," clearly spelling out how he would deal with "rogue state dictators," as the Times points out today. He would use force, force, and more force. There might be an opening here for a more compassionate Bush, but as I have pointed out before, the same hardliners who are backing McCain on national security are backing Bush. We can observe the shift in the Jewish political establishment in this week's Forward, the premiere Jewish weekly. The editorial line that once lined up behind Bush, on the assumption he would win the nomination and trounce Al Gore, now gushes praise at McCain for his total support for whatever it is that Israel desires, including an American Embassy in Jerusalem and a promise to deal with Saddam Hussein as soon as he becomes commander-in-chief. To top him, Bush might have to commit NATO to the bombing of Lebanon and ground troops in Baghdad.

If McCain winds up being the GOP nominee -- which my friend John Sears predicts will happen -- the Reform Party candidate will be all the more important in deciding the outcome of the November election. What appears to be some confusion in the Reform Party these days on who is in charge involves Ross Perot getting himself back into control after losing at least the appearance of control to Minnesota Gov. Jesse Ventura. The confusion will be cleared up in Nashville this weekend, when Ventura's man, Jack Gargan, either resigns or is booted out of the chairmanship. The idea floated recently that McCain might get the Reform Party endorsement atop the GOP nomination -- first floated last year by William Safire of the NYTimes -- no longer will be possible after the weekend. Perot, who came to national attention as a citizen diplomat, has little use for McCain, a citizen bomber. As I recall, in both 1992 and 1996, McCain also made disparaging remarks about Perot, and Perot does not forget.

Pat Buchanan will be the Reform Party nominee, not McCain or Trump or Ventura or Perot. What probably cinched it was Buchanan's foreign policy speech at CATO last month, which I have urged be read even by those of you who insist he is anti-Semitic (he isn't). It is in his website library. I've not spoken to Buchanan in several weeks, but he continues to e-mail me questions and comments, and I've at least been able to sand some rough edges off his trade protectionism. He's also agreed to meet regularly with a team of supply-siders who now see little hope for change no matter who wins the major party nominations, now that Forbes is finished. The object is to find common ground on domestic and international economic policy and design a general domestic blueprint for a Buchanan presidency. I'm not directly involved, but I'm close enough to know that the preliminary discussions indicate a genuine willingness on Buchanan's part to resolve those differences that would make it difficult for him to get formal endorsements from the growth wing of the GOP. If the major party nominees are Gore and McCain, and Buchanan has a respectable platform, you can bet there would be major defections to his candidacy. These are the only cards on the table at the moment. It does not look all that promising from any direction, but we do have the luxury of general peace and prosperity and a sound system of checks and balances -- which suggests we could manage our way through four years of whoever makes it across the finish line first.