Notes on the Revolution IX Jude Wanniski April 3, 1995

PACKWOOD & TAXES: Senate Finance Chairman Bob Packwood, cleverly disguised as Herbert Hoover these past two weeks, showed up Saturday for the Evans & Novak show sounding Reaganesque. We can now forget the $500 kiddie credit, as Packwood correctly described it as a straightforward spending scheme without positive effects on the economy. He prefers instead marginal rate cuts! Credit a Wall Street Journal editorial of March 9, which made this argument. Amazingly, the only person on the weekly talkies who seemed to notice this momentous shift was former Delaware Gov. Pete de Pont, on C-SPAN’s Sunday Journal, who cheered. Packwood obviously is speaking for the GOP Senate leadership. The maneuver leaves room to compromise with the House to convert the kiddie tax credit into an increase in the personal exemption, thereby delighting both supply-siders and cultural conservatives. As an embellishment, if I were Packwood, I would restore the personal exemption for dependents for taxpayers earning more than $110,000 -- one of the sneaky class warfare moves slipped into the 1993 Clinton tax bill which take a bite out of the hides of “the rich.” Packwood also was emphatic in his preference for Rep. Dick Armey’s flat tax idea over the consumption tax ideas floating around Capitol Hill. 

GINGRICH & TAXES: Newt was all over the tube this weekend, celebrating the Contract’s progress at 89 days. His finest moment was on This Week with David Brinkley in swatting aside the question from Cokie Roberts on whether he worries that the GOP is being seen as “The Party of The Rich” because of the tax cuts. Newt pointed out that 1) Reagan won a 49-state landslide in 1984 after cutting taxes on The Rich, 2) the voters booted out George Bush when he allowed himself to be cowed by the Democrats on this issue, and 3) the voters gave the GOP the House last November 8 in a referendum on Reagan vs. Clinton on the rich/poor issue. Hurray for Newt! In combination with the Saturday statement by Packwood, this is all very bullish, folks, as it quietly invites the President to contemplate what will happen to him and his party if he vetoes the tax bill that will be sent him later in the year. As Dirty Harry would say, “Make my day!” 

KRISTOL & TAXES: Republican activist Bill Kristol, a weathervane of Beltway sentiment these past several months, has now shifted from a budget-balancing mode to a tax-cutting mode. This was big enough news to make Page One of The New York Times this morning, “Tax Cut Edges Out Deficit As G.O.P.’s Guiding Tenet.” In the article, Kristol observes that the voting public did not reward President Clinton for devoting his first two years in the White House to deficit reduction, but instead punished him for raising taxes. He argues that the voters in 1996 will probably not respond to GOP evidence of deficit cutting, but will clearly respond favorably to tax cuts. On this morning’s Wall Street Journal front page, we find Washington bureau chief Alan Murray way behind the curve, writing “Plans for Big Tax Cuts Are Fast Losing Favor.” Murray, the ideological heir to his predecessor Albert Hunt, “informs” the newspaper’s readers: “The desperation of the supply-side camp was evident in a newsletter sent out last week by its high priest, Jude Wanniski. Mr. Wanniski is urging tax-cut advocate Malcolm S. Forbes Jr., the 47-year-old publisher of Forbes magazine, to run for president (Mr. Forbes declines the honor.)” Is that so? Forbes is pleased as punch with the faxes and letters he’s gotten in the last week -- many of them from Poly people -- urging him to Go For It! 

KEMP & TAXES: A press conference is scheduled this afternoon, with Senate Majority Leader Bob Dole, House Speaker Newt Gingrich and RNC Chairman Haley Barbour announcing a GOP “Tax Commission,” to be chaired by Jack Kemp. What’s the idea? Kemp will spend the next three or four months working on a report for the RNC as an overture to the Republican National Convention’s platform committee in 1996. It’s still pretty murky on who will finance this effort, how it will be organized, and who will be on it. The story leaked out Friday and CNN played it as a Dole maneuver to pacify Kemp and the supply-siders. A CNN reporter linked it to a Bob Novak report that Steve Forbes is warming to the idea of entering the race for the GOP presidential nomination to fill the vacuum left when Kemp dropped out January 30. It does appear to have been inspired by Dole’s closest economic advisor, Wayne Angell. Dole latched on to it in the wake of his political faux pas in The New York Times Magazine of March 5, in which he blamed the budget deficits on Reaganomics. Kemp was persuaded that it will enable the supply-siders to shape the fundamental tax reform that will take place in 1997. It is assumed the Republicans will then control the White House and the Congress for the first time since Eisenhower’s first term. If Kemp is right, this will put all the presidential candidates on a flat-tax track, as opposed to any form of consumption tax. The other possibility is that it will simply neutralize any influence he may have in the ‘96 bidding. Those promoting Steve Forbes were clearly hoping Kemp would join the effort instead of the Dole “tax commission.” Kemp will have to get the agreement of all the GOP candidates for the effort to have much influence.

TERM LIMITS: After its overwhelming defeat in the House last week, the idea of amending the Constitution to limit congressional terms is dead, I think for good. This has been its high-water mark. Its backers are dreaming if they think the GOP can turn it into a winning issue in 1996. Like the idea of a Constitutional amendment to balance the budget, its time has come and gone with the Republican victory last fall. There was no outcry from the grass roots in congressional offices of Republicans or Democrats who voted against the Contract item. The polls indicate 80% of the electorate favors the idea, but Jack Germond was correct Sunday on the McLaughlin Group in arguing that there is now a low level of passion behind that 80%, which means its opponents will not be punished at the polls. Newt Gingrich is talking about coming back with a simple statute, but the party will probably wait to see what the Supreme Court has to say about challenges to state statutes. It’s likely the Court will rule the limit unconstitutional, and that will be that. In the decades ahead, it’s likely the unusual conditions that led the Democrats to control the House for 40 years will not reappear. Traditional patterns of cyclical one-party government will make concern about politicians using incumbency to ignore minority interests moot.

DEMOCRATS: On the Brinkley show yesterday, news commentator Cokie Roberts, a life-long liberal, confessed that she had been trying to think of a single Democrat anywhere in the nation with a new idea, and could not. Sam Donaldson looked around nervously, as if someone might ask him if he knew of a single Democrat with a new idea. The most important development in Democratic ranks is the exploratory committee announced by former Pennsylvania Gov. Bob Casey, who may turn out to be more than a rare right-to-life Democrat with a heart transplant of a 35-year-old African American. My old friend supply-sider Jeff Bell, who won the 1978 GOP Senate nomination in New Jersey as a dress rehearsal for Ronald Reagan’s 1980 presidential run, has now bolted the GOP to work as a senior advisor to Casey. The conventional wisdom is that Clinton will swat Casey like a fly. With Bell, a protégé of political wizard John Sears, in his corner, though, Casey could give the New Hampshire voters a chance to advise the national party that they want a Growth Candidate in the mode of John F. Kennedy. If I were Jeff, I’d advise Casey to ask David Boren, former U.S. Senator, now president of the University of Oklahoma, to be his running mate.