Friendly Advice for Gephardt
Jude Wanniski
May 21, 1997


Memo To: House Minority Leader Richard Gephardt
From: Jude Wanniski
Re: Running for President

Your decision not to support the President's Budget Deal has been widely reported as being the result of your determination to seek the Democratic presidential nomination in 2000. In other words, you are viewed as positioning yourself to contest Vice President Gore from his left. And because the budget deal contains a provision for a cut in the capital gains tax, you will oppose it on the grounds that it contains elements that favor the rich. Normally, I do not give unsolicited political advice to presidential candidates, but in this case, because your decision impacts public policy now taking shape, I must warn you that you are making a big mistake. The way you handle yourself in the budget deal as it unfolds may even cost you your seat in the House, let alone cause you difficulties in a race for the presidency.

For one thing, the electorate is observing you as a spoiler, a man who is crassly positioning himself politically without regard for the health of the economy or the national political family. The fact that the President's popularity rating is as high as it is, given the many tangential problems in his administration, is testimony to the good faith he has shown thus far in his dealings with the GOP leadership. For you to appear to be looking for an excuse to soil his achievement in order to have the mud spill over onto Gore is not the nicest way to get to the Oval Office. If I were advising your GOP opponent in 1998,  I would hammer away at this point and expect it to play into the awareness of your district that there is something to this.

Secondly, you seem to think that class warfare is still a viable option in the Democratic Party as a way of getting to the White House. By identifying capital gains as the source of your displeasure, you are leaving yourself open to an attack by a Republican centrist, who would rightly argue that you have become obsolete as a representative of your district, either in the House or White House. The only way for the United States to grow rapidly enough to solve its problems in public finance is to enjoy major capital gains to those who would seek them via investment. To tax a gain before it has happened is to discourage the investment. This is why Alan Greenspan says the correct rate of tax on capital gains is zero.

In 1992, when he ran, Bill Clinton's task was simplified by the fact that the electorate did not have a choice, given the failure of Bush to keep his "no new tax" pledge and that Ross Perot was in the race. Even so, Clinton let it be known that he was not opposed to cutting the capgains tax. In 1996, he ran a safe race, offering himself as the man who would protect the American people from Newt Gingrich. Dole did nothing to discourage that appeal. In 2000, you will not have Bush or Gingrich to work on your behalf, as Clinton had. Instead of fighting entrepreneurial capitalism, as you so far seem intent on doing, you should encourage it, and thereby perhaps eclipse Gore.

In any case, it does you no good to look like the neighborhood tough who will do what he can to spoil the ballgame, just because he is not one of the pitchers.