On Sept. 27, some 300 Republican candidates for Congress--incumbents and challengers--stood on the steps of the House of Representatives and made a pledge: Elect enough of us to control the House, and we'll balance the budget, boost defense spending, and enact massive tax cuts.
As fiscal policy, the GOP's "Contract with America" reprises pie-in-the-supply-side-sky economics. Without offsetting spending cuts--and with the national debt approaching $4 trillion
--promising $200 billion in tax breaks is like running for high school class president by promising to put Coke in the water coolers.
Nevertheless, as a political manifesto, the pledge is a potent message to President Clinton and congressional Democrats. The Republicans not only believe they can win on the tax issue in November but they're also confident that they can force Clinton to back a tax cut before the 1996 election. They may be right.
GOLDEN OLDIES. Harking back to Ronald Reagan's glory days, the GOP agenda includes expanded individual retirement accounts, a capital-gains tax cut, more deductions for small business, a new cost-recovery system for capital investment, and tax breaks--as well as bigger benefits--for Social Security recipients. Among the nontax items, there's even a promise to restore much of the Reagan defense buildup, which Congress shot down after the cold war.
Of course, none of these bold plans comes cheap. Besides the huge tax cuts, the GOP proposes $70 billion in new spending over five years. Where would it find the money? Oh, the contract claims $40 billion in savings from welfare reform and nicks a few other government programs. But those cuts, even if achieved, are barely a downpayment. And Republicans have even bigger plans in mind: They want a Constitutional amendment requiring a balanced budget. Doing that in, say, seven years, would require an additional $1 trillion in spending cuts. The "contract" is silent on how that hurdle would be cleared.
Although the budget numbers don't add up, the GOP is convinced that the political arithmetic is solid. Taxes and big government--not race, crime, abortion, or foreign policy--are the wedge issues. It's a tried-and-true message: Democrats will raise your taxes; we'll cut 'em. Says Newt Gingrich (R-Ga.), who becomes House GOP leader next year: "The tax issue has the potential to make a substantial difference."
Curiously enough, the manifesto has generated some cool responses from Republicans. Senate GOP leaders have ducked the plan. Scoffs one: "It's silly season." Some social conservatives are complaining that the contract ignores "values" issues such as school prayer and school choice. And economic conservatives fret that the plan should be pushing tax reform more aggressively. They preferred a contract endorsing the flat tax that has lately been sponsored by Representative Richard Armey (R-Tex.).
Still, the plan is in stark contrast to the Clinton agenda. And if Gingrich and company gain at least a working majority in the House, their contract will set the stage for mind-numbing gridlock. Beyond welfare reform, it's hard to find anything Clinton and Gingrich could agree on. Except one: a middle-class tax cut.
OFF THE RADAR. Clinton's political advisers have been urging him ever since the 1992 campaign to propose a tax cut. Until now, Administration deficit hawks have held sway. But if confronted with a resurgent Republican Party pushing to cut the average American's taxes, Clinton may have no choice but to preempt the opposition. He won't go for the kind of budget-buster the GOP is peddling, but he may offer a modest tax cut, such as expanded IRAs or a new child-care credit.
In the end, taxes may not turn the election tide. Andrew Kohut, director of the Times Mirror Center for People & the Press in Washington, says the issue barely shows up in his polls. But that hardly matters. If the GOP makes big gains in November, it will claim a mandate for lower taxes and less government. And with a Democratic President's grudging help, it may deliver on at least one piece of its pledge.