GOP Convention

Commentary by Pete du Pont

For the past year, the Republicans have been a fractious lot. The Gingrich conservatives have argued with the liberal Senate Republicans. The presidential primaries were nasty. Abortion is an issue that splits the party into warring factions on a weekly basis.

So it is none too soon that Republican presidential candidate Bob Dole has centered his campaign on an issue nearly all Republicans can agree on - tax cuts.

Given the continuing debate between the party's supply-siders and deficit hawks, that may seem a strange statement. But who better to preside over a tax-cutting administration than Bob Dole, the deficit hawk?

Supply-siders can be pleased with the prospect of new economic growth stimulated by the Dole tax cuts. The deficit hawks can be pleased because Dole's own credentials offer them assurance that he will give equal attention to curbing government spending.

And the entire Republican party - supply-siders and deficit hawks alike - can stand on a plan for running government in the years ahead that combines the two most important elements of a stronger economy, lower taxes and the reduced growth of government spending.

Both of those elements are also vital to another Republican goal: a balanced budget by the year 2002.

The Dole plan includes a 15% across-the-board personal income tax rate cut over three years, halving the capital gains tax rate, repealing the 1993 Social Security benefits tax increase, expanding the availability of Individual Retirement Accounts and giving families a $500 per child tax credit. Altogether the cuts are projected to reduce government tax revenue by $548 billion over six years.

Tax cuts are more than simply politically popular. Dole doesn't have to be a supply-sider to be aware of what scholarly studies conclude and recent history confirms - that the right kinds of tax cuts stimulate economic growth. The longest periods of sustained economic growth in the United States have followed tax cuts. After the Kennedy tax cuts in the 1960s, the economy grew by 42% over seven years. After the Reagan cuts of the 1980s, the economy grew by 33% over seven years.

Economist Gerald Scully, a Senior Fellow at the National Center for Policy Analysis who has done extensive analysis of taxes, has concluded that maximum economic growth occurs when government at all levels takes between 21.5% and 22.9 % of the nation's output of goods and services in taxes. Currently, the federal government alone takes 20.5 % - and the Congressional Budget Office expects the economy to grow by only 2.2% this year. Real gross domestic product grew only 1.3 % last year.

President Clinton may see that kind of economy as "the soundest it's been in a generation," but it is not growing rapidly enough to provide Americans with economic opportunity.

Dole projects that the stimulation of enacting his tax cuts will push annual economic growth to 3.5%, generating millions of jobs, a lasting expansion and more opportunities. But the Dole proposal needs only a third of that increase to succeed.

Clinton officials will likely jump on the bandwagon, arguing that they will now enact the middle class tax cut they promised four years ago. But for the moment, they are pushing the familiar theme of economic class-warfare. Those who pay the most taxes will benefit the most from the tax cuts, they say. True, of course, but that argument may not resonate so well with taxpayers who conclude that everybody is getting a fair share of the reductions. Dole will touch some responsive chords with the theme he sounded last weekend when he said, "I was thinking of the husband and wife who both work, who have little money to save for their children's education after they pay their bills."

Maybe Dole decided on tax cuts simply as a political tactic. If so, this is one time when good politics is also good policy. And a President Dole would be unlikely to lose sight for a moment of his goal of a balanced budget by 2002. Given the tax cuts, this deficit hawk would of necessity have to go after government spending with a zeal that hasn't been seen in the White House since ... well, ever.