WSJ: GOP Tax Dilemma

The following was sent to me by a good friend. In my opinion, the party's fiscal message should be the following: eliminate wasteful government spending, balance the federal budget each year and start paying off the National Debt. If the party and it's candidates adopt that approach, I think they'll find widespread support.


GOP Tax Dilemma
After years of waste in Congress, voters aren't buying the party's fiscal message.

BY STEPHEN MOORE
Friday, October 5, 2007 12:01 a.m. EDT - Wall Street Journal

A few weeks ago Republican leaders gathered on Capitol Hill to hear from their top pollsters and pundits about how they can win back the votes of independent voters. Some of the attendees are still in a state of cardiac arrest over what they learned.

America's swing voters, especially the suburban "security moms," who abandoned the GOP in droves in 2006 still hold Republicans in very low regard. What has party tacticians especially spooked is that these independents are apparently not much attracted to what the Republicans are saying about taxes. That's a bitter pill for party leaders to swallow, because for 25 years the anti-tax banner has been a political trump card for conservative candidates. A top strategist at the Republican National Committee who attended the meeting told me: "Our tax message has worn thin."

Well, that's not exactly true. It is true that the GOP message on taxes needs a makeover, perhaps a radical one--and the party's congressional leaders had better figure this out soon: The big tax fight starts as early as next week when House Ways and Means Committee Chairman Charlie Rangle unveils his multibillion dollar soak-the-rich tax hike plan to pay for middle-class Alternative Minimum Tax relief. So let's review some of the key attitudinal shifts of voters on taxes as revealed in recent polls and focus-group findings.

First, the not-so-good news for the GOP. Most voters are unpersuaded by the Republican message that the Bush tax cuts were a resounding success that pumped the economy back to life. Worse, the key independent voters are actually repelled by that message. "It crashes like the Hindenburg," says Richard Thau, who has been monitoring swing voter sentiments across the nation. Why? Because politicians who boast about the rosy economy seem out of touch, even delusional, given the rising costs of gasoline, health insurance and college tuition.
The reality, of course, is that the investment tax cuts did help create seven million jobs and did steer the economy out of recession. That doesn't matter to these "stressed out" voters, as Mr. Thau calls them. The Bush tax cuts are a bridge to the past, not the future, to borrow a Clintonite term. Moreover, because local property and school taxes have been skyrocketing, many independent voters scratch their heads and wonder: What tax cuts?

There is more deflating news. Unlike in the 1980s and '90s, voters are today less attracted to talk of new tax cuts, which they think are pie-in-the-sky, given the current war costs and budget-deficit. Nor are they averse to raising taxes on "the wealthy," a group they are persuaded is taking advantage of tax loopholes to avoid paying their fair share. That the richest 10% already pay two-thirds of the income taxes isn't well understood. One strong defense mechanism against the left's class warfare tax policy is that roughly half of voters are convinced that when politicians say they are only going to soak the rich, they fear their own tax bills will go up.

There is another silver lining for the GOP: The Democrat's tax-happy policies are an even less palatable message to voters. Sen. Jon Kyl of Arizona, who has sat in the GOP tax strategy sessions tells me that "an overriding concern of economically anxious voters today is that they don't see their own taxes rise."

Pollster David Winston, who's been testing the tax issue for Republicans, agrees with that assessment. When Mr. Winston asked a national sample of registered voters last month, "Do you believe or not believe this statement: Given the cost of living these days, now is not the time to raise taxes," 65% believe now isn't the time to raise taxes, while only 31% believe it is.

There is another GOP imperative: The anti-tax message must be linked to wasteful government spending. "There's no question that for seven out of 10 American voters, wasteful government spending is one of the largest problems in Washington," says pollster Tony Fabrizio. "For many of these voters it's a bigger issue than taxes." All of the polling consistently finds that voters believe about 40 cents of every dollar spent by Washington is wasted. So this widespread aversion to the way government mishandles money may be the best shield against tax hikes--at all levels of government.

In Mr. Winston's survey, 75% of respondents agreed that, "Taxes should not be increased as long as Congress continues to waste the tax money it already receives." Only 23% did not.

Perhaps the most encouraging poll finding is that Americans fully understand the link between a strong economy and deficits. In 2006 federal revenues increased by a world record $250 billion, because of surging employment, corporate profits, and stock values. No Hillary Clinton tax hike could have possibly raised that kind of money.

This is a nation that instinctively gets the supply-side message that putting people to work yields more tax revenues than a strategy of weighing down businesses and workers with tax hikes, which explains this stunning finding: When Mr. Winston's poll asked, "Which approach is more likely to increase federal revenues?" 81% said "increasing economic growth" while only 13% said "increasing taxes."
So the tax issue is still radioactive with most voters, and the GOP would be foolhardy to run and hide from it. That's especially true because if the economy slows down in the coming months due to the housing credit crunch, aversion to higher taxes is likely to intensify.

"Voters' biggest economic concern is whether they will have enough money to meet their own needs," says Sen. Kyl. He says that if Republicans are going to win in 2008, they have to persuade voters that Democratic tax hikes "will make things worse" for the economy and their own personal finances. Fortunately, this message has the added attraction that it's not just pollster-driven spin. It's the truth.

Mr. Moore is senior economics writer for the Wall Street Journal editorial page.

LTTE: Lapses in judgment

Here is my response to Rep. Jim Oberstar's recent commentary, posted below. The letter appeared in the Oct. 1, 2007 edition of the St. Paul Pioneer Press.

Lapses in judgment

Rep. Jim Oberstar's recent commentary lashing out at the National Taxpayers Union as a "naysayer" organization is utterly laughable.

As the chairman of the House Transportation Committee, he should be working to prevent and fix problems instead of playing the blame game. He also fails to hold himself accountable in the process.

Oberstar points at the time it takes for freight to go through Chicago as a major concern without mentioning how he has failed to secure much-needed funding for the city of Duluth, which would enable a port in his home district to become a major hub for multi-modal freight.

He points out the need for bridge repair, but never advocated it before the I-35W bridge collapsed.

Instead, he continues to spend more earmarks on bicycle trails in his home district, mass transit and other risky schemes while continuing to blame others for his lapses of judgment.

- J. Scott Williams
Maplewood