THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Tuesday, January 2, 1996 TAG: 9512300016
SECTION: FRONT PAGE: A10 EDITION: FINAL
TYPE: Editorial
LENGTH: Medium: 74 lines
The year ahead will be filled with politics. In Virginia, there will be lots of local elections and a U.S. Senate seat is at stake. A presidential race between President Clinton and Sen. Bob Dole doesn't exactly shape up as a duel of the titans, but the action has shifted to Congress anyway.
There, the year will thrill political junkies and decide whether the Republican revolution continues or is turned back. Given the Democrats' moribund state, the real question is whether the Republicans will snatch defeat from the jaws of victory.
There's evidence the GOP got control of Congress because of a deep populist resentment of business as usual. But Republicans could squander their victory if they seem to be continuing the same shenanigans.
There's a sense that the American Dream of upward mobility is in trouble. Voters want change they can detect in their economic lives. They want government out of their pockets. They want the budget balanced and are willing to sacrifice if the pain is shared equitably. But they aren't likely to be loyal to a revolution that excludes them.
GOP promises to downsize government play well, but so far the shrinkage isn't apparent. Everybody wants lower taxes, but there's increasing concern that everybody isn't going to get an equal break.
Ross Perot sold people on the notion that the deficit must be eliminated. Such previously unthinkable steps as cutting Medicare, Medicaid and defense are being seriously contemplated.
But the Republicans have made themselves vulnerable to charges of not looking out for the middle class in a number of ways. First, the Contract With America called for limits on Washington power - the line-item veto and term limits. They have not passed the Republican Congress.
Though deficit reduction is supposed to top the national agenda, the GOP promotes tax breaks that favor the well-to-do. Sixty percent of a proposed $240 billion tax reduction - about $150 billion - would benefit families with children. But only $50 billion will go to families earning less than $75,000.
The remaining tax breaks, worth $100 billion, tilt toward the prosperous. Extending tax-deferred retirement accounts to top earners will deny the Treasury $12 billion over seven years. Cutting capital-gains taxes will reduce revenues by $36 billion. Reducing estate taxes for the top 1 percent of taxpayers will lose another $12 billion.
There are cogent arguments for not taxing capital gains twice and for altering estate taxes that can force the sale of family businesses. But the Republicans look bad advocating them as they try to tighten the Earned Income Tax Credit for the working poor and cut hundreds of billions from programs for poor children and the elderly.
They look even worse by dishing up more ``corporate welfare.'' Insurance companies, airlines, computer companies, utilities - many of them heavy campaign contributors - all come in for special tax treatment that will reduce federal revenues by billions and make the deficit harder to eliminate.
Kevin Phillips, a political analyst who understands the mood of the electorate, saw the South would go Republican before Nixon became president and predicted the appeal of Reagan's conservatism to blue-collar Democrats. He now warns that a rising populist tide threatens the Republican revolution.
In a recent Washington Post report, Phillips was quoted as saying the GOP courts disaster by pandering to special interests. Yet, ``they are like moths drawn to the flame. They cling to this extraordinarily foolish notion that, since everybody hopes to get rich someday, everybody will support them for rewarding people who are rich already.''
On the contrary, everybody hopes the government will get its fiscal house in order and everybody expects to be treated fairly in the process. If the conviction grows that the GOP is favoring the few at the expense of the many, the gains of 1994 could become the losses of 1996. by CNB