AN interesting challenge to the Democrats running
for president, Treasury Secretary John Snow last
week dusted off yet another package of tax cuts
for the you-know-who that President Bush would
love to make part of his reelection year agenda.
So many highest-income shelters to create, so
after a third round of goodies last spring and
an autumn crammed with corporate scams (from the
oil and gas boys to health insurance companies),
the next round is designed to slip through the
back door a virtual exclusion of investment income
rhetoric will be all about promoting saving, but
the reality will be something quite different
-- part of a careful rearrangement of the tax
burden, as Senator John Edwards likes to say,
away from wealth and onto ordinary income (the
kind you work for).
has been getting favorable attention in recent
weeks for arguing that it will not do, it is not
enough, for Democrats simply to get angry at this
unprecedented looting of the Treasury for the
benefit of those who can afford four grand per
couple for Bush's reelection campaign. It is a
soft jab at Howard Dean's movement, which the
former Vermont governor led in an angry chant
-- "You have the power" -- at the big weekend
party dinner in Des Moines.
North Carolina senator argues that presenting
alternatives is a more effective way to attract
support. It is such an appealing point that Senator
John Kerry joined him in making it, to equally
favorable notice, at the same Iowa dinner. This
could catch on.
family finances are concerned, the Edwards approach
yields an interesting comparison. What Bush wants
was actually included in his budget last winter,
forgotten for other tax-cutting priorities, but
is now being readied for high-profile resubmission.
president wants to replace the current array of
savings incentives -- retirement accounts, special
purpose funds (like for college), and worker-employer
plans -- with three basic funds.
each case, the top limits on what can be put into
these essentially tax-free vehicles would be raised
enormously. For retirement funds, for example,
up to $15,000 a year could be socked away by a
couple with no tax on the accumulating earnings
and no tax on withdrawal after the age of 58.
For basic investment accounts there would be no
a catch, however. To deal with part of yet another
huge addition to the budget deficit, the tax deductibility
of retirement contributions -- a major help for
Americans of moderate means -- would be eliminated.
As it is, most workers are lucky to be able to
put anything close to the current maximum into
things like IRAs and 401(k) plans on the job.
can do the anti-Bush riff in a few sentences.
This is classic class warfare, only in reverse.
It is a backdoor way to exclude gobs of investment
income for very well-off people at the direct
expense of the less well off. It is outrageous.
Edwards also likes to discuss the real world most
Americans live in. In this world, two incomes
(largely static of late) are barely keeping up
with rapidly rising basic expenses. Virtually
no saving is occurring as families scramble to
cover necessities. As debt piles up (the percentage
of income in credit card debt has tripled), home
foreclosure rate and bankruptcies have soared
(another sharp increase was reported just last
might make sense, in other words, if Democrats
concentrated a little less on their anger and
a little more on addressing these painfully real
problems, which Edwards does in five ways:
savings incentive for normal people in the form
of a dollar-for-dollar government match of money
put into savings up to an income limit of $50,000,
roughly the median household income.
exclusion from income tax of the first $1,000
of realized capital gains income and of the first
$500 in stock dividends, another idea targeted
carefully at the middle.
government match in the form of a tax credit of
up to $5,000 for either a down payment on a residence
or mortgage payments. According to housing experts,
this would fit another 2 million people into their
own dwellings, still the most important investment
ordinary Americans will make.
assault on the so-called predatory lenders who
are feeding off the widespread financial problems
of working families -- from check-cashing "services"
to credit card companies' interest rate scams,
to new and usurious personal loan schemes.
Joe Lieberman and Kerry -- and unlike Dean and
Dick Gephardt -- Edwards wants to keep the tax
cuts of recent years that primarily benefit working
families (and were Democratic ideas to begin with).
These include the higher child tax credit, the
10 percent income tax rate, and a more broadly
applicable 15 percent rate.
political danger in this kind of campaigning is
that it risks being a little more boring and a
little less angry and rhetorical. The benefit
is that it addresses the problems real people
face and makes a powerful contrast to Bush's priorities.
At a minimum, it is what is supposed to happen
in presidential campaigns.
Oliphant's e-mail address is email@example.com.
© Copyright 2003 Globe Newspaper Company.
Posted: November 28, 2003