Gephardt Embraces Tax Cuts and Tax Simplification

President George W. Bush delivered a tour de force in his first State of the Union address last week. Bringing to mind Charles Dickens’ sense in “A Tale of Two Cities” that we live in both the best of times and the worst of times, the president said, “Our nation is at war, our economy is in recession and the civilized world faces unprecedented dangers. Yet the state of our union has never been stronger.” Even Geraldine Ferraro, former member of Congress who was Walter Mondale’s running mate in 1984, called the speech “phenomenal” on Fox News’ “O’Reilly Factor.”

With all the much-deserved praise for the president’s address, the Democratic response given by House Minority Leader Dick Gephardt has undeservedly fallen through the cracks. The minority leader’s speech was important, and it should be taken seriously.

Gephardt did the Democrats and the entire country a great service by laying out the values and principles of the “Gephardt wing” of the Democratic Party. While we may agree with some of those principles and disagree with others, I believe we all should welcome his stating them with such clarity and forthrightness because it provides the basis for reasoned debate between the parties and strengthens our democratic system.

Gephardt’s speech was important for his party because it helped dispel the obstructionist image created for the Democrats by Senate Majority Leader Tom Daschle. Not only has Daschle fought Bush’s effort to cut tax rates tooth and nail, he doggedly held up Bush’s judicial appointments and has refused to allow the Senate to take action on some 50-odd bills already passed by the House of Representatives and supported by the president.

Gephardt repudiated the strategy of blaming the recession on Bush’s tax cuts and demanding that they be delayed. Even though he voted against the Bush tax cuts, Gephardt says it doesn’t make sense to talk about repealing or delaying scheduled tax cuts in the midst of a recession.

Instead, Gephardt took a different tack when he responded to the president’s State of the Union address: “I refuse to accept that while we stand shoulder-to-shoulder on the war, we should stand toe-to-toe on the economy,” he said. “Our (Democratic) values call for tax cuts that promote growth and prosperity for all Americans.”

Now that sounds like a real Kennedy Democrat — a John F. Kennedy, not a Ted Kennedy Democrat.

Then Gephardt took Bush’s speech a step further and called for “an economic growth summit to figure out how we’re going to help businesses create jobs, reduce the deficit, simplify the tax code and grow our economy.” What a terrific idea. But it’s not only a great idea for the country, it’s a shrewd political challenge to the Bush administration, and one the president should accept.

Tax rate reductions, tax reform and tax simplification have been solid “Republican issues” since Ronald Reagan’s presidency. The standard Democratic response, unfortunately, has been to play off the tax issue by waging class warfare, pitting labor against capital, claiming Republicans only want to cut taxes for “the rich,” pretending that tax cuts “undermine Social Security” and lately making the bizarre claim that tax cuts worsen and exacerbate recessions.

In his speech, Gephardt may have turned a new leaf on taxes for the Democrats. It waits to be seen whether the House minority leader follows through on his stated desire to work shoulder-to-shoulder with the administration on the economy for the good of the country rather than standing toe-to-toe with the president over tax cuts in pursuit of partisan gain. If he does, then Gephardt will have taken the first important step in making tax rate reductions, tax reform and tax simplification issues with broad bipartisan support once again.

It’s time to move beyond the small-potatoes “stimulus package” that has kept Congress and the administration deadlocked. The economy doesn’t require short-term stimulus; it demands long-term reform. Gephardt’s idea of an economic summit offers one way to shift the debate off short-term stimulus onto long-term growth, which must include consideration not only of taxes but also trade, regulations and what to do about an ever-strengthening dollar and deflationary monetary policy.

Serious-minded people from both political parties would welcome this kind of high-level summit on economic growth. Everyone would benefit greatly from the challenging debate and discussions that would emerge from it. While I am sure there would be serious disagreement over the details along the way, I also believe the country would be far better off if our political parties spent their time arguing over how to enlarge the economic pie for everyone rather than forever bickering about the “fairest” way to distribute a pie that’s not growing as fast as it could. A summit on long-run economic growth, hopefully, could be an important beginning that eventually leads to a pro-growth, pro-family tax code for the 21st century, and would be good for everyone.