Magazine article Insight on the News

Dole's Surprise Walk on the Supply Side

Magazine article Insight on the News

Dole's Surprise Walk on the Supply Side

Article excerpt

Bob Dole, like George Bush, never liked supply-side tax cuts, because they were the political property of Jack Kemp. Now that Kemp no longer is a political rival, Dole can have a political face-lift, exchanging his dour demeanor for supply-side optimism. Nevertheless, Dole will get only one cheer from supply-siders for a conversion based on expediency rather than conviction.

If clothes make the man, the new Dole (if it lasts) will be a more formidable presidential candidate. Americans prefer an optimistic president who believes in them, the economy and the country. They prefer a hopeful outlook to hand-wringing about the deficit, the ozone hole and other contrived horrors that heighten anxiety and gloom.

Economic trends also are pushing policymakers to supply-side solutions. It no longer can be denied that the aging of the population means problems for Social Security. Either benefits will have to be cut or the payroll tax increased, repeatedly. Cutting benefits takes away retirement income, and raising the employment tax leaves people without jobs, especially in a globally competitive economy.

Global competition also is putting pressure on our income-tax system, which penalizes saving and investment, thus denying Americans the productivity increases necessary to protect American jobs and wages. The old economic policy focused on redistribution and has no solutions for these problems.

A balanced budget won't solve these problems either, but unless they are solved, the deficit will grow as red ink tries to fill the gap between ends and means.

Dole's walk on the supply side is an indication that the political establishment is beginning to recognize the need for a tax system that encourages success and self-reliance. By cutting the capital-gains tax rate from 28 to 14 percent, Dole's program would greatly reduce the confiscation of private wealth that occurs when people sell their homes, businesses and farms. The lower rate also means more reward for taking risks and will spur entrepreneurs in new ventures.

By expanding individual retirement accounts, Dole's program helps Americans provide for their own retirement. As people become accustomed to these responsibilities, they will lose their fear of a privatized Social Security system. …

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