A CBS/New York Times poll released last week suggested that 68 percent of Americans favor a middle-class tax cut. And while three out of five think the Democrats are pushing a tax cut to get votes, that does not seem to bother them.
"If a Democrat is saying to me, 'I can lower your taxes,' I'm sure going to vote for that guy," said Frederick Espy, who makes wire conduit in a Wichita, Kan., factory. "But I also want to see some action."
For the Espys, who have a 5-year-old son and make less than $25,000 between them, a $300 or $400 tax cut is not peanuts. "It can either go to pay a month's worth of bills or get our son his clothes," Espy said.
COMPETING PROPOSALS
House and Senate Democrats are pushing competing proposals to make the rich pay for a modest middle-class tax cut. The House has passed its plan, and the Senate bill is expected on the floor this week. Bush favors a series of investment-oriented tax cuts built on a lower capital-gains rate.
All three plans are sprinkled with tax breaks for various industries that could begin to unravel the tax reform of 1986, which eliminated loopholes to bring down rates.
Nevertheless, the CBS/New York Times poll suggests that 53 percent of the people believe a middle-class tax cut of $400 will help them personally, and 56 percent think it will help the economy. Forty-seven percent of respondents believe a capital-gains tax cut will help the economy.
Economists say the public is dreaming.
In a profession in which disagreement is the rule, there is virtual unanimity that the Democratic plans - and Bush's package, too - will not turn the country around or significantly improve the fortunes of middle-class Americans.
Harvard economist John Kenneth Galbraith has said that it's "foolish, even mildly insane" to think tax cuts could revive the economy.
'A GOOD DEBATE'
Eugene Steuerle, an economist with the Urban Institute, said: "There's nothing wrong with having a good debate at campaign time. The danger is that the tax debate is pre-empting a more important debate about restructuring our educational system and redefining our position in the world."
The economists' criticism of the tax plans is straightforward. To begin with, none of the packages is big enough to create more than a ripple in the $5.5 trillion economy. By the time Congress acts, a recovery could well be under way.
They say tax cuts that add to the $400 billion deficit could drive up interest rates and choke off growth. Some analysts blame the recent rise in long-term interest rates on jitters that the tax debate will end up in a budget-busting bidding war.
Democrats have begun to back away from justifying their tax package on grounds that it would spur economic growth.
Instead, their main argument is that their plan will help restore fairness to a tax system that takes too much from the middle class and too little from the wealthy.
The total federal tax rate for middle-class families increased during the 1980s while incomes rose only slightly or remained stuck. But the wealthy benefited from significantly lower tax rates while enjoying a steep rise in income.
NOW OR LATER?
Many economists say government policies to increase savings and investment, accompanied by an overhaul of the education system, are preferable to tax cuts.
The choice for the Espys and other working families is whether they want a tax cut now or a better standard of living for when their children grow up, said Van Doorn Ooms of the Washington-based Committee for Economic Development, a former chief economist for the House Budget Committee.
"Twenty years from now, do they want their children to be earning less than they are?" he asked.
Redistributing wealth may not be the prescription for economic growth, but redistributing votes could put a Democrat in the White House. And the Democrats sense that they are on to something with the tax fairness issue.
"I think the Democrats are right in terms of raising taxes on the upper end and trying to help Middle America," said Jim LaFlamme of Elkhart, Ind., a hospital pharmacy director and lifelong Republican. "The American people will look at it and say (Bush) is not responding to what we need."
