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The Public's Mood: Testy on Taxes

By Godfrey Sperling Jr.Godfrey Sperling Jr. is the Monitor's senior Washington columnist. / July 3, 1990



THE politicians of both parties don't seem to be listening to the voters, who at the top of their voices are saying: There has to be a peace dividend stemming from the easing of global tensions and the resultant cutback in the US military, and it should go directly to the taxpayer.

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They are fed up with the savings and loan scandal and the financial burden it's putting on them.

Spokesmen within the Bush administration and Congress, apparently not sensing these public views, respond by:

Contending that the peace dividend won't be all that large, that it will come gradually over years, and that in any case it will have to be put into other domestic programs or used to help reduce the budget deficit.

Asserting that although the S&L scandal will be costly, the federal government is acting responsibly to repay depositors and to see to it that such S&L wrongdoing cannot happen again.

No, Washington politicians just aren't listening. But they'd better start paying closer attention. This fall the people get an opportunity to speak out in the congressional, gubernatorial, and other state and local elections. And those candidates who aren't attuned to these voter views may well be rejected.

Politicians forget that this is the same public which gladly ``bought'' the Reagan-pushed concept that lowering, not raising, taxes would help the economy. The public remembers, too, that Democrats joined with Republicans in Congress to support the legislation that mirrored that point of view. Further, Americans generally feel that the economy has rolled along pretty well under what was called Reagonomics.

This is a public that, largely, doesn't see storm clouds on the economic horizon. Further, having accepted the idea that lowering taxes has been good for them, most people readily conclude that the availability of a peace dividend indicates a further lowering of taxes is in order - not higher taxes, a goal toward which both the president and Congress seem to be heading.

The voters, too, don't like all this smooth talk emanating from Washington about the S&Ls. They are no fools. They know that this is a scandal that rivals Watergate or Teapot Dome and that it is being covered over by both parties and by both the executive and legislative branches.

The cost to the taxpayers of the S&L excesses is shocking voters from coast to coast. They hear various estimates, each one larger. First, $40 billion, then $60 billion, and then talk of $130 billion. The other morning William Seidman, perhaps the leading expert on the S&L scandal, told reporters the cost, if paid off quickly, would be ``somewhere between $140 billion and $200 billion.'' ``If financed over 10 years,'' he added, ``the cost will be in the trillions.''

Mr. Seidman traces the origins of the scandal to the Office of Management and Budget, then headed by David Stockman (under Reagan), and its inattention to problems emerging after S&Ls were deregulated.

One Washington estimate is that the S&L disaster will cost every American $1,000 in taxes. That's very alarming - particularly to those who quickly compute that the cost will be, to them, several thousand dollars because the burden of income taxes falls disproportionately on those in middle-income brackets.

So candidates who get behind new or increased taxes are headed for a cold reception. They'll be asked about the peace bonus and they'll stir up anger if they blame the S&L scandal for the need to increase revenue.

Republican dissidents who are parting company with the president on taxes are, therefore, on the right track politically. They know that the same no-tax approach to the voters that worked for them under Reagan will work now. They are upset by Bush's people discussing the budget with congressional leaders and pledging ``no conditions.'' They think the president has opened the door to higher taxes.

So if new taxes become an issue this fall, look for those candidates who can position themselves as opponents of taxes to fare well with voters. It will help them, too, if they say there is a peace dividend - and that the public is entitled to that, too.