Dole Campaign Mapping Out Tax-Cut Strategy

Faced with a yawning gap in public opinion polls, Sen. Bob Dole is rifling back through the pages of the Republican songbook for an old party favorite: tax cuts.

Senator Dole has enlisted the help of noted conservative economists to formulate a "fairly dramatic" proposal to cut taxes, according to advisers, that will become the central campaign theme. Details remain sketchy, but one prevailing idea includes an "across the board" reduction of up to 15 percent.

The move toward tax cuts is important - and problematic. Over the course of his career, Dole has taken to tax cuts about as well as oil mixes with water.

To argue in favor of significant tax cuts, he'll either have to move the party away from its goal of balancing the budget or begin supporting a theory he has always rejected - the supply-side argument that tax cuts will erase the deficit by spurring economic growth.

But Republicans are frustrated over President Clinton's success in capturing the upper hand in talks on balancing the budget. With polls showing the public leaning generally toward the Democrats, there are signs that the GOP Congress may be slowly backing away from its promise to end deficit spending.

Over the past few weeks, the presumed GOP nominee for president has chided the Clinton administration over liberal judicial appointments and tepid trade policy to China, but Dole has been in politics long enough to know those issues won't rally the American public behind him. As one campaign adviser puts it, those speeches have been more about the candidate testing his legs for the general election.

By shifting their message to tax cuts, the critical component of GOP electoral success since 1980, Dole and the Republicans hope to remind the public that Clinton is the champion of big government and high taxation.

"Judges, crime, and anything else are just the nits and gnats of this campaign," says a senior Dole strategist, speaking on condition of anonymity. "The central thrust of any winning Republican campaign - the central thrust of this campaign, if it is going to win - is the growth of central government and excessive taxation of the American people."

The politicking over the gas tax illustrates the advantage Dole hopes to gain by drawing Clinton into a debate over revenues. It also shows the risk. The senator tried to blame higher prices at the pump on the president's 4.3-cent hike in the gas tax, one part of Clinton's overall 1993 stimulus package. The issue put Dole and his party on the offensive for the first time in weeks.

Similarly, Dole hopes to force Clinton on defense by attacking the president's first two years in office. During that period, the administration pushed through Congress - without a single Republican vote - the largest overall tax increase in history. At the same time, Clinton spurred a health-care reform effort that Republicans regard as a blatant attempt to bloat the federal bureaucracy. A proposal to significantly trim taxes, Dole advisers say, would cut a sharp contrast between the president and the senator.

But there are pitfalls to such a strategy. While Dole stood at a Virginia gas station blaming the White House for inflating pump prices with taxes a few weekends ago, the administration reminded voters that Dole backed a dime's worth of such tax increases during the 1980s.

When Dole goes on a larger tax attack, probably at the end of this month or in early June, the White House will be ready with other nuggets from the senator's past. A year after President Reagan pushed through his 1981 landmark tax cuts, Dole - an ardent deficit hawk tempered by a Dust Bowl youth - wrote a major piece of legislation raising taxes to dam rising red ink. The senator's disdain for supply-side policy runs deep (recall Jack Kemp's endorsement of Steve Forbes in the primaries).

Strategists shrug off the contradictions. "Ronald Reagan, after all, was the author of the biggest tax hike in California history" at the time, notes a Dole campaign adviser: $1 billion during his first year as governor in 1967.

But if tax cuts make for attractive election-year politics, economists say, any ambitious proposal would frustrate GOP plans to balance the budget or reform entitlement programs such as Medicare. A reduction in either the Social Security or FICA taxes, for example. Those revenues pay into the trust funds that keep those programs afloat. Medicare is already expected to become insolvent by 2001.

And tax cuts may not be as politically effective as they once were. Since Republicans gained control of Congress in 1994, polls have consistently shown that voters support balancing the budget over fattening their own wallets.

"There doesn't seem to be a groundswell of support among the American people for deep tax cuts. The tax cuts from the Contract With America were dogs that didn't bark," says Robert Reischauer at the Brookings Institution in Washington. "We're not in a recession," he notes, "most voters would rather see spending cuts made and the goal of balancing the budget reached before having the dessert, so to speak.''