Why Dole Tax Cut Isn't Trimming Clinton Lead

Strong economy, voter skepticism hamper GOP strategy

First there was health-care reform. Then the Contract With America. Now it's the 15-percent solution.

In his attempt to win the White House this fall, retired Sen. Bob Dole is promoting an economic agenda that has as its centerpiece a 15 percent across-the-board tax cut. By all indications, it's not working. The Republican challenger lags anywhere from 13 to 21 points behind President Clinton in national opinion surveys.

What's wrong? Tax cuts, after all, have been a crucial component in GOP success in state and national ballots since 1980. Mr. Dole hopes his plan will feed off public dissatisfaction over Mr. Clinton's 1993 tax increases, just as George Bush was hurt in 1992 by his broken pledge not to raise taxes

But several factors set 1996 apart from previous elections. The economy is strong, the public has a favorable view of the incumbent's economic performance, and voters are increasingly skeptical of ambitious political agendas. This gives Clinton a formidable advantage.

"Americans have had two big agendas, and they both flopped," says William Schneider, political analyst at the American Enterprise Institute. "Bill Clinton got the message. Bob Dole probably understands this, but he has to take a gamble."

The prize for that gamble, if it works, is the suburban middle class, the largest voting bloc in the nation and the most important force behind GOP control of state government. Dole needs this vote to win in November, but he will have to fight for it.

The economic recovery after the 1991 recession has swung support among this group behind Clinton, and the president now enjoys his highest ratings on economic performance. A New York Times poll showed on Friday that 55 percent of Americans approve of the way the president is handling the economy. Only 1 in 6 of those said they were unlikely to vote to reelect him.

Dole, meanwhile, is in the unfortunate position of having to scare up bad news when voters, according to the poll, are more optimistic about the economy than at any point since 1988. The numbers show why: Unemployment, according to figures released Friday, stands at 5.1 percent - the lowest in 7 years; inflation is below 4 percent; and the economy grew at 4.2 percent last quarter.

Republicans discount these numbers. Dole advisers argue that behind the appearances of robust growth lies an economy choked by overregulation, big government, and excessive taxation. While Clinton promotes an agenda of incremental reform, Dole argues that a major change is necessary to avert a disaster that lurks not far down the road.

Accordingly, Dole is pushing an agenda equal to $548 billion in tax cuts, including the 15 percent across-the-board reduction, a halving of the capital gains rate from 28 to 14 percent, and a $500 per-child tax credit. He also would require cost-benefit analysis for new federal regulations and would repeal Clinton's higher tax rate on wealthier recipients of Social Security.

The point behind all of this is an argument that Dole had long opposed: the supply-side theory that lower taxes free capital for greater economic growth. Dole promises that his plan, which comes in the context of a promise to balance the budget by 2002, would achieve a stable growth rate of 3.5 percent a year. That's higher than the decade average of 3.2 percent reached during the 1980s. Under Clinton, growth has averaged 2.4 percent.

Dole hopes this message will enable him to tap middle-class anxiety over economic security. Even if voters generally approve of the way Clinton is handling the economy, Dole's advisers argue, they remain worried about their own long-term financial well-being.

That may be so. But Dole's big-fix agenda may miss a subtle but important shift in public mood: Voters have become suspicious of ambitious political plans.

When Clinton tried to create a new health-care system involving a massive new web of bureaucracy, voters reacted by voting in a GOP Congress in 1994. The new GOP leaders, led by Speaker Newt Gingrich in the House, tried to push through a 10-point plan to recast government. They claimed a mandate for change that appears to have been a mirage, and their failure helped Clinton build a swift comeback.

Clinton's incremental approach to change, meanwhile, seems to be holding voters. The tax cuts he proposes are targeted and he shows how he would pay for them. He offers tuition tax credits for college-bound students, and tax breaks for businesses that hire welfare recipients.

Critics decry many of the president's proposals as election-year giveaways that can't be funded without a tax hike or cuts in other government services. But in their limited scope they do something important: They don't create an economic crisis. Dole's plan promises to avert a catastrophe many voters aren't ready to see. In 1996, that's a tough sell. Voters seem more wary of the negative than the positive impact of a campaign promise.

"Dole offers too much solution for not enough problem," says Mr. Schneider of the American Enterprise Institute.

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