To Be a Winner, Bush’s Tax Plan Needs a Soul

George W. Bush is having a difficult time getting traction with his tax cut plan. He has admitted so publicly, saying that he needs to do a better job of explaining it. Toward this end, his campaign has trotted out various “real people” to show how their taxes would be reduced more by Bush’s tax cut than by the smaller tax cut proposed by Al Gore.

This is a bad way to sell a tax cut. For every specific family or individual Bush can find who saves more under his plan, Gore can probably find another who saves more under his. It is all just a matter of finding a family with the specific income level and other characteristics that maximize the particular provisions of the respective tax plans. In the end, voters are numbed by the numbers and tune out. This helps Gore by neutralizing the tax issue, which Bush needs to win.

Furthermore, the debate about who saves more trivializes the tax issue. People come to believe that candidates are simply trying to buy their votes. Such blatant pandering generally does not work in American politics. And voters know from bitter experience that politicians seldom keep their promises to cut taxes or keep them low. Remember Bill Clinton’s middle-class tax cut of 1992 that disappeared once he was elected?

What is really important about the tax debate is not whether more voters pay less taxes under one candidate’s plan or another, but what is a candidate’s economic philosophy and philosophy of government. A candidate promising tax cuts is more likely to reject Big Government solutions to national problems. And a candidate promising tax cuts is more likely to see private initiative as the engine of economic growth.

The task for Bush is to spell this out in a simple, convincing way. He should take a cue from Ronald Reagan’s 1980 campaign. Reagan did not win because he told voters, “Vote for me and you will pay less taxes.” Rather, he talked about the need to put Big Government on a diet by cutting its allowance. He talked about the need to get the economy growing by lifting the burden of taxation from entrepreneurs, investors and businessmen. And he talked about how all taxpayers would benefit from his tax plan, not just the favored few who might have saved a bit more under Jimmy Carter’s proposal.

Bush, however, never talks about Big Government and has never really articulated a political or economic philosophy. His “compassionate conservatism” is little more than a political slogan. That would be OK if there were some sign that beneath the slogan there was a philosophical underpinning that was grounded in the work of noted scholars.

Reagan understood the need for this underpinning, and he found it in supply-side economics. While it too was really just a slogan, it had a solid theoretical foundation in classical economics and the works of Adam Smith, Alfred Marshall, Joseph Schumpeter and other great economists. Also, for years before Reagan first put forward his plan to cut tax rates, members of Congress such as Jack Kemp and Bill Roth had been pushing something similar. Congressional hearings had been held, numerous studies published and a considerable amount of debate had taken place on the nation’s op-ed pages over Reagan’s plan before he ever announced it. So his supporters were well armed with facts and arguments in favor of his plan.

By contrast, Bush’s tax plan does not build on those that have been debated in Congress. It was developed for him by a team of economists led by former Federal Reserve Gov. Lawrence Lindsey. The plan is well-constructed technically, but it lacks a soul. It is not based on supply-side economics, Keynesian economics or any other economic school of thought. It cannot be explained easily, making it an easy target for Bush’s political opponents.

If he is to turn around the tax issue, Bush needs to get away from the specific details of his plan and use it to highlight the philosophical differences between himself and Gore. He needs to hammer Gore for proposing at least $2.3 trillion of new spending and a tax cut so narrowly targeted that hardly anyone qualifies for it. Bush needs to emphasize that all taxpayers will benefit from his plan, not just the selected few that Gore’s plan would aid. And Bush needs to put his tax plan into a larger philosophical framework that sees the private sector, not government, as the wellspring of prosperity. If he does that, Bush can still make his tax cut a winning issue.