Can Tax Cuts Revive The Dole Campaign?

Down in the polls and watching time tick away, Bob Dole may soon steal a play from Ronald Reagan's old game plan: the sweeping tax-cut proposal.

By making tax relief the center of his long-awaited economic program, Mr. Dole likely hopes he can woo middle-class swing voters disenchanted with stagnant incomes.

In recent days the GOP candidate and his supporters have been constantly repeating the theme that President Clinton's fiscal policies have produced only disappointing economic growth.

But will the Gipper's moves work for the Man From Russell in the 1990s? After all, the economy may not be breaking records, but it's doing pretty well. Furthermore, years of Washington talk about deficit reduction have made tax cut promises less popular with the public.

Growth figures to be released this week could hint at which candidate will control the campaign's economic ground game.

The second-quarter report on gross domestic product is due out Aug. 1. If the figure is as strong as expected - around 4 percent - watch for the Clinton team to pounce.

Already, the administration defense against Dole's fiscal proposals is warming up. "The best words I can use to describe what I've seen so far is deja voodoo II," said Senate minority leader Tom Daschle (D) of South Dakota last week.

It's a political truism that the economy is among the most potent of presidential election issues. That's particularly so for a challenger looking to unseat an incumbent. In 1980, Reagan asked swing voters if they were as well off as they had been four years earlier - and the answer was a resounding Carter defeat.

In 1992, the sign on the wall in Clinton campaign headquarters said "It's the economy, stupid." With 40 to 50 percent of voters judging economic conditions poor at the time, President Bush got sent back to the beach at Kennebunkport.

Dole strategists have been planning their approach to economic policy for months.

In particular, they've been thinking about how to address the deep feelings of economic insecurity engendered by years of corporate layoffs and stagnant middle-class incomes.

The overall economy may be chugging along, their theory goes, but there are enough dissatisfied and even fearful voters to hand the Republicans a powerful campaign issue.

Politics of taxes

Proposed tax cuts are the way to capitalize on this issue. At least, that's what many GOP leaders, from House Speaker Newt Gingrich (R) of Georgia on down, have long been urging. And it looks as if they'll have their wish: Dole's economic agenda is likely to have a big cut in individual taxes as its centerpiece.

Dole's plan will likely be unveiled before the August 12 start of the GOP convention, and could be made public as early as this week.

Its tax reduction provision will probably call for $400 billion in relief over five years.

As of this writing, two options for reaching this overall goal were under consideration: a 10 to 20 percent cut in overall income tax rates, or a rollback of all the tax hikes approved by Presidents Bush and Clinton in the 1990s.

In advance of the plan's unveiling the GOP has already begun to take harder shots at Clinton's economic record.

It's true that inflation is low and 10 million new jobs have been created in the last four years, they say. But real GDP has grown at an average pace of only 2.3 percent since Clinton took office.

"We've had three and a half years of Clinton economics now, and we know what that feels like," said House majority leader Rep. Dick Armey (R) of Texas dismissively last week.

But indications are that the tax cut play may not work as well for Dole as it did for Reagan. For one thing, the public is warier today of the economic consequences of tax reduction, note pollsters. A recent CBS/New York Times poll found respondents almost evenly split on the question of whether taxes can be cut and the deficit reduced at the same time.

Tax cuts are no political elixir

"Generally, if you ask people if they want a tax cut, they favor it," says Margaret Petrella, survey analyst at the Pew Research Center. "If you pose it with the question of deficit reduction, the opinion definitely changes."

Furthermore, the public still gives Clinton good overall marks for his handling of the economy. A three-way CNN/USA Today poll released last week, found that 41 percent of voters thought Clinton the best candidate on economic issues. Dole was the choice of 30 percent of respondents, while Ross Perot won the economic nod of 22 percent.

There's still time for this perception to change, however. If the economy stumbles in the months leading up to election day, Clinton's perceived economic competence could come into question.

The election 'is close'

Yale University analyst Ray Fair has developed a mathematics model that predicts presidential elections based on the state of the economy. Right now, he says, the election is relatively close, despite what national opinion polls say.

But if this week's second quarter GDP numbers are a strong 4 percent, "the equation predicts a Clinton win," says Fair. "If it's a mediocre 2 percent, the equation predicts a slight Dole win."