Surprise: Democrats Defend Tax Cuts
As always in politics, it's about money, money and money.
Attending a steelworkers' rally in Des Moines, Iowa, this week you might have been surprised to hear the issue that took center stage -- taxes. Leo Girard, the president of International Steelworkers Union, told 200 members of his Iowa local that President Bush's $1.35 billion tax cut stood in the way of health care benefits for every American. In an economy that is still struggling to produce jobs, Girard said, the toughest part of any contract negotiation is the medical benefits package for workers. Union workers need a president in the White House who makes the cost of health care the number one priority, Girard said, instead of putting tax refunds in the pockets of the rich.
Taxes also captured the spotlight at the last major debate before this year's Iowa caucuses. Howard Dean, the former Vermont governor who has been leading in polls here, came under attack from most of his fellow Democrats for his plan to repeal the entire Bush tax cut. The charge against Dean (and Rep. Dick Gephardt of Missouri, who also pushes total repeal) is that rolling all the cuts back would raise taxes on the middle class as well as the rich. Dean responded by saying he would rather cut the payroll tax -- the regressive tax paid by all wage earners at the same rate on the first $87,000 of income.
The problem with that strategy is that the payroll tax goes to Social Security and Medicare. So Dean's opponents wasted no time accusing him of weakening the twin pillars of Democratic social policy. Dean, already criticized for having once said Medicare needed reform, immediately pledged not to take a dime from the sacred trust fund.
The tax issue raises its head all around Iowa. This is a state where manufacturing jobs have been leaving fast and where family farmers have their sad story of economic woes. So Iowa Democrats hear any talk of higher taxes as more losses from a shrinking pot.
At the NPR debate last week, one listener pressed Dean by saying a rollback of the tax cuts would make it harder to handle the cost of raising and educating his children.
Dean shot back: "While individuals like the caller will have higher taxes, the fact is... if we were all paying the same taxes we paid when Bill Clinton was president, we could have the same kind of economy we had when Bill Clinton was president..."
Dean has tried to argue that Bush's tax cuts have actually hurt the middle class. He connects lower taxes to higher college tuition rates, higher health care costs and higher state deficits that have led to cuts in social services.
A Chicago Tribune poll released Monday shows that only 40 percent of the people who will attend a caucus here next week agree with Dean and Gephardt that it's time for a full reversal of the tax cut. Fifty percent, according to the poll, prefer a "targeted tax cut." That means keeping the tax cut for the middle class and peeling away the tax refunds that went to the upper class. In fact, most Democrats here told the Tribune they favor raising taxes on Americans who earn more than $200,000.
(But here is an interesting aspect of the poll: among the people pledged to support Dean 55 percent like the idea of the full repeal.)
The Republicans have not been silent on the tax issue. The Club for Growth, a conservative group, is running television ads in Iowa that target Dean and his proposed repeal of the tax cut. A gray-haired Iowa couple is on camera suggesting that Dean's "tax-hiking, government expanding, latte drinking, sushi eating policies" should go back to Vermont.
Taxes appear sure to remain front and center long after the campaign moves on from Iowa. Sen. Joe Lieberman told The Washington Post he believes the tax issue will change in the general election and become less about the specifics of the tax cut and more about the issue of fairness: is it fair to give tax cuts to people who don't need them?
The key to this debate is a matter of definitions. What is equitable? And who is asking the question? This much is clear: a lot of Democrats have bought into the idea that repealing Bush's tax cuts -- or even allowing them to expire -- amounts to a tax increase. That is a promise of more trouble for whichever candidate wins the Democrats' nomination.