Dole-Kemp tax plan: Hurt poor to pay rich

by Les Bayless

This article was reprinted from the August 24, 1996 issue of the People's Weekly World. For subscription information see below. All rights reserved - may be used with PWW credits.

WASHINGTON - There's little doubt Bob Dole got a "bump" in the polls after he released a plan to cut federal taxes and selected an old Reagan ally, Jack Kemp, as his running mate. While pledging to hand out 15 percent tax cuts, Dole and Kemp promised to balance the federal budget, too.

But as details of the Dole-Kemp plan are slowly leaking out, critics are saying the plan follows the old Republican formula: cut Medicare and Medicaid to pay for tax cuts for the rich.

According to the Center for Budget and Policy Priorities (CBPP) - the Dole proposal would be paid for by $867 billion in budget cuts. If optimistic projections for economic growth are not met - they are premised on the proposition that the next six years will be "recession-free" - the total could reach $1 trillion by the year 2002.

Included in Dole's package are $650 billion in cuts approved by Congressional Republicans in June but never voted on: deep cuts in Medicare, Medicaid and the Earned Income Tax Credit. The cuts in Medicare and Medicaid alone would total $245 billion.

Democrats labeled the plan "extremist" and President Clinton vowed to veto the legislation.

The Dole plan calls for these cuts and an additional $217 billion from other entitlements, federal workers and the environment.

The remaining money to finance the tax cuts and balance the budget would come from enhanced government revenue based upon supply-side economic assumptions. The controversial theory holds that tax cuts increase the supply of capital, creating more jobs.

Many experts think this is "voodoo economics," a phrase coined by George Bush in 1980 to describe Ronald Reagan's "trickle down" economics.

Because budget cuts and revenue estimates in the plan are "problematic," CBPP says the net result would be higher budget deficits and slower economic growth.

The Washington-based Citizens for Tax Justice (CTJ) says the tax cuts will add $140 billion a year to the federal deficit. According to the CTJ, the richest one percent of Americans - those with family incomes of $200,000 a year or more - would save an average of $25,000 a year under the plan. That accounts for 28 percent of the total proposed cuts in the Dole plan.

The three-quarters of all families making $50,000 a year or less would get less than 25 percent of the total proposed tax cuts. A family making $30,000 to $40,000 a year would get an average tax cut of $765, according to the CTJ.

One item in the budget left relatively unscathed by Dole is military spending. Only about 10 percent of the proposed budget cuts come from the Pentagon, and much of that from reductions in civilian employment.

The Defense Department would continue to acquire large and advanced weapons systems. Since these systems usually cost more, rather than less, to operate and maintain, it's probable that defense expenditures will increase more than projected and eat up any budget savings.

Martin Calhoun of the Center for Defense Information called the Dole plan "wrong-headed," pointing out that defense spending remains at Cold War levels.

In a related development, it was revealed that Jack Kemp avoided military service in 1961 because of a shoulder injury. As Kemp was avoiding military service, he was the starting quarterback for the San Diego Chargers of the old American Football League.