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COPYRIGHT 2004 All rights reserved. Reproduced by permission of The Condé Nast Publications Inc.
A few weeks ago, George W. Bush crossed the Potomac to a community college in Annandale, Virginia, where he hosted an "Ask President Bush" town-hall-style meeting and took up a favorite campaign theme, saying that one of the things that separated him from his opponent was his intention to create a "culture of ownership." The same day, the Bush-Cheney campaign released a new television ad that shows pictures of houses, workers, and businesses as the President announces, "One of the most important parts of a reform agenda is to encourage people to own something. Own their own home, own their own business, own their own health-care plan, or own a piece of their retirement. Because I understand if you own something, you have a vital stake in the future of America."
The President's ownership initiative hasn't featured prominently in the media coverage of the campaign, which, strictly from a news perspective, is understandable: he hasn't announced many specific proposals to back up his talk. But in downplaying the Bush Administration's economic agenda the media is missing one of the biggest domestic stories of the 2004 campaign. When the President pledges to create an "era of ownership," he is not talking merely about encouraging people to buy their own homes and start small businesses. To conservative Republicans who understand his coded language, he is also talking about extending and expanding the tax cuts he introduced in his first term; he is talking about allowing wealthy Americans to shelter much of their income from the I.R.S.; about using the tax code to curtail the government's role in health care and retirement saving; and, ultimately, about a vision that has entranced but eluded conservatives for decades: the abolition of the graduated income tax and its replacement with a levy that is simpler, flatter, and more favorable to rich people.
Work on achieving this ambitious program began with the tax cuts that Congress passed in 2001, 2002, and 2003, but the conservative economists who advise Bush and the right-wing institutes that support him have more in mind than consolidating their gains. Despite a gaping budget deficit, they are pressing the President to continue down a route that will reverse almost a century of American history. Since the personal income tax was introduced, in 1913, it has been based on two principles: the burden of taxation is distributed according to the ability to pay; and capital and labor carry their fair share. The Bush Administration appears set on undermining both of these principles.
It is easy to forget that when George W. Bush made his bid for the Presidency many conservatives initially opposed him. Their candidate in the 2000 Republican primaries was Steve Forbes, the publishing heir, who had endorsed an annual flat tax of seventeen per cent on all income above thirteen thousand dollars. This proposal, a descendant of a tax plan that two conservative economists from Stanford, Robert Hall and Alvin Rabushka, had devised in the nineteen-eighties, was based on supply-side economics: flattening tax rates and simplifying the tax code would encourage people to work harder and save more, which would boost economic growth. Critics of Forbes's proposal pointed out that the link between taxes and growth is tenuous, but it proved popular with Republican activists, and Bush, whose father had enraged conservatives by reneging on his "no new taxes" pledge, came under pressure to match it.
In December, 1999, Bush said he would cut federal taxes by $1.6 trillion over ten years if elected. This plan, which was enacted into law as the Economic Growth and Tax Relief Reconciliation Act of 2001, wasn't a flat tax,...
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