Dole Pulls the Trigger
Jude Wanniski
June 11, 1993

 

On Wednesday afternoon, Senate Minority Leader Bob Dole quietly made one of the most important decisions of his political career. It was not a decision made lightly, as Dole knows it actually triggers the opening shot of a revolution in the Republican Party and the politics of the country. It doesn't seem that sweeping on its face, but by sending a letter to Treasury Secretary Lloyd Bentsen, asking Treasury to do a revenue scoring on the Angell Plan, Dole signaled the Black Caucus that he was truly serious about helping them break away from the white liberal plantation. Without Dole's signal, the Black Caucus could not afford to take seriously the idea that the GOP would offer them an escape route from the continuing humiliation at the hands of the President and congressional Democratic leadership a humiliation that has so infuriated their 39 members that earlier Wednesday afternoon they decided to reject President Clinton's offer to meet with them this week.

To Rep. Charles Rangel of Harlem, the most powerful member of the Caucus by virtue of his seniority on the House Ways & Means Committee, Dole's letter to Bentsen meant the escape route was secure enough for him to advise the Caucus that he had found a way to end their humiliation. Any chance that President Clinton's economic plan will be passed into law is also at an end. Whatever deal the white Democrats make in the Senate among themselves, they know the compromise that must again be agreed upon by the House will be killed by the Black Caucus, and probably the 19 members of the Hispanic Caucus as well, who will join the House Republicans who unanimously voted against Clinton the first time around. Having given this signal to Rangel, Dole with complete confidence could then inform the Senate that President Clinton really has no choice but to pull his plan back from consideration and start from scratch. However, this time the President will have to respectfully hear the opinions not only of the Black Caucus, but also of the congressional Republicans.

Indeed, when the President asks for these opinions, they will be offered up jointly, in the form of an alternative sponsored by Charlie Rangel and Senator Malcolm Wallop, the conservative Republican from Wyoming (who is now being lightly referred to as "Malcolm X"). The theory is that with compromise being frustrated by the forces at the center, it may be possible to find common ground by the forces at the extremes. If a liberal black Democrat on the Ways & Means Committee can find common ground with a conservative white Republican on the Senate Finance Committee, the center will be forced to collapse in agreement. The Rangel-Wallop alternative to the Clinton plan, which is now being designed by their respective staffs, is built around the Angell Plan, which we previously described in "Clintonomics, On the Line," 5-26. The plan indexes capital gains across the board, liquefying $8 trillion in frozen assets. It also ends the loophole that "steps up" capital gains at death, in a way that Federal Reserve Governor Wayne Angell believes solves the problems that would otherwise face family farmers and small businessmen. It was Angell, a Kansan named to the Fed eight years ago on Dole's recommendation to President Reagan, who persuaded Dole of the viability of his idea as a means of breaking the current economic gridlock. The plan, Angell believes, would yield at least $100 billion in new federal revenues over the next five years, merely by liquefying the assets.

Rangel and the other finance experts in the Black Caucus do not only see this $100 billion as an answer to the gridlock that has developed around the President's abortive attempts to tax energy. They also understand that the process would yield revenues several times $100 billion as the economy expands, now unburdened by a tax that confiscates capital via inflation. Rangel has let Wallop and the Senate Republicans know that, in his words, "The Black Caucus has never had a problem with capital gains. The problem has been with the white intellectuals in the Democratic Party." The addition of $100 billion to the negotiation process ends the zero-sum game that has baffled the White House and Democrats in Congress. Rangel had suggested that he develop a plan anchored by this $100 billion and that Wallop develop one independently, and that they then merge the two. Wallop suggested, as Rangel belongs to the ruling party, that the congressman design the plan, and they would work from it. Otherwise, they would begin the process on a confrontational footing. Rangel's first interest would be in restoring the tax incentives to his inner-city Enterprise Zone legislation that were slashed in the first round. He has also indicated that he would like to see some relief to Puerto Rico, which would be hammered by the Clinton Plan.

The plan that emerges would of, course, have to meet the $500 billion savings over five years agreed upon in the budget agreement. There would be tax increases and spending cuts, but insofar as they would be designed by different power centers, at the far left and far right, the plan would look completely different from the one which now cannot pass. One would imagine there would be far less corporate socialism in the package, saving considerable amounts of money. The Gucci Gulch lobbyists of the Fortune 500, instead of carving up the pie and tossing the crumbs to the Black Caucus, would be on the receiving end of the crumbs. For the first time in modern history, political forces representing the interests of minorities would be at the center of the action, making unnecessary the power adjustments that Lani Guinier believed might be the only solutions to plantation politics.

The revolution would be so disruptive to Establishmentarians that they would try to kill it, by persuading Secretary Bentsen to see to it that Treasury "scores" the Angell Plan as a money loser. This would be the final outrage and humiliation to the Black Caucus, which can now count up to $100 billion on its fingers, without the blessing of Treasury's political computers. In any case, Rangel and Wallop will be asking for second opinions. It is actually in the interest of President Clinton, himself, to embrace the plan, as he has no alternative. Rangel observes that there is now no combination of tax increases and spending cuts that can pass the Congress. "It is as tight as a drum," he says. "We have been over the ground a thousand times, and we know where every dime is. We're not going to find a solution by taking one more look." The latest attempt was to win over Democratic Sen. Breaux of Louisiana, a maverick who opposed the BTU tax, by offering a transportation tax instead. This left the President limp with frustration when Democratic Senator Max Baucus of Montana, who supported a BTU Tax, announced his opposition to a transportation tax. Tight as a drum it is.

This is what makes democracy so delicious, as the American people have found a way of producing a gridlock that can only be resolved with a compromise at the extremes. On the other hand, Rangel is easily the most optimistic African-American in the Congress and "Malcolm X" is as optimistic as any of the small crew of white optimists in the Congress. Optimism is the common denominator.

Does it matter if the White House resists, scoring the Angell Plan negative and instructing the Senate leadership to ignore it? Not much. When Bob Dole pulled the trigger, it killed the old New Deal coalition dead. Once the Rangel-Wallop plan surfaces next week, it will be seen by the American people as an irresistible one. Anyone who gets in its way will be crushed. We're not talking about Rangel and the Black Caucus leaving the Democratic Party, after all, just making common cause with the growth wing of the GOP on this one issue. But what an issue! Once the Black Caucus gets this chance to sit at the head table to carve up a pie this big, it is not going to give up without a fight, and with Bob Dole's strong right arm, they will have the power of majority free at last!