Notes on the Revolution XXX Jude Wanniski March 12, 1996

CAPGAINS: It is still hanging by a thread, but it will take co-ordinated action by Bob Dole, Newt Gingrich and House Majority Leader Dick Armey to pull it off. It’s probably true that Gingrich has begun to despair of getting a cut this year, because the GOP leaders can’t resolve the problem of paying for the $500 child care credit with reductions in entitlement programs. The President threatens to veto any compromise package sent to him, and the GOP leaders assume the public will side with the President  There is, though, always the last resort of sending the President an increase in the debt limit at the end of the month that has attached to it only a capgains tax cut. A 50% exclusion is scored as a revenue raiser for the first two years, because the Congressional Budget Office accepts an “unlocking effect” on unrealized capital gains. We are assured by experts that the exclusion could probably be extended for four years with no revenue loss -- the first two paying for the second two. The idea would fly, we’re told, if the family organizations that advocate the kiddie credit say they can support the idea. Gary Bauer, the leader of the most important of these groups, tells me that the idea makes sense to him because he does understand the benefits to the economy, and realizes that the four-year plan is free on CBO scoring. There is always the chance that President Clinton would veto a debt-limit increase with capgains attached, but then he would have to bear the burden of any economic weakness that would result. He would sign without hesitation, I believe. The benefits to the economy would enhance Dole’s stature as the putative party nominee. It also would rescue Newt’s 104th Congress from the doldrums, enabling him to finally produce the crown jewels of his Contract With America.

FORBES: My guess still is that Steve will remain in the race all the way to San Diego, even if he does not win another primary. Having invested as much time and money as he has in representing the growth wing of the party, he is not now going to settle on winning a few lines in the GOP party platform. He correctly argues that the party not only chooses a candidate, but also a direction, and that the direction has not yet been settled. If he were to pull out and Pat Buchanan remain in the race, Buchanan’s themes of economic nationalism would inevitably impact the Dole candidacy. As The Wall Street Journal pointed out last week, the likely chief-of-staff in a Dole administration would be Robert Lighthizer, whose protectionist views are in sync with Pat Buchanan’s. There is an argument that Steve would damage the party by keeping it divided, but that only applies if Steve lapses back into negative attacks on Dole. As long as he makes it clear he is focusing on economic growth themes, Dole does not have to worry about being buried in mud and not having the cash to fight back. Steve also should foreswear the contrived, counter-productive 30-second spots that have dominated his campaign, using only infomercials that develop his growth themes. The fact that Dole has arrived at this point without having committed himself to any direction allows him to sit back and let Forbes and Buchanan duke it out. To be sure, the perfect combination that might result would be Buchanan’s diagnosis of the problem and Forbes’s solutions.

KEMP: The stories of a Florida campaign blow-up between Kemp and Forbes became nuttier yesterday as the day unfolded. Jack made some offhand remarks to a few reporters while eating strawberry shortcake at a campaign stop. The way the remarks were reported made it sound as if Jack was throwing in the towel on the campaign, when he was really discussing the way that Steve’s message campaign could be made to bear fruit. Steve saw the story after Jack had left the next morning and “repudiated it.” Forbes’ aides on the bus and at headquarters took the cue and wound up denouncing Jack, without knowing what was what. Jack finally talked to Steve and Tim Forbes and cleared things up, repeating his commitment to fight on with Steve under the growth banner. Apologies have been tendered all around.