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New economic team in the offing

By Carol Devine-Molin
web posted December 9, 2002

An overhaul of the Bush administration's economic team is absolutely imperative at this juncture, given the ongoing shaky financial markets and climbing unemployment figure now at 6 per cent. (Yes, the unemployment number is a "lagging indicator", but no matter how you approach it, high unemployment is still not conducive to engendering vital public confidence). Last week Treasury Secretary Paul O'Neill and White House Economic Advisor Lawrence Lindsey were summarily fired to pave the way for a revamped and effective coterie of experts to tackle the troubled economy. Reportedly, the new team will be installed by early January, so that President Bush will be poised at his "State of the Union" speech to unveil a more comprehensive tax reduction plan geared toward unleashing the pro-growth economic dynamics of prosperity.

O'Neill and Lindsey

The O'Neill/Lindsey dismissals were meant to signal that President Bush will not settle for anything less than "first class" economic leadership, akin in quality to the top-notch "national security and defense" team already in play. Unfortunately, neither O'Neill nor Lindsey was an adept operator in a highly-charged political atmosphere, nor were they sufficiently able to communicate a clear and unified message to the public on economic matters. More deadly for O'Neill, he was not an enthusiast of further tax cuts as a means of creating economic stimulus that spurs productivity, investment and overall prosperity. Given an administration that believes in the beneficial power of tax cuts and tax reform, which is the essence of supply-side principles, O'Neill was apparently the "odd man out".

Clearly, President Bush wants to expand tax cuts and make them permanent. And Bush is particularly zeroing in on the deleterious double taxation on dividends, a subject matter analyzed in a recent column by television pundit and economics expert Larry Kudlow. In his 12/8/02 commentary for the Washington Times, Kudlow states: "For nearly two years, Washington's economic cure-all has been to throw temporary tax rebates and spending subsidies at consumers. But consumers were not the cause of the much-lamented recession. Rather, it was caused by a stock-market collapse and a profits crunch that destroyed wealth and eviscerated credit…To remedy sinking equity values and impoverished investor returns, the Bushies are about to propose a reduction in the double tax burden on corporate dividends. All in all, a new Bush proposal to lower the dividend tax burden is a win-win".

GOP conservatives love to be thoroughly immersed in the battle of ideas. And nothing is more integral to our ideological and philosophical core than the concept of supply-side economics, or as it is colloquially dubbed, "Reaganomics". Mainstream conservatives, those individuals who truly represent the heart and soul of the Republican Party, are populists dedicated to every American reaping the benefits of a pro-growth economy. Sure wars and skirmishes come and go, and we're certainly obliged to fight when America is under considerable threat, but GOP optimism is always focused upon creating prosperity, bolstering "family" and faith, and pursing the "fulfilling life". And we have some leaders within our ranks that express these quintessential ideals magnificently.

I particularly appreciate the words and insights of Republican stalwart Steve Forbes (CEO of Forbes, Inc. and Editor-in-Chief of Forbes Magazine) who provides greater context for America's salient values, which are inexorably linked to "pro-growth" or "supply-side" prosperity. During his 1995-1996 presidential campaign, in which a "flat tax" promoting tax fairness and tax reduction was at its cornerstone, Forbes stated: "I reject the grim notion of the Washington politicians that America must learn to make do with less, that the American people have spent too much and now the American people must pay, that the wagon is heavy and crowded and now is the time to start throwing people off…I see a different reality, an America of vast potential - greater than anything that has ever been seen before, waiting to be released. I see an American economy that is the most innovative and productive and technologically advanced in the world, hamstrung by high taxes and counter-productive regulation…I believe that the time-honored American values of hope, opportunity, family, faith and community are the moral bedrock of our nation and every action by Washington should be judged by one and only one criterion: does it help or hurt those values? Does it create stronger communities, stronger families? Does it create more opportunity, greater security, and greater faith in the future?"

Several names are currently being bandied about the media as possible candidates for the Treasury Secretary cabinet position such as former congressman Bill Archer, Secretary of Commerce Donald Evans and California financier Gerald Parsky. But former congressman and supply-side policy wonk Jack Kemp may well have provided the best recommendation. Kemp believes that Steve Forbes would be a superb Secretary of the Treasury, and frankly many Republicans are in agreement. Besides being a GOP loyalist and team player, Forbes possesses formidable communication and media skills, he knows the political terrain, he is one of the quintessential supply-side proponents, and he has a wonderful pulse on both Wall Street and Main Street USA. If you're talking tax cuts, then Steve Forbes is your man.

Carol Devine-Molin is a regular contributor to several online magazines.

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