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by Kevin Phillips
For those who ever believed in it, Washington "compassionate conservatism" just took off its mask. Federal deficits are soaring. State finances are sinking into their biggest crisis since the Great Depression. So, what does the Bush White House propose?
No serious help for the states. Nor is there relief from payroll taxes to encourage job creation. Sen. John McCain, R-Ariz., has rightly remarked on the lack of compassion in the Bush administration's economic stimulus package. Its centerpiece, costing $364 billion of the $674 billion to be spent over 10 years, is to reduce or end taxation of dividends, some 40 percent of which annually goes to the top 1 percent of wealthy Americans. What this complicated proposal would stimulate is not the workaday economy but the already huge gap between the wealthiest Americans and everyone else.
Historically, this is the great Republican Achilles' heel -- favoritism to the rich. The 2003 Bush tax-cut proposal is the biggest, baldest example since the 1920s, when Treasury Secretary Andrew Mellon decided that if Congress wouldn't let him cut income-tax rates enough he'd just start giving money back, to individuals and corporations alike, through Treasury refunds, rebates and remissions. Given this recurrent thread over eight decades of GOP fiscal history, White House and congressional Republicans may be setting up a dangerous issue for the 2004 elections.
Still, you have to admire GOP chutzpah. Boldness often pays. Republicans are gambling that ordinary Americans are too numb or too dumb -- either one works -- to go beyond the 20-second sound bites to see who gets the meringue and who gets the filet mignon. They're gambling that John and Jane Q. Public won't comprehend a thinly disguised bailout of upper-income stock investors as another round of old GOP trickle-down economics.
It's been 10 years since the first President Bush was voted out of the White House on a wave of public indignation at his economic policies -- in particular, over how he had no sense of what was happening on Main Street. All he could ever talk about was cutting the capital gains tax rate on behalf of investors.
You'd think that anyone at least 40 years old would remember that myopia. You'd think they'd remember the old adage about the acorn not falling too far from the tree. Because that's the economics involved: Like father, like son. In fact, we can go further: Like great-grandfather, like grandfather, like father, like uncles, like siblings, like son. The predominant history of the Bush family for 100 years has been to work in the investment business (sometimes with an oil tilt); interpret the economy through the lens of investment; and tailor economic policies to favor friends, neighbors and relatives in the investment business.
If a president who came out of the widget industry spent all his time trying to promote the widget business, it would be obvious -- and it would raise major ethical problems. But the magnitude of the Bushes' investment involvement and bias is too little understood.
Great-grandfather George H. Walker was the president of two major New York investment firms: G.H. Walker & Co. and W.A. Harriman and Co. Grandfather Prescott Bush was the managing partner of Brown Bros., Harriman & Co. Presidential uncles Jonathan and Prescott Jr. have been, respectively, the heads of small investment firms named J. Bush & Co. and Prescott Bush & Co. Prescott Bush Jr. has also been closely involved with Asset Management International Financing and Settlement Ltd.
Presidential brother Marvin runs hedge funds at investment company Winston Partners. Presidential brother Neil started an investment deal in Austin, Texas, and both George H.W. and George W. Bush have been in the kind of oil business that is largely driven by tax shelters and financing from friends and relatives.
Such finance doesn't look out for widows and orphans. Besides President Bush's problems with the Securities and Exchange Commission over his sale of Harken Energy stock, his uncle, Scott Pierce, resigned as president of the now-defunct securities firm E.F. Hutton after pleading guilty on behalf of the firm to check-kiting. Brother Neil was fined because of his culpability in the Silverado savings and loan debacle in Colorado in the 1980s. A Tokyo investment firm that hired Uncle Prescott as an adviser in 1989 was identified by Tokyo police as a mob front.
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