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Class warfare, GOP-style
President Bush’s economic plan: Leave no millionaire behind. Plus, Felix Arroyo joins City Council.


LAST WEEK, when talking about his economic-stimulus plan, President George W. Bush said: "I understand the politics of economic stimulus — that some like to turn this into class warfare. That’s not how I think." The "class warfare" phrase was repeated this weekend on NBC’s Meet the Press by Republican senator Don Nickles, who defended the president’s plan: "Well, a lot of people want to play class warfare."

But isn’t that what Bush and the Republicans are doing? Engaging in class warfare, that is?

The centerpiece of Bush’s plan is a proposal that would do away with taxes on dividends. It’s a gift for the wealthiest of Americans — those who derive income from stock dividends. If Bush’s proposal passes, it won’t help middle- or even upper-class Americans, who hold most of their dividend-paying investments in 401(k), 403(b), and pension plans. In other words, their stocks are held in retirement plans that don’t tax dividends to begin with.

If Bush really wants to allow "Americans to keep more of their money so they can spend and save and invest," as he claimed Tuesday during a speech outlining his economic plan to Chicago business leaders, why isn’t he calling for a temporary payroll-tax freeze or even a payroll-tax cut, as the Democrats are? These taxes are deducted directly from our paychecks; 1.45 percent of our income goes toward Medicare and 6.2 percent goes toward Social Security. (Employers also have to pay Social Security taxes; they match what we pay.) Is Bush’s apparent lack of interest in cutting this tax related to the fact that the Social Security tax applies only to income up to approximately $85,000? (All income, meanwhile, is subject to the Medicare tax.)

Take a look at what else Bush is proposing: he wants to make the tax cuts passed in his 2001 tax plan and currently slated to take effect in 2004 and 2006 — tax cuts aimed, again, at the very wealthy — retroactive to January 1 of this year. He also wants to eliminate the estate tax, which applies only to estates worth more than $1 million. It’s interesting that Bush backed away from some of the other proposals favorable to corporations that were floated last week. It’s also interesting that he’s proposing the immediate implementation of three measures already approved in the 2001 tax-cut plan but not scheduled to take effect until 2008, 2009, and 2010: increasing the amount of income taxed at just 10 percent from $6000 to $7000; eliminating the "marriage" penalty; and increasing the child tax credit, respectively. Each is aimed at middle-income earners.

These moves show that Bush is sensitive to the charge that he is concerned only about America’s wealthiest citizens. And it shows just how politically savvy he is. But make no mistake, it does not, by any means, show that he’s actually concerned about the middle class or, more pointedly, the poor. These moves are peanuts compared to what he’s offering those who have "more wealth and income than any aristocracy has ever had," as former labor secretary Robert Reich put it in a column Tuesday for the Los Angeles Times.

Democrats are often accused of fomenting class warfare. But in this instance, it’s the Republicans who are playing that game. Bush’s plan will not jump-start our recession-bound economy. It will sink us even further into deficit spending — particularly as we pay for the Department of Homeland Security and expand the war on terrorism to Iraq, as the Bush administration seems almost certain to do.

Of course, this isn’t the only way to wage class warfare, GOP-style. Governor Mitt Romney is engaging in a fairly odious version of it as he spars with the legislature over pay raises. As nearly everyone knows, Romney and his lieutenant governor, Kerry Healey, recently announced that they will forgo their respective $135,000 and $120,000 salaries while in office. The money saved will be spent on higher salaries for cabinet members. It’s a symbolic move devoid of any meaning other than to demonstrate that it really helps to have a portfolio in the high seven figures if you want to be a successful politician in America today.

Just take Romney’s recent dig at state legislators. He announced that our state representatives and senators should get a 6.5 percent raise this year. That would come to about $3258. (Under a state constitutional change enacted in 1998, legislative pay raises are determined by the governor based on changes in statewide median household income. It is a purely statistical calculation; the governor has no discretion when making it.) Romney presented the figure and noted that legislators should think carefully about whether to accept it in these difficult economic times.

It’s not hard to see what Romney’s doing. He’s trying to bully state representatives and senators, who earn about $50,000, into leaving their raises on the table. After all, it would make for a great sound bite. (The tactic has worked with the 40 state senators, all of whom announced that they will either decline the money or donate it to a charity. State representatives are expected to decide what to do on Wednesday, after the Phoenix goes to press.)

But let’s keep something in mind. It’s one thing for someone with Romney’s wealth to decide to work for free. It’s quite another for someone of Romney’s wealth to try and browbeat politicians into forgoing a portion of their pay. Although many state legislators do have outside incomes from law, insurance, or real-estate businesses, the bullying is no less imperious.

This isn’t just class warfare. It’s unseemly. It’s deeply cynical. And it’s tacky.

THIS WEEK, the Boston City Council welcomed Felix Arroyo as an at-large councilor. Arroyo ran in 2001, but finished fifth. When at-large councilor Francis "Mickey" Roache won election as Suffolk County registrar of deeds this fall, a slot opened up for the former Boston School Committee member. The Phoenix endorsed Arroyo, a pastor and grassroots activist with 25 years of service to the city, when he ran. We’re delighted to see his ascension to the council this week. He’s sure to be an interesting voice on the board.

What do you think? Send an e-mail to letters[a]phx.com

Issue Date: January 9 - 16, 2003
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