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Class warfare, GOP-style
President Bushís 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 ó that some like to turn this into class warfare. Thatís not how I think." The "class warfare" phrase was repeated this weekend on NBCís Meet the Press by Republican senator Don Nickles, who defended the presidentís plan: "Well, a lot of people want to play class warfare."

But isnít that what Bush and the Republicans are doing? Engaging in class warfare, that is?

The centerpiece of Bushís plan is a proposal that would do away with taxes on dividends. Itís a gift for the wealthiest of Americans ó those who derive income from stock dividends. If Bushís proposal passes, it wonít 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 donít 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 isnít 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 Bushís 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 ó tax cuts aimed, again, at the very wealthy ó 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. Itís interesting that Bush backed away from some of the other proposals favorable to corporations that were floated last week. Itís also interesting that heís 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 Americaís wealthiest citizens. And it shows just how politically savvy he is. But make no mistake, it does not, by any means, show that heís actually concerned about the middle class or, more pointedly, the poor. These moves are peanuts compared to what heís 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, itís the Republicans who are playing that game. Bushís plan will not jump-start our recession-bound economy. It will sink us even further into deficit spending ó 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 isnít 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. Itís 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 Romneyís 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.

Itís not hard to see what Romneyís doing. Heís 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 letís keep something in mind. Itís one thing for someone with Romneyís wealth to decide to work for free. Itís quite another for someone of Romneyís 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 isnít just class warfare. Itís unseemly. Itís deeply cynical. And itís 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. Weíre delighted to see his ascension to the council this week. Heís sure to be an interesting voice on the board.

What do you think? Send an e-mail to letters@phx.com

Issue Date: January 9 - 16, 2003
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