Adlai Stevenson, who had reason to be skeptical of voters, said the contest between agreeable fancy and disagreeable fact was so unequal that the truth was apt to be terribly unpopular, especially in economic matters.
Americans in 2008 would prove the thinking person's politician from the '50s wrong. Most people get it, and every week it seems that the only people who don't are the men in dark suits who line the stage at the Republican presidential debates — and maybe the party's congressional leaders. They believe, or profess to believe, that salvation in all things lies in further lowering the taxes of business and people of wealth.
That has been the top of the agenda for all the candidates for a year, and it was their solution last week when Democrats and President Bush said something had to be done to rescue a crashing economy. Make the Bush tax cuts for corporations and the well-to-do permanent, the GOP candidates chimed in unison. Rudy Giuliani, hoping to revive his moribund campaign, would go further and award them tax cuts that would dwarf the Bush giveaways. Only our populist hero Mike Huckabee had a different wrinkle. He would rescue the economy by handing defense contractors another $200 billion a year so that they could turn out more arms and hire more workers.
It is hard to imagine politicians being more out of touch with reality. The marginal tax rates of the Walton heirs and Exxon Mobil do not show up on any list of the top concerns of American voters. Republican voters are turning to John McCain, the only candidate from the huge original field who opposed the Bush tax cuts because he said they rewarded the rich and would run up huge deficits. McCain defers unconvincingly to extending the tax cuts when they expire in two years.
Even Bush may glimpse the truth. It perhaps may no longer be said of him that he was celebrated for his ignorance as he had but one idea and it was wrong. Bush yielded to advisers who said it would be pointless and maybe catastrophic to demand the extension of the tax cuts and big new tax breaks as part of a desperate stimulus package, so he proposed only some temporary business tax cuts along with a big rebate check to everyone but low-income workers. But the rescue will be written by Democrats, who will provide more direct relief to working families, but they will have to fend off the gathering vultures at the tax-writing committees seeking tax bonanzas for this or that commercial interest. Two dozen big tax favors had been lodged with the Senate Finance Committee last week.
Starting this week, we surely will no longer hear the refrain about the economic miracle from the Bush tax cuts — the new jobs, the brisk growth in the gross domestic product, the torrid productivity growth, the shrinking budget deficit.
By Jan. 1, after seven years and three rounds of tax cuts, the Bush economy had produced 5.9 million new jobs, a fourth of Bill Clinton's eight-year record. By the end of his term he will do well to have broken even. The Bush economy also added $3 trillion to the national debt, but the Republican candidates except McCain were still agreeing that tax cuts would increase government revenues and balance the budget. Personal income tax collections were a hair more than $1 trillion in Clinton's last year, before the first round of Bush tax cuts. They did not reach that level again until 2006.
It is true that GDP, corporate profits and, yes, productivity grew briskly for three years but it is a bonanza only for those who look at it from the top, where all the wealth accumulated. Data released this month by the Congressional Budget Office showed that income inequality had reached its highest level since the statistics were gathered in 1979. While real wages have been declining, real after-tax incomes for the top 1 percent of households increased by an average of $180,000 in 2005 alone. It was the second solid year of benefiting from the 2003 reduction in taxes on capital gains and dividends, which went almost altogether to the top 1 percent of households.
Increased productivity and a robust GDP look magnificent from up there, but at the middle and the bottom it feels like a lot of pain. People sense the truth, that there are now two economies in the United States, one for the rich and one for everyone else.
Before the gloom of recent weeks and with the official statistics, including unemployment, still rosy, a CNN poll showed that 60 per cent of Americans believed the country was in a recession. People don't buy agreeable fancy anymore.