Memo To Dole: It's Not 1980

BOB DOLE SEEMS CAUGHT IN A time warp, convinced he can re-create Ronald Reagan's first triumph. But this is not 1980, and Bill Clinton is not Jimmy Carter. In 1980, Americans did not vote for Reagan's promised tax cuts so much as they voted against Carter's double-digit inflation and his handling of the Iranian hostage crisis. People were frightened. In 1979 and 1980, prices routinely rose 1 percent a month. The ABC News election exit polls asked voters which ""one or two'' issues determined their choice. Inflation led at 38 percent (47 percent among Reagan voters); America's ""position in the world'' followed at 33 percent (Reagan voters: 45 percent). Tax cuts lagged badly at 12 percent (Reagan voters: 16 percent).

Maybe if Dole had refreshed his memory he wouldn't have pinned his election hopes so emphatically on an ""economic plan'' that's mostly a pipe dream. Dole would have us believe that the economy is sickly when the unemployment rate is 5.4 percent, when disposable personal income (adjusted for inflation) has risen 3.5 percent over the past year and when profits (unadjusted) are up 15 percent. Not only is the economy strong, but people think it's strong. The latest University of Michigan index of consumer confidence stands at 92. It was 59 in July 1980, and 77 in July 1992. Clinton didn't create today's economy, but he can't be blamed for ruining it. (Ironically, the next president may face a recession precisely because the expansion has lasted so long.)

It is probable, as Dole says, that lower tax rates, streamlined regulation and limits on excessive litigation would raise the economy's long-term growth rate. But how much and how soon? These are open questions, and Dole's claim that annual growth can be boosted from 2.3 percent to 3.5 percent is a wild leap of faith. The plausible effect may be much less than 0.5 percent. Just because Dole's plan is endorsed by a couple of Nobel Prize-winning economists (Milton Friedman, Gary Becker) does not make it any more believable than many Democratic schemes blessed by their Nobel laureates. Economists of all political flavors exaggerate their own powers to enhance growth.

As a political symbol, Dole's plan does ring true. He is, compared with Clinton, the candidate of lower taxes and less government. It's also true that the tax burden from all levels of government reached a peacetime record in 1995: 29.6 percent of gross domestic product. To be sure, this needs to be qualified. First, the tax burden has been almost as high for years; it was 29 percent in 1970 and 29.1 percent in 1987. Second, it's state and local taxes that are at their peak (10.8 percent of GDP). Still, the drift is up, and it matters whether a president wants to restrain or expand government.

The trouble for Dole is that his plan to shrink government isn't credible. ""[T]elling people what you think they want to hear just to win their votes,'' he writes in his autobiography, ""is a very old idea.'' And apparently irresistible. Dole promises deep tax cuts and a balanced budget by 2002 without touching Social Security, Medicare or defense. His tax cuts are indeed deep. A typical family of four with $50,000 in income now pays about $8,366 in federal income and payroll taxes. Under Dole's plan, their tax bill would drop $1,738 (21 percent), estimates the accounting firm of Deloitte & Touche.

But Dole never identifies the spending cuts needed to finance this $548 billion tax reduction (over six years) and to balance the budget. Once Social Security, Medicare and defense are excluded, only a third of the budget remains, says Susan Tanaka of the Committee for a Responsible Federal Budget. The bulk of Dole's cuts would fall on a spending category known as ""domestic discretionary.'' That's much of what the federal government does, including, for example, the FBI, college loans, public housing, health research, environmental regulation, art subsidies and Head Start.

To meet Dole's budget, estimates Tanaka, this spending category would need to drop by a third. In 2002, domestic discretionary spending would total $314 billion if programs were adjusted for inflation. Dole's budget would depress that to about $207 billion, she calculates. Some programs could be ended; others could be trimmed. But could spending be cut so sharply without harming important government functions? Probably not. What would be cut? The national parks? The border patrol? Airline safety? Would such deep cuts, if justified, be politically possible? Probably not.

Even if the answers were yes, Dole sidesteps spending on older Americans -- Social Security, Medicare -- that represents the largest part of the budget and, given an aging population and high health costs, creates the most intense pressures on spending, taxes and deficits. The uncertainty over the budget outlook can't be dispelled until these issues are broached and settled. Future benefits and taxes will remain under a cloud. But for Dole and Clinton, these issues are the great unmentionables. Little wonder anxious Americans lack confidence in their leaders.

Perhaps Dole can surf his plan's symbolism to victory. Perhaps he can convince voters that his record -- his pragmatic bent, his reputation as a deficit fighter -- warrants trust and tolerance for election-inspired exaggeration. Perhaps his very stiffness will persuade people he would govern better than he campaigns. Dole will need such strengths, because his strategy misreads history. Ronald Reagan opposed a discredited president; Carter's failures were Reagan's allies. In late June 1980, he led Carter 47 to 41 percent. Reagan never had to close the gap that Dole now faces. To win, Dole can't relive history but must make it.