Online NewsHour: Dole economic plan -- August 13, 1996

DOLE'S ECONOMY

AUGUST 13, 1996

TRANSCRIPT

Using San Diego as his backdrop, economics correspondent Paul Solman does a walking tour of Bob Dole's plans for the American economy.

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The NewsHour's complete coverage of economic issues.

The Online NewsHour presents full coverage of the Republican National Convention in San Diego, including delegate interviews, regional analysis, interactive forums, and political retrospectives.

PAUL SOLMAN: Vast growing San Diego, California, an ideal spot for Republicans to push their vision of an economy that has been chugging along but could they say take off and zoom ahead. At this year's Republican convention, the economic mantra is faster growth. Last week, Dole's senior campaign adviser and former Minnesota Congressman Vin Weber took us to the convention center. Trying to tame the obligatory credentials, he began by blasting Clintonomics.
VIN WEBER, Co-Chair, Dole Campaign: The last four years have marked the slide of the United States from a high-growth economy to a low-growth economy. That's an ominous sign for the United States of America if we're going to accept permanently lower rates of growth for the United States economy.
PAUL SOLMAN: By contrast, Republicans are proposing a growth renaissance, and if to you and me it looks like most people are still doing business the old-fashioned way, to the new GOP, we're at the dawn of a post-industrial revolution that will enrich almost everyone. It sounds a bit like the old Democrats, a rising tide to lift all boats. But, say Republicans, they'll do it their way, with big time budget cuts and a tax slash of better than $1/2 trillion over six years. To the inevitable skeptics, Weber has a response. Together, a Republican Congress and President can do it.
VIN WEBER: The Republican Congress was elected in 1994, produced a budget that made real decisions, real reductions, and, and did it in the context of a tax cut as well, very simply saying that if you give us the first opportunity since 1953 to run both branches of government, we can do that job.
PAUL SOLMAN: As he looked around, Weber wasn't especially happy about the convention facility, itself--designed for trade shows, after all, not political spectacles. But he was positively exuberant about the Republican economic program and its key feature, cutting taxes.
VIN WEBER: When the tax burden gets too high, you simply discourage larger and larger numbers of people from working and from saving and from investing. This is not magic. Our critics would like to say that this is voodoo, or something. It's not magic at all. People respond to incentives and rewards. And that's what drives a free economy.
PAUL SOLMAN: Now critics may think of this as smoke and mirrors, but Julie Wright, Republican Secretary of the California Trade & Commerce Agency, thinks a tax cut, a state tax cut, is what spurred the recovery in California in general, San Diego in particular. Dole's capital gains tax cut from 28 to 14 percent would further help these states' economies, she says, because--
JULIE WRIGHT, California Trade & Commerce Agency: It stimulates investment, and speaking from a California perspective where we have literally hundreds of thousands of companies and cutting edge industries, some of which are aggressively seeking new investment and new capital, it would be a tremendous stimulus to the California economy.
PAUL SOLMAN: San Diego's Overland Data makes back-up systems for computer storage, grosses $50 million a year, employs 180 people. Such firms, their stock not yet publicly traded, rely on private investors for the money to do research and development, to expand, even just to retool. CEO Scott McGregor, a lifelong Republican, agrees with Julie Wright, a capital gains tax cut would spur investors to put more money into his business. Would it allow him say to automate the low-tech parts of this production process?
SCOTT McGREGOR, CEO, Overland Data: Specifically automating this process we might not do, but we certainly would add some tooling to make what we have done easier, done at a higher level of quality, with a lower level of labor content, and in general deliver a better customer product. We would use the money literally to invest and also invest in the human capital. We have money to get more training to the people to make them more skilled in the processes that they do.
PAUL SOLMAN: To Julie Wright, this is the whole point of a capital gains tax cut.
JULIE WRIGHT: Basically, it just encourages new investment, and frankly, while people try to categorize a capital gains tax cut as something for the wealthy. If you think about every single person who sells a home, every single person who is in a pension plan, we all benefit from an environment that encourages that kind of investment.
PAUL SOLMAN: Of course, just because an environment encourages investment doesn't mean people will invest wisely, or for that matter invest at all. Consider another of the Dole tax cuts, a 15 percent across-the-board cut in income tax rates to be phased in over three years. We asked some Overland Data line workers who average about $20,000 a year what they'd do with the money saved on taxes.
WORKER: Save for my savings, put in the bank and save for in the future.
PAUL SOLMAN: You wouldn't spend the money--a new TV?
WORKER: Well, save for my kids, because if a car is--
PAUL SOLMAN: What would you do with the extra money?
SECOND WORKER: Pay bills.
PAUL SOLMAN: What about you?
THIRD WORKER: I would eat it.
PAUL SOLMAN: You would eat it.
THIRD WORKER: Yeah. I'd go out and have fun with it.
PAUL SOLMAN: There are other proposed tax cuts as well. One supposedly strengthens both the economy and the family, a $500 tax credit for every child under 18. To illustrate, the Republicans had lined up the Perkins, a family of four with more on the way.
CAROLYN PERKINS: We look at that as an opportunity to hopefully set that money aside because right now we're in the process of buying all the things we need for the kids. It's really hard to start their savings accounts for college, so hopefully we can do that with it.
PAUL SOLMAN: Well, I saw you steal a look over at him while you were answering that. Is he going to blow it?
CAROLYN PERKINS: No, no. Just reminding each other that we need to not, not let it just become part of the regular money that we have but to put it away.
DOUG PERKINS: And get frittered away.
CAROLYN PERKINS: And get frittered away, right, so we save it.
PAUL SOLMAN: Are you afraid that might happen, I mean, that you don't, you can't be disciplined enough, or that the American families in general would spend the money, rather than save it?
DOUG PERKINS: Well, I don't know. You know, you have to be disciplined, and so we'll really try to do that. Right now we have not very many opportunities to save, just sort of paycheck to paycheck, so to get a credit like that is going to be very important to us.
PAUL SOLMAN: Of course, what family wouldn't enjoy a little extra money? On the other hand, say critics, that doesn't repeal the first law of economics, that there is no such thing as a free lunch. In other words, the cuts will have to be paid for, mainly with spending cuts far steeper even than those President Clinton vetoed during recent budget battles. But to Dole adviser Vin Weber, tax cuts are only part of the Republican economic growth plan. There's also regulatory reform, simplifying the IRS and legal reform to lessen companies' fear of costly lawsuits. This is an issue which actually came up in the convention center, itself. When we asked to shoot our Weber interview from the vantage point of a cherry picker, the powers that be said no, if anything happened to us, there could be a lawsuit, an example, said Weber, of why Dole's pushing legal reform.
VIN WEBER: It's a major problem. It's part of Dole's economic plan because the whole American economy is now burdened with this incredible cost of litigation. You can get sued for just about anything, and it's also sort of a moral question. I'm an adult with apparently a clear mind at this moment. I can't make a decision that I can go up in that cherry picker and assume the risks myself because if I get hurt, I might turn around and sue somebody. Unfortunately, we have an administration that will not allow a change in that problem because they're bought and paid for on this issue by the Trial Lawyers' Lobby.
PAUL SOLMAN: Have you actually been up in a cherry picker before?
VIN WEBER: No. I'd like to go. Turn the cameras off, and we'll go, regardless of what they tell us. (laughing)
PAUL SOLMAN: At the end of the day, though, the key to the Republican economic growth plan is a belief that our economy is better off if money is in the hands of individuals instead of government. That, say Republicans, is the key to prosperity--here in San Diego and everywhere else.

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