October 19, 1990|By Ben Wattenberg

WASHINGTON — KEVIN PHILLIPS' argument, from his new book ''The Politic of Rich and Poor,'' has now been honed into a Democratic theme. The argument is simple: In the 1980s, the greedy rich got richer while poor people and the middle class made no progress; not fair; fix the deficit by taxing the rich.

But census data on income, issued in late September, confirming previous statistics, reveal that the facts behind the Phillips-Democratic theme are a long way from accurate.

In the Reagan-Bush years every income cohort got richer -- the rich, the middle class and the poor. And the poverty rate went down.

Even the idea that, while all prospered, the rich prospered much more, is at least somewhat diluted in the census report. When taxes, non-cash health benefits and non-cash government programs are taken into account, income inequality is much less than assumed.

Moreover, as every student of taxation knows, taxing the rich doesn't do a great deal to reduce the deficit. Big revenues in a middle-class country (like America) can only come from the middle class. Sorry about that.

Do these facts matter politically?

Not necessarily. Only if Republicans can make them sing. So far they have done a sorry job of it.

And not necessarily, because the always potent Democratic theme of mild redistribution can be valid even when the American economy is yielding across-the-board prosperity. There is no iron law of capitalism that says the top tax rate can't go any higher than 28 percent.

But there is a danger for Democrats. Mr. Phillips preaches not only redistribution but resentment.

Perhaps because he is a Republican, Mr. Phillips doesn't quite understand the degree to which resentment has been a poisonous potion for liberals and Democrats in recent years. The ''fairness issue'' is inherently sound, but it has not worked for Democrats. Walter Mondale found that out.

It hasn't worked because invariably fairness has turned into something else: the search for vicious villains and virtuous victims. ''Fair- ness'' should not be the same as the whine of a 5-year-old stamping his foot and bleating, ''It's not fair!''

Thus: Civil rights was a fine, fair and powerful political cause when addressed to black opportunity; it was undermined when it moved to preaching continuing white guilt even after reform was legislated. Now Democrats are locked into the perception of favoring reverse discrimination, and are pushing new legislation that can yield quotas. Feminism, too, is inherently a noble and potent movement toward fairness. But it becomes a political loser when its megaphones sound anti-male and anti-traditional values.

Real causes, pushed through the liberal, Democratic guilt-blender, soon come to be perceived as pleas for special interests. The demand for fairness, in the recent Democratic tonality, has too often turned into the screech of conspiracy and the drumbeat of America-bashing. That is not popular politics. Ronald Reagan kept winning elections by saying America is a great country.

Will the Democrats, now seeking a handle on the anti-incumbency mood, also overplay the solid issue of economic fairness? If the past is any guide, the danger is there. Fairness won't work if it is seen as just another liberal trick to keep the special interests well-funded. It won't work if it is seen as villainizing success. It won't work if it becomes a whine against America.

The complaint in America today is partly about who pays how much tax, but more potently about how taxes are being spent. Democrats are shrewdly addressing the first part. But the voters who are concerned about the second part are also saying, ''It's not fair!''

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