Encouraging Words From Little Rock

GEORGE F. WILL

December 21, 1992|By GEORGE F. WILL

Washington. -- David Cone, who last year pitched for the Mets and Blue Jays and next year will be with the Royals, recently signed a three-year contract with an interesting wrinkle: of the contract's $18 million total, $9 million is a signing bonus. There could be various reasons why he and the Royals did that, but one reason probably is that Bill Clinton is coming.

Mr. Clinton promises a tax increase on almost all most major leaguers (average salary $1.2 million) and other plutocrats. The plan includes an increase in the top rate, probably from 31 percent to 36 percent, for couples earning more than $200,000 (and individuals earning more than $150,000) and a 10 percent surcharge on millionaires.

I do not know how, or if, Mr. Cone voted, but it is believably reported that the two top Disney corporation executives voted for Mr. Clinton. Then they promptly acted to evade his planned taxes, exercising stock options that netted them $256 million together.

They can argue that they were being good corporate officers because Mr. Clinton is expected to approve what Congress passed and President Bush vetoed this year -- a measure preventing companies from taking a deduction on annual pay exceeding $1 million per executive. Disney says such a provision could have cost it up to $100 million on the two executives' options. Still, they kept more than $20 million of their dollars from the clutches of their candidate's tax policy.

Let us not be judgmental, other than to note that it is nice that the ''era of greed'' ended Nov. 3, and that liberals are careful at least with their own money. Of course conservatives, too, are making some of the rustling sounds you hear from coast to coast -- the shuffling of papers as people shift bonuses and deferred income into 1992 and defer deductible expenses until next year.

Business Week reports that in the first 16 business days after the election, $2.7 billion flowed into tax-free municipal bond mutual funds, compared with $2.4 billion for all other bond funds combined.

People will bob and weave when taxes become burdensome. New York's grasping government is sending snoopers into Pennsylvania and New Jersey to gather license plate numbers of New York shoppers escaping from New York City's 8.25 percent sales tax. Albany is especially cross that Ikea furniture stores are enticing shoppers with advertisements noting that in New Jersey urban enterprise zones that state's 6 percent sales tax is cut in half. New Yorkers shopping there will get letters from Albany dunning them for the tax difference.

Will those U.S. affiliates of foreign companies that employ 4.7 million Americans -- almost 5 percent of all employment by businesses in the United States -- passively sit still while Mr. Clinton squeezes (or so he says) $11 billion more per year from them? Not likely.

However, Washington's parasite class of lawyer-lobbyists which contributed so enthusiastically to Mr. Clinton's campaign, is content. One of its own, Ron Brown, is to be commerce secretary, and Lloyd Bentsen is going to Treasury.

Mr. Bentsen has a bad case of the bipartisan itch to keep the tax code in motion. There was significant tinkering in 1981, 1982, 1983, 1984, 1986, 1988, 1989 and 1990, and there would have been in 1992 if Mr. Bush had not vetoed it, and there will be in 1993.

When government spending is constrained by budget deficits, the tax code becomes an arena for governmental activism -- for allocating wealth and opportunity, for disguised pork, for oblique direction of economic activity. This causes joy in Washington's K Street corridor, the habitat of the lawyer-lobbyists, because every contemplated change calls for two teams of that species, one team playing offense and one playing defense. The waste of society's resources of time, money and energy and intelligence is appalling.

The most encouraging words about economic policy have come from where they could not reasonably have been expected -- the Little Rock economic confabulation. When a Helena, Ark., banker said that if bank regulators would ease up, banks could prudently pump up lending by an additional $86 billion a year, the president-elect said: ''Stimulus is peanuts compared to this increase in bank loans.''

True, he promptly muddied his message with a characteristic swerve (''I don't mean we shouldn't do the stimulus''), but he had blurted out the truth that nothing makes capitalism hum like private, profit-seeking, market-driven allocations of capital.

George F. Will is a syndicated columnist.

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