Administration is wary of reigniting 'class warfare'


WASHINGTON -- The apparent split in the Clinton Cabinet between Labor Secretary Robert B. Reich on the one hand and Treasury Secretary Lloyd M. Bentsen and Commerce Secretary Ronald H. Brown on the other over the need to cut what Reich has called "corporate welfare" indicates that the administration is wary of initiating another round of what the Republicans like to call "class warfare."

Reich coined his term in a speech last week. "If we're asking middle-class people to work smarter and welfare mothers to play by the rules," he told the Democratic Leadership Council, "it seems important to ask Corporate America to get off welfare and play by the rules as well." His target was various federal tax breaks, credits and subsidies to business and agriculture that he estimated could save the Treasury more than $111 billion over five years.

Bentsen and Brown, whose Cabinet portfolios make big business part of their special constituencies, quickly distanced themselves from Reich's words. Both said they had not been consulted by Reich and that his remarks did not reflect an administration position. "I did not find myself very excited about them," Bentsen said on CBS News' "Face the Nation" over the weekend.

Nevertheless, Reich's call for Corporate America to pay a greater share of the nation's tax bill is reminiscent of the demand of liberal Democrats during the 1993 deficit reduction debate that various tax breaks and loopholes for business be closed, and that any tax increases fall most heavily on the most wealthy, a category that includes the top dogs of big business.

The deficit reduction package as enacted did restrict federal income tax boosts to the top 1.5 percent of taxpayers, a fact that was trumpeted thereafter by President Clinton and deplored by Republican conservatives as a classic Democratic pitting of the poor against the rich -- "class warfare" in the GOP vernacular.

The poor, however, have not been much of an effective political constituency at least since the days of the New Deal, when there were enough have-nots in the society to be a voting factor. Clinton in his 1992 presidential campaign instead championed the middle class as the group that was getting the shaft in spite of the fact that they, in his favorite phrase borrowed by Reich, "work hard and play by the rules."

After his election, Clinton reneged on his campaign call for a middle-class tax cut but obviously hoped that, by hitting the top-income category, he would still cast himself as the advocate of the beleaguered middle class. But the assumption that the middle class sees itself at war with the rich was disputed back in the Bush years. Then, House Democrats found themselves pressured by middle-class constituents, who nourished the hope that they might be well off someday, to vote for a capital gains tax cut.

With the Republican majority certain to seek a cut in the capital gains tax rate in the next session of Congress, the cry of "class warfare" probably will be heard again, this time from liberal Democrats who will argue that such a cut will only make the rich richer. But that lament, as with Reich's call for an attack on "corporate welfare," is not likely to have much resonance in a Congress under Republican control for the first time in four decades.

Even before the Republican congressional avalanche of Nov. 8, the tactic of making villains out of wealthy Americans and the Corporate America to which many owe their wealth -- taking care of the poor and middle class by "soaking the rich" -- had become threadbare as an inducement to embrace the Democratic Party. It does not figure to be the answer now that lower- and middle-income voters apparently no longer see that party as their protector in the way they did in the days of Franklin D. Roosevelt.

Still, if the congressional Republicans go overboard in cutting programs of primary benefit to the welfare poor and working poor -- such as Newt Gingrich's harebrained notion of relying on orphanages rather than welfare mothers to care for needy children -- they may yet unwittingly breathe life into the "class warfare" argument once again.

Rob Shapiro of the Progressive Policy Institute, who agrees with Reich's pitch to end corporate tax breaks that undermine economic health, says he hopes that won't happen. He expresses a fear of "ideologues capturing economic policy" -- and a hope that rhetoric about "class warfare" can be cooled.

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