By Dick Morris on October 20, 2008

Published in the New York Post on October 18, 2008

Ronald Reagan’s most important contribution to the American political dialogue was his ability to move the tax issue from an economic-populist issue into a populist, blue-collar one. Under George W. Bush, however, the issue has switched back to one of class warfare, as increasing numbers of Americans have paid no taxes at all and the rates on those who did pay taxes fell. Now, a chance encounter with “Joe the Plumber” has afforded the Republicans the chance to use taxes as a blue-collar issue.

The opening Joe provided and John McCain skillfully exploited in the third presidential debate gives the GOP ticket its first long shot at victory since McCain punted on the terrible, pork-laden, corporate-giveaway “rescue” bill Congress passed and Bush signed. Obama’s tax plans and spending programs have emerged as the key point of difference between the campaigns. And the Democrat’s comment to Joe that he saw his tax policy as a “way to spread the wealth around” underscores the motive behind his program: to redistribute income. Obama might as well have told Joe, “I want to take the hard earned money you make fixing pipes and give it to other people.”

If the Republican Party concentrates its fire on the tax issue and the redistributionist impulse behind Obama’s plans, it can close the Democratic lead point by point, day by day, until the election. McCain’s campaign must resist the temptation to take random shots on other issues and zero in on the tax-and-spend issue, stressing how taxes penalize those who work hard and live right.

In fact, the rich are paying vastly more in taxes than they ever have. “Reality Check,” by Dennis Keegan and David West, points out that the percentage of income-tax revenues paid by the top percent of the population has almost doubled in the last 20 years; it now pays 40 percent of all income tax. (The bottom half in income pays less than 3 percent.) Despite the lower rates, the rich are paying more in taxes because they are earning more and more. In the last eight years, real, after-inflation income growth for the top 10 percent of the population has been more than 45 percent.

Essentially, the tax debate comes down to economic populism versus social populism. The Democratic economic populists rail against the rich and demand that they pay more in taxes. The Republican social populists decry the notion of income redistribution as rewarding failure and penalizing hard work. Until Joe, the economic-populist polarity dominated the presidential race to the detriment of the Republicans. But now Joe has brought the social-populist argument back to life.

Because there always are, there will doubtless be those who see the social-populist approach as a code word for racism, especially because it is directed against the proposals of an African-American candidate. But the dichotomy that social populism exploits is one that separates the most productive members of our work force from the others, in the spirit of Joe the Plumber. Race is quite beside the point.

The question is whether McCain has the discipline to pursue the tax issue doggedly for the rest of the campaign. The other targets – from Bill Ayers to ACORN – are so tempting but ultimately appeal to the Republican base and few others. But taxes hit us all.

The core difference between the American working class and its European equivalents is that Europeans are inclined to vote based on their current condition while Americans base their decisions more on their goals and objectives for the future. Americans assume upward mobility while Europeans do not. Each nation’s workers are correct in their assessments.

Despite the widening gap between the richest 20 percent and the poorest in the United States, the economic chart is constantly churning. People are always moving out of the bottom fifth and up the scale, their places at the bottom of the ladder yielding to new arrivals, usually from abroad. So Americans are right to vote their dreams. Obama’s European socialist tendency to sabotage growth in the interests of “fairness” merely serves to convert an American model that works into a European one that does not.

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