Democratic agenda already under fire

Posted: Nov 17, 2006 12:01 AM
Democratic agenda already under fire

WASHINGTON -- When the Democrats were campaigning to take over Congress, they benefited from a tidal wave of political anger aimed at the Republicans who had been in charge for the past 12 years.

But as the Democrats prepare to take control of the House and Senate, it is their legislative proposals that are in the spotlight, drawing much closer critical scrutiny than they received in this year's election. As one top GOP political strategist told me, "They are the ones who are in trouble now." The Democrats won't assume power until January, but their proposals to pull out of Iraq, slap a higher minimum wage on small businesses and raise taxes, including the tax on dividends and capital gains, are already taking hits.

In some cases, the criticism is coming from people who were among the Republicans' severest critics. People like retired Gen. Anthony C. Zinni, the former head of the U.S. Central Command, who called for Defense Secretary Donald Rumsfeld's resignation and has been a critic of the conduct of the war. Zinni thinks the Democrats' proposal to begin withdrawing troops from Iraq within four to six months would be a disaster.

The Democrats' reasoning behind their plan, if you can call it a plan, is that the prospect of troop withdrawal would put pressure on Iraqi Prime Minister Nuri Kamal al-Maliki to take more aggressive steps to combat the terrorists and end the sectarian violence there.

"Well, you can't put pressure on a wounded guy," Zinni told The New York Times last week. "There is a premise that the Iraqis are not doing enough now, that there is a capability that they have not employed or used. I am not so sure they are capable of stopping sectarian violence."

Indeed, he thinks it makes more sense to increase U.S. troop strength, as Republican Sen. John McCain has proposed, to "regain momentum" as part of a comprehensive effort to stabilize Iraq, build its economy and its security forces.

Zinni is not the only one criticizing the troop-withdrawal plan devised by Democratic Sen. Carl Levin, the incoming chairman of the Senate Armed Services Committee, which would send the proposal to the Senate floor early next year. Retired two-star Maj. Gen. John Batiste, who commanded a division in Iraq and who had also called for Rumsfeld's resignation, said the idea was "terribly naive."

"There are lots of things that have to happen to set them up for success," Batiste said. "Until they happen, it does not matter what we tell Maliki." Kenneth Pollack, a defense analyst at the Brookings Institution and a former national-security adviser in the Clinton administration, told the Times that if Levin's plan were put into effect, it would result in "the eventuality of civil war tomorrow."

That view was further underscored in Senate testimony last week by Gen. John P. Abizaid, the American military commander for the Middle East, who said withdrawal would result in an increase in sectarian killings and undermine Iraq's ability to provide for its own security.

One of the Democrats' major campaign promises is to raise the federal minimum wage to more than $7 an hour, but small-business lobbies are already gearing up to battle the proposal they say would hurt smaller enterprises that have been the engine of job growth in the United States.

This would be a job killer, plain and simple. If it became law, millions of small businesses would find ways to trim their employment force, reducing the number of entry-level jobs that are critical to helping people get on the first rung of the economic ladder.

The businesses most severely hurt would be the younger start-ups that are still struggling to get established and that have not built up their payroll capacity to the much higher levels the Democrats would mandate by legislative fiat. Economist John Cogan at the Hoover Institution said, "This would hurt small businesses, especially in the South" where wages tend to be lower than in other regions of the country. But Cogan thinks the Democrats' plan would face numerous hurdles in Congress and very possibly from Democrats themselves, particularly in the Senate.

"There will be Democrats who don't want to stick it to small business," Cogan told me.

Democrats also hope to repeal the capital-gains and stock-dividend tax cuts that Republicans passed and President Bush signed into law, reforms that unlocked needed venture-capital investment that created jobs, lifted the stock market to record levels and boosted worker pension wealth.

Hundreds of companies have begun offering dividends as a result of the GOP's pro-growth initiative, and the lower tax rate on capital gains has made it more profitable to sell stock, spawning increased tax revenue that has helped to shrink federal- and state-budget deficits.

If Democrats vote to raise taxes on capital gains and dividends, they are going to encounter fierce opposition from two powerful constituencies, many of whom voted for them on Nov. 7: Millions of retirees and those soon to retire who depend on a lifetime of stock investments for their income; and the financial industry and investors who have plowed larger capital gains into new investment opportunities, boosting the nation's economy in the process.

The Democrats' campaign mantra that it's time for a change apparently appealed to a lot of dissatisfied Americans. But once these voters learn the fine print in the Democrats' plans, many may begin to think this wasn't the change they had in mind.