Capital Pains


Washington. Mr. Bush's renewed request for a capital-gains tax cut may be based on his hope that a successful Persian Gulf war will boost presidential popularity so high that he can get whatever he wants through Congress. While that is an iffy prospect, keeping the tax-cut idea alive is a bone thrown to the hard-core supply-side conservatives who still figure disproportionately in GOP politics.

What makes this year's gesture on capital gains slightly different is that the Federal Reserve Board chairman, Alan Greenspan, heads a bipartisan commission to study the issue objectively, and bring back technical agreements on which the debate can proceed.

Those opposed to cutting the tax naturally question whether Mr. Greenspan can possibly produce anything but favorable findings, since he has long been on record for such a cut. And the administration, naturally, says not to worry.

Richard Darman, the president's budget director, pointed out at breakfast yesterday that Mr. Greenspan headed the bipartisan commission that came up with consensus Social Security recommend- ations in 1982. The bipartisan, consensus aspects of those changes took President Reagan and congressmen off the hook politically.

That's the kind of result the administration hopes will come from the new Greenspan commission on capital gains. But the parallel is inexact.

Mr. Darman concedes that the chairman's position is known and "biased" -- adding the quotation marks himself, to make clear he doesn't accept that adjective. But neutrality is not necessary, he says, because Mr. Greenspan's group will merely try to "reduce the partisanship on technical issues," something he says probably must be done to move the bill in Congress.

Besides, Mr. Darman adds, in the previous case Mr. Greenspan's position on Social Security was well known, too -- he thought the program should be made voluntary. Voicing that same opinion was one of the blunders that sank Barry Goldwater's presidential ambitions in 1964, and Ronald Reagan was careful never to echo it once he became a serious contender.

Any suggestion of changing Social Security is politically dangerous; to suggest making it voluntary is like tampering with a blockbuster bomb. Whatever Mr. Greenspan's personal opinion, it was moot because such a drastic step was never considered by his 1982 commission.

There was a wide consensus then that Social Security was in trouble, and adjustments were needed to put it on a sound footing. But neither party was willing to risk stepping out front for specific changes. The bipartisan commission provided political cover, removing any political label from the result.

But on capital gains, there is no such consensus. There is a deep split, mainly over fairness, and Mr. Greenspan's personal position could not be more relevant. On this one, it is not way out in right field, but squarely on the side of the administration.

Mr. Darman maintains that "the votes are there" in Congress to pass a cut, but says the commission can improve its chances by reducing technical disagreements. And what are these merely TTC "technical" questions? Well, whether a capital-gains tax cut produces economic growth -- and whether it favors the wealthy over poor and middle-class taxpayers.

The latter question is not technical at all, of course. It is the heart of the debate. The figures are on the record. For example, the richest 1 percent of Americans own 60 percent of corporate stock, which is the trading field most affected by the proposed cut. Reagan tax policy enabled the Forbes 400 richest Americans to triple their net worth between 1982 and 1989, while the median net worth of all households dropped 4 percent from 1984 to 1988.

The disagreement is not over technical matters, but over what the figures mean. To opponents of a capital-gains cut, they mean that the tax laws of the Eighties favored the rich over the rest, and this proposed cut would favor them still more.

If Mr. Greenspan supports the cut, he obviously goes biased (without the quotes) into the study-commission assignment. The only way he could prove otherwise would be to come out persuaded that he was wrong, and a cut is wrong.

Needless to say, that might shake his job security as chairman of the Fed. To emerge still supporting a cut would shake his credibility there. He can't win -- which demonstrates how unwise was to draft him for such a deeply political job.

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