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GOP Hopefuls Preach ... Gasp! ... Low Taxes

Republican candidates stick to the party's traditional message, warning that tax hikes would kill the economy.

The Republican Party has long advocated low taxes and small government. But Stephen Moore, the founder and former president of the Club for Growth recently said that the GOP has a tax dilemma. He said in a Wall Street Journal op-ed: "After years of waste in Congress, voters aren't buying the party's fiscal message."

Moore concluded that the GOP candidates "have to persuade voters Democratic tax hikes will make things worse for the economy." It seems the candidates got the message. Rudy Giuliani, Mitt Romney and Fred Thompson all preached the benefits of lower taxes at Club for Growth's economic conference Wednesday in Washington, D.C.

As keynote speaker, Giuliani made the biggest headlines at the conference. Club President Pat Toomey gave him glowing reviews:

"Giuliani's opposition to raising Social Security taxes, his support for personal accounts and his renunciation of McCain-Feingold

campaign finance legislation sends a very encouraging message to all Americans who believe in limited government, free-market principles and the importance of free speech in the political sphere."

Giuliani pledged to make the Bush tax cuts permanent and said, "I believe that our economy is being harmed right now by the failure to make those tax cuts long-term and permanent." He also wants to make the Estate Tax (renamed the Death Tax by conservative proponents of eliminating it) a thing of the past. He quoted French President Nicholas Sarkozy, who believes this tax has caused an exodus of the wealthy from France.

Giuliani got laughs when he mentioned his "dream." In the dream, Sarkozy flies to the U.S. to learn American economic values, and the Democrats pass by Sarkozy, almost colliding, on their way to France to take up "failed" Socialist policies. Giuliani appears to delight in saying the Democrats will hike taxes and socialize industries.

During the question-and-answer session, Giuliani gave a popular answer on Social Security. He said: "I would rule out a tax increase for that purpose. ... And I would want to follow the example that Ronald Reagan followed in the sense of a bipartisan commission." This answer appears contradictory. Reagan did enact a commission, and he followed the recommendation of it to


taxes. This safeguarded Social Security for an additional 63 years.

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Thompson had another take on Social Security. He's the only GOP candidate who's said entitlement programs will be a problem we must confront. During his speech, he suggested indexing Social Security benefits to inflation as opposed to wages. This would create a cut in benefits and pay for the shortfall.

These comments made some of Thompson's supporters in Congress a bit nervous.

The Hill

reported that Rep. John Duncan (R., Tenn.) said, "I think there are other things we can do." The article went on to say that "Privately they're scratching their heads as to whether grabbing the 'third rail' of American politics is the wise choice from a purely political perspective."

Larry Lindsay, a Thompson adviser, warned that the discussion was premature. "You should wait until you see the whole plan ... There's a personal savings component and a minimum benefit component. ... The indexing change is one component of the Thompson plan," Lindsay said.

Thompson suggested the Democrats understand entitlement reform, saying, "It's so easy to demagogue: 'Tax hikes for the rich.' How long does it take to say that?" Thompson also hit on the common themes of keeping taxes low. He said that cutting the capital gains tax has been a big boon for investors and questioned what would happen if it were reversed.

Romney presented his speech via live video. He espoused the strategy outlined by Moore: "Let me tell you what I'd do, as opposed to what Hillary Clinton would do with regard to our tax and spending policies." He went on to support extending Bush's tax cuts and says he wants to see marginal rates cut across the board.

Romney tried to differentiate himself from his fellow Republicans also. He repeated his dedication to fiscal responsibility through use of the line-item veto --

a dig at Giuliani. Romney also mentioned his plan for middle-class savings. He plans to request zero capital gains tax for anyone earning less than $200,000 a year, which is a bolder plan than any other Republican's. I'm not sure how

fiscally sound it would be, however.

The battle lines have been drawn for this campaign. The GOP will accuse Dems of raising taxes that in turn will kill economic growth. And the Dems will have to convince the middle class that any tax hike won't hurt their pocket books.