REAGANITE RUDY'S BAD MEMORY

by Joe Conason

The only way for Rudolph Giuliani to protect his status as the Republican Party's leading presidential aspirant is to distract his party's primary voters from the long list of issues that divide them from him. So he constantly seeks to balance his moderate record on abortion, homosexual rights, gun control and immigration, which the Republican base abhors, with his authoritarian style and his grim enthusiasm for war, which the base admires.

But the war in Iraq is increasingly unpopular, so lately Giuliani is talking more about supply-side economics -- and about Hillary Rodham Clinton, who irritates Republicans almost as much as taxes. During a campaign visit to California's Silicon Valley on May 30, he resorted to familiar rhetoric in attacking his old rival.

What prompted Giuliani to pounce was Sen. Clinton's forthright declaration that she would, if elected, roll back some of the Bush administration's tax cuts for the richest Americans. "This would be an astounding, staggering tax increase," he said at a fund-raiser that included technology executives and lobbyists. "She wants to go back to the 1990s. . . . It would hurt our economy. It would hurt this area dramatically. That kind of tax increase would see a decline in your venture capital. It would see a decline in your ability to focus on new technology."

Once again, Giuliani's memory seems to be failing, as it did when he claimed that Ronald Reagan had stared down the Iranian mullahs (rather than secretly selling them missiles and giving them cakes). His mayoralty, which lasted from 1994 through 2001, closely coincided with the strongest decade of economic growth in American history. He should remember those fat times, because the city advanced smartly along with the rest of the nation.

In fact, if he tries hard enough, he might even recall that those years of peace and prosperity began with a bitter debate over taxes, when President Clinton was seeking to enact his first federal budget in 1993. Upon entering the Oval Office, Clinton found to his dismayed surprise that his "fiscally conservative" predecessor had left a $290 billion deficit. He responded by imposing substantial tax increases on the top 1 percent of taxpayers and omitting the "middle-class tax cut" he had promized in his campaign. That measure passed by a single vote in the Senate, cast by Vice President Al Gore.

Predictably, the Republican right threw a screaming tantrum, falsely describing the tax increase as the "largest in history" (that honor actually belonged to Reagan) and warning that it would result in a severe recession or worse. Conservative politicians and pundits unanimously predicted that higher taxes would mean fewer jobs and larger deficits.

They were resoundingly wrong, of course. Within a few years after the '93 tax hike, we were enjoying full employment, shrinking poverty, rising household incomes at all levels, greater home ownership -- and the prospect of a gigantic federal surplus.

Now it is true that the biggest opportunities for Giuliani to enrich himself (and start worrying about the top tax rate) arrived in the years after he left office. As a security consultant, book author, investment rainmaker and corporate lawyer, he has reportedly earned many millions of dollars. He commands more than $50,000 for every inspiring speech he delivers about the leadership he displayed on 9/11, a sum that annoys heroic firefighters whose opinion of him has soured.

But for the rest of America, the '90s were better than the years since the millennium. Under President George W. Bush, another economic Reaganite who cut taxes for the wealthy, wages have stagnated along with family incomes, while the income gap has grown -- all thanks to the policies advocated by Giuliani. He promoted those trends early on as mayor, when privatization began to drive down wages among the city's lowest-paid workers, causing family incomes to drop and poverty to rise.

Out in Silicon Valley, he bragged about his economic record. "The way I paid for preparing the New York City budget was by lowering taxes. I was collecting billions of dollars more from the lower taxes than from the higher taxes," he claimed. "You can make money by lowering taxes."

That is exactly what Republicans love to hear: It's their version of a free lunch. He forgot to mention what happened later, however. When he departed City Hall, he left on his desk a gaping deficit of nearly $4 billion, and Mayor Michael Bloomberg had no choice but to raise taxes.

Perhaps Rudy Giuliani really would be better off talking about handgun bans and gay marriage.