What They Would Do

Republicans claim that the Democrats lack a plan for governing. But with respect to the economy, the Democrats are chock full of ideas — just all the wrong ones. So, on Election Day, when thinking about the effect of your vote on your wallet, it is important to stop and ask yourself: What Would the Democrats Do?

If the Democrats win big, the economic agenda — the one area the Bush administration has handled with great aptitude — is subject to major changes, or, at the very least, some big blockades. And though the economy is solid, three areas in particular require shoring up: the 2002 Sarbanes-Oxley act begs for improvement; the massive automatic tax hikes that will undo the tax cuts in 2011 must be canceled; and entitlement reform, starting with Social Security, is desperately overdue. These are top Republican priorities. But what do congressional Democrats have in store?

Take Rep. Barney Frank, the man from Massachusetts who probably will be chairman of the House Financial Services Committee if Democrats are successful. The issue at stake is the Sarbanes-Oxley act, the bane of American investors' lives since 2002. For the past four years, American businesses have outsourced their initial public offerings to less-regulated and more business-friendly capital markets abroad, mainly in London and Hong Kong. International companies stayed away from here, as well. In the year prior to Sarbanes-Oxley's enactment, the New York Stock Exchange held six foreign firms' IPOs, each valued over $1 billion — but holds only one at that price this year.

The blame lies squarely with Sarbanes-Oxley-empowered regulators who demand expensive accounting measures and threaten with jail time executives who don't dot their i's and cross their t's, even for a miscounted box of paper clips. Would Mr. Frank lessen this regulatory burden? Doubtful, since his answer has consistently been more regulation. And this time, he would go global.

Mr. Frank recently proposed a worldwide regulatory institution to oversee international markets if countries cannot settle their differences. Any other day, investors would chalk that up to red meat for the anti-business Democratic base. But come next Tuesday, Mr. Frank has a betting man's chance of heading the committee tasked with loosening (or tightening) the death grip of Sarbanes-Oxley.

Don't think for one second that big business is the only one in the hot seat. With Rep. Charles Rangel of New York poised to wield the Ways and Means Committee gavel in a Democrat-controlled House, your income-tax bill is in even worse danger. In response to a question about which tax cuts he would extend, Mr. Rangel said he "cannot think of one." Though now backtracking by saying that he meant all options are on the table, the statement is still illuminating.

The tax cuts generated windfall individual and corporate tax revenue this year that shrank the budget deficit by almost half, from $423 billion to $248 billion. In addition, discarding the tax-cut extensions would abandon the 10% bracket for low-income earners and slash the child credit from $1,000 to $500 for American families. But Mr. Rangel never cared much for silly facts. He seems to believe that punitive tax rates are good, and these numbers just get in the way of his thinking.

And, though Mr. Rangel is determined to raise taxes in the here and now, he doesn't suffer from myopia. Peering into the future with crystal clarity, he knows just the shape Social Security should take for the next generation. He doesn't envision the positive, pro-worker reforms that last year the administration botched worse than Harriet Miers's candidacy for the Supreme Court. No, he plans a "bipartisan effort" that will tackle the ticking time bomb scheduled to destruct sometime around 2042.

Mr. Rangel says of this effort: "Private accounts will not be on the table if you are looking for bipartisanship." Essentially, he's saying that Republicans can have Democratic support as long as they propose a Rangel-approved plan, which undoubtedly consists of higher payroll taxes and lower benefits with no structural reform. That doesn't sound like bipartisanship to me.

Not to be outshone, New York's senior senator, Charles Schumer, flexed his economic muscle this week when he co-authored an op-ed with Mayor Bloomberg on the city's weakened financial services industry. But Senator Schumer, who represents the world's financial capital on the Senate Committee on Banking, Housing, and Urban Affairs and is the ranking member on the Subcommittee on Economic Policy, has consistently toed the Democratic line in the past. It will take more than an election-week opinion piece to convince voters otherwise. If he finds himself in a position of influence after the election, the financial services sector will hope he keeps his pro-growth tone when hearings on hedge fund regulation open.

Democrats were never successful stewards of the economy, and this is one area where the Bush administration has truly shined. Through the aftermath of the dot-com bubble burst, the largest terrorist attack ever in America, and a prolonged war, the economy continues its steady hum. One measure of economic health, the Gross Domestic Product, showed consistent growth averaging at 3.5% for the past four quarters before the current quarter, the fastest of any other major industrialized country. Indeed, this remarkable prosperity — coupled with decreasing gas prices — has allowed Americans the luxury of focusing on the other issues that could produce a Democratic victory on Tuesday. With that in mind, it's helpful to hear these Democratic ranking members speak as if they supped a truth serum.

These likely chairmen should be commended for their honesty. And if voters hand them the gavels on Election Day, there will be no one to blame. After all, we were warned — straight from the donkeys' mouths.

Mr. DeSena is a policy analyst at the Free Enterprise Fund in Washington, D.C., an organization which promotes pro-growth policies and free-market reforms. He can be reached at mdesena@freeenterprisefund.org.

Correction from November 6, 2006: mdesena@freeenterprise is the e-mail address of Marco DeSena. An incorrect e-mail address appeared with his column on page 10 of the November 3-5 New York Sun.