European Stars And Stripes (Newspaper) - September 23, 1989, Darmstadt, Hesse                                Page 10 columns William Safire the stars and stripes la la Iii Ink continued Prosperity is fax Challenge of the 90s x reduction has worked. Despite Liberal to trumping throughout the 80s. The Kemp Roth tax Cut followed by the Packwood rate Reform has produced higher tax revenues and a longer Prosperity than most optimists envisioned. We Are literally growing our Way out of the deficit just As the Supply aiders promised. Even those of us who caution that the business Cycle has not been re pealed have to admit that the most successful economists have been the tax Cullers. They started with a grand design that invited elite derision in its popular Assurance of painless Ness. But the decade proved their Point lowering the tax Bur Den does increase the incentive that enlarges the Pic. Lunch so far. Turns out to be free. Since the tax reduction appetite manifestly builds the political body How about a Little dessert that was a George Bush Campaign message and it turns out he meant it. Against the angry orders of the House democratic leadership the House ways and Means committee has gone for a modified version of the president s pro posed reduction of the capital gain tax. Chairman Danny Rostenkowski d-lll., looks As embarrassed As Wilbur Mills after his splash with Fanny Fox. Reducing the capital gains lax helps the Richins. In Sist the Cro sum games Man of the democratic left. Never mind that capital gains reduction is sure to Trig Ger transactions hat will swell Uncle Sam s lax coffers swelling the coffers is As Mouth filling a cliche As awash in Oil. And never mind that fairness Calls for the taxation Only of real rather than inflated gains. Anything that s Good for the Rich must be bad for the poor say he Yero Summers. Who forget thai Jack Ken Nedy line about a rising tide lilting All the boats. To delay the reduction in capital gains. House democratic leaders now look to the Senate. There the finance chairman Lloyd Bentsyn. A Texas. Has hastily put Forward an alternative Goodie restoration of the individual retirement account tax deduction for everyone who wants it the unspoken idea is to go into conference with both capital gains reduction from the House and Ira restoration from the Senate because the combination would probably reduce revenues and bust the budget the conferees would then quietly kill both. But wait what if these two proposals pick up popular steam the Ira deduction has its conserva Tive enthusiasts we support incentives for people to save for their own futures. The Rosty Bentsen scuttling plan might then backfire and the conferees would be forced to approve a Bill with both the Republican Goodie capital gains and the democratic Goodie iras. James Kilpatrick Detour act together Edrutt  justs Flo Newmes what an Xci ing Prospect. If capital gains and Ira Are wedded the Revenue loss of the Ira would have to be made up. Lest the steady reduction of the deficit be imperilled. Where is the new Revenue producer for this possible package democrats will say prick the Bubble that is smooth out the rates to lop out at 33 percent and not come Back to 28 percent. That s the discredited soak the Rich theory forgetting All the lessons of the 80s, republicans May have a few surprises. Why for example has Treasury Secretary Nicholas Brady raised the old objection about the double taxation of dividends my guess is thai is part of a double Bill with a Public purpose that goes beyond the raising of Revenue reduce corporate taxes on dividends thereby encouraging equity and simultaneously Cap the deductibility of interest thereby discouraging dangerous debt. Another use of the tax code to strengthen the Funda ments of american business while bringing in revenues is to extend the new. Lower capital gains a to he huge pension funds which now plunge in and out of Securi ties markets unrestrained by tax considerations. That would Case the tyranny of the analysts the go go upward very Quarter or Dic pressure on managers whose businesses arc now made less competitive in world markets by being forced to skimp on re and to neglect the cultivation of Long term loyalty in employees and customers. See one change can set off a tax Chain reaction. The purpose of the next package should not be merely to raise revenues we have to think bigger than that. The lax Reform of the 90s must seek to extend and stabilize the Prosperity brought about by the Pioneer ing tax policy of the 80s. The democrats having missed the last boat arc still dithering at the Dock still talking of incremental lax increases. The republicans using the capital gains wedge Are at least trying to work out a grand design. Bennett s anti drug plan merits fighting Chance in his superlative report on a nation Al drug control policy director Bill Ben Nett deals with two defeatist arguments that often arc advanced. The first is that the problem could be cured by legalizing drugs. The second is that if neighbor Hood drug dealers Are driven away they will immediately set up shop somewhere else. Some usually sound conservative thinkers professor Milton Friedman for one have taken their libertarian philosophy and gone off the deep end on this Issue. They tend to equate today s War on drugs with the War on Demon rum 70 years ago they Sec parallels in the gang wars the corruption of police the lucrative Trade of bootleggers and rum runners and so on. If drugs could be sold legally As Beer and spirits could be sold after repeal of the 18th amendment the criminal traffic would disappear illicit fortunes would dry up there no longer would be a sense of excitement in doing something unlawful. Superficially the Case for legalization makes sense but it is wildly removed from reality liquor simply cannot be compared to the deadly drug known As crack. Some of the Moonshine peddled in the 1920s could Lead to crashing hang overs in rare instances catgut caused blindness. But even the worst White Light Ning never turned brains to Mush in the fashion of a hallucinogenic drug. Bennett scorns the naive idea that legalization would solve the problem. He doubts that legalization would significantly reduce crime. Less expensive drugs might just As Well mean More fre quent purchases and a still constant need for Cash producing burglaries and Rob  moreover because cocaine produces dangerous behavioural Side effects legalization might also entail an increase in even More serious crime. An average Gram of cocaine Bennett observes now Sells on the Black Market for $60 to $80. The free Market Price would be $3 or $4, but the advocates of legalization would tax and regulate legalized drugs so heavily that a Gram of co Caine might sell in a state store for $30 to $40. In that event criminal organizations could undercut the official Price and still turn an immense profit. These illicit gains could be halted Only by reducing the regulated Price to $ 10 a Gram. This would Cut the Price of an average dose to about 50 cents Well within Trie lunch Money budget of the average american elementary school  Bennett is puzzled As we All might be puzzled by contradictory aspects. Hav ing just made drugs As Legal As Beer How could we convincingly warn Young peo ple against them and because legalization assuredly would Lead to an increase in drug use How could a new horde of addicts be treated prevention clinics arc overcrowded now. In sum says the director legalization would be an unqualified National  another mounded idea goes to the notion that neighbourhood drug enforcement is an exercise in futility. It is supposed that dealers Are entrenched in their turf. Only a strenuous Effort by police will dislodge them from the Center cities. In Chicago it is supposed the dealer who is run out of Cicero will set up shop in Oak Park. Bennett disagrees. Drug dealing after All is an illegal and hazardous occupation. Only the most flexible determined and powerful drug dealers can readily move to a new locale establish clients and still protect themselves from rivals after they have been chased from their regular turf. Effective Street level enforcement aspires to keep dealers constantly insecure so much so that Many of them will find they cannot profitably and safely carry on with their  this makes sense. As an economic entity the neighbourhood drug dealer May be classed with the neighbourhood grocer or dry cleaner. The dealer has a payroll to meet he relics on an accessible sup plier he depends wholly upon regular customers. Forced to move Miles away he has to recruit new paddlers and new customers and he has to face the Competition of established dealers. Bennett s strategy is a comprehensive strategy. He wants this War fought on every front at the same time but he believes the first priority of local drug enforcement is to fight the evil at the neighbourhood  it is probably the most difficult front of All. In the few weeks since Bennett s re port appeared we have heard mostly critical carping and political showboat ing. In t it High time to Knock it off Bennett s strategy demands Cool Heads and fighting hearts. A univ Ial Pieu synd Cau