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Rep. Richard Gephardt, D-Mo., often speaks of his humble roots as the son of a milkman in St. Louis.
“My views on work and unions and the struggles of working families were shaped during this period,” the former House minority leader and current candidate for the Democratic presidential nomination writes in his 1999 autobiography, An Even Better Place. On the presidential stump in Iowa last February, Gephardt again recalled his father Louis in a paean to labor unions. “He told me every time, pretty much, [when] we were at the dinner table that we had food on the table and I had clothes on my back because he was represented by a union that could bargain to get him fair wages for his hard work,” Gephardt declaimed.
But Gephardt’s brother Don remembers it quite differently. “My dad was in the Teamsters, but that’s because he had to be to get the job.” Don Gephardt spoke of his father to the St. Louis Post-Dispatch: “He prided himself on being a Republican. … He had the feeling that you had to make it on your own, that any kind of welfare program would just raise his taxes.”
A spokeswoman for Dick Gephardt’s presidential campaign did not deny Don Gephardt’s description, when contacted by the Washington Times, but said the candidate “truly believes the union job was the best for his dad and family because of the wages and benefits it offered.”
When Dick Gephardt first was elected to Congress in 1976 from a heavily Catholic middle-class district in suburban St. Louis, his politics seemed to be a lot closer to those of his father than they are 25 years later. He was among the “boll weevil” Democrats who supported Ronald Reagan’s 1981 tax cut, voted for aid to the Nicaraguan Contras and supported a constitutional amendment to ban abortion.
In the late 1980s he moved to the left, mostly on economic issues but also on social issues such as abortion, and he now proudly calls himself pro-choice. But it was those economic issues into which he poured himself, and in the last few years he has proposed radical changes to Social Security and taxation, urging abolition of Roth individual retirement accounts (IRAs) and calling on the government to invest Social Security revenues in the stock market (but opposing efforts to let individuals invest part of their Social Security taxes through personal accounts).
Gephardt began positioning himself as the labor-union candidate when he first ran unsuccessfully for president in 1988, and still is trying to win the Democratic nomination by making himself the candidate of organized labor.
He seems to be on a roll. After taking flak from the left of the Democratic Party’s electoral base for sponsoring the resolution authorizing President George W. Bush to use force against Iraq, Gephardt stole the thunder in late April from candidates thought to be more liberal, such as former Vermont governor Howard Dean and Massachusetts Sen. John Kerry. He proposed a massive new health-care entitlement to be paid for by mandates on employers and by repealing all of Bush’s tax cuts – both those in place and those to be activated in the future.
In one of many plaudits from liberal pundits, Washington Post columnist E.J. Dionne wrote, “He has drawn a clean, clear line across American politics by challenging Bush on precisely the issue that should be at the heart of the domestic debate in 2004.”
Early polls among Democrats show Gephardt already is strong, even ahead of South Carolina-born Sen. John Edwards, D-N.C., in the Palmetto State.
And many savvy observers of presidential politics, both on the left and the right, say that with his populist appeal, image of centrism and longtime courtship of the politically powerful labor unions, Gephardt has an excellent chance to win his party’s presidential nomination. And this despite the fact that he was their congressional leader when the Democrats lost the U.S. House of Representatives in 1994, and that he never achieved his goal of becoming House speaker by taking control from the GOP.
“Gephardt would certainly be coming from a place where he would have a good chance to consolidate his whole party,” says GOP political consultant Richard Nadler, president of Kansas City-based Access Communications and a longtime conservative activist in Missouri.
“I regard him as a serious contender,” Nadler says. “He and Edwards and Kerry are at the head of the pack. He has been a straight union boy for ages, and that is the core of the Democratic Party. He has the distinction of being the only one running who belongs to that group.”
Darrell McKigney, president of the Small Business Survival Committee and a longtime congressional staffer for Midwest Republicans, says of the candidate: “Gephardt’s plan is really where the heart of most of the members of his party is among activists, which is to get big government to take over everything. The rest of the field is having an awkward time figuring out how to deal with it. They want to do everything to criticize the Bush tax cut without actually saying repeal it.”
Jeff Faux, a longtime Gephardt friend and founder of the left-wing Economic Policy Institute, a labor-backed think tank, sums it up: “He’s got a base in the labor movement and the Democratic Party, and he’s a very smart strategist.”
Although Gephardt may be a moderate on foreign policy, his moderation ends at the nation’s gates. “He probably isn’t the most liberal of the bunch on foreign policy, but he’d certainly compete for that title on economic policy,” says McKigney. “On the war, Gephardt is less progressive than Dean; on some other issues he probably is more progressive,” says Faux.
Indeed, a review conducted by Insight of Gephardt’s campaign platform and recent legislative proposals shows that his determination to repeal the Bush tax cuts is but one of many instances in which he would raise taxes to expand government. At press time, Gephardt’s campaign had not returned repeated telephone calls seeking clarification of the candidate’s views on taxes as well as other issues. A call to his Capitol Hill office again produced regrets and the explanation that “all of our press people are over there [at his campaign].”
Meanwhile, questions abound. For instance, his proposed “Universal and Portable Pension Act of 2002,” which he touts on his campaign website, would make millions of Americans ineligible for the tax benefits of IRAs and would double-tax what Americans currently have saved in Roth IRAs. The website touts the proposal as a way of simplifying retirement saving: “A Gephardt administration would propose that we fix our overly complicated pension system by putting in place a universal pension system that will simplify the existing 16 different pension programs and establish one universal account.”
But as with any retirement investment, it’s best to read the fine print. Gephardt’s website says his pension plan calls for the “termination of contributions to individual retirement plans, including Roth IRAs.” IRAs would be replaced by universal retirement-savings accounts that are anything but universal. They would allow tax-deductible contributions similar to those of current IRAs, and the interest and principal would not be taxed until withdrawal during retirement. But Gephardt slashes the income maximum to qualify by more than one-third for married people and almost half for singles. Currently, Roth IRAs begin to be phased out at $150,000 for couples and $95,000 for singles. Under Gephardt’s plan, these income limits begin to be phased out at $100,000 for married couples and $50,000 for single individuals.
Even some liberals have admitted that in many environments today earning $100,000 or more in combined income does not make a family “rich.” Brookings Institution tax economist William Gale has made the point in another context that a couple making $100,000 could be “a cop married to a nurse.” Gephardt’s plan also would get rid of new “catch-up” provisions enacted under Bush to allow people 50 and older to save more.
Likely to be especially provocative is that taxpayers would be hit on what they already have accumulated in their Roth IRAs, according to a close reading of the bill’s provisions by tax experts with whom Insight consulted. Passed into law by the Republican-controlled Congress and signed by president Bill Clinton in 1997, the hugely popular Roth IRA, named after then-Senate Finance Committee chairman William Roth, R-Del., works in reverse of the traditional IRA. Instead of receiving a tax deduction up-front, individuals contribute after-tax income in return for the promise that they can make tax-free withdrawals during retirement.
But this promise likely would be nullified under Gephardt’s plan. A House Democratic Policy Committee paper on the Gephardt bill says that “existing balances in current accounts that are being superseded (IRAs, Roth IRAs, etc.) would be rolled into the universal account without penalty” – meaning without the 10 percent penalty for early withdrawal under current law for IRAs. But Roth IRA savers still would incur a penalty in terms of double taxation on what they’ve saved because, according to the bill, “No [tax] deduction shall be allowed … with respect to a rollover contribution to a universal retirement-savings account,” and there is no provision for tax credit for the amount in Roth IRA rollovers during retirement.
This means that everything Americans have saved for the last five years in Roth IRAs, and all the interest, dividends and capital gains reaped in these accounts – after-tax money that people were counting on for their retirements – now would be double-taxed upon retirement in violation of the terms set by the Republican Congress.
“This is outrageous!” says Nadler, who tries to urge Americans to save more for their retirement. This anomaly was one of the questions to which Gephardt’s campaign did not respond.
This isn’t the only way Gephardt’s plans would hit the savings of the family of Gale’s cop and nurse. He also would hike the tax on the capital gains from their nest-egg stocks and mutual funds: “I’d treat all income the same, whether it is earned by the sweat of your brow, the power of your mind or the sale of your investments,” Gephardt wrote in An Even Better Place. This means that capital gains (on money invested from after-tax income) would be taxed at the same rate as ordinary income, as Gephardt has proposed in his so-called “10 Percent Tax Plan” bills in Congress. Those bills would raise the capital-gains tax from the current level of 20 percent to as much as 34 percent. Since more and more middle-class families are investing, this would hit them as well. A couple together making $80,000 to $150,000, which includes our cop and nurse, now would have to pay a 26 percent tax every time they or their mutual fund sold a stock.
The flaw in Gephardt’s thinking, say conservatives, is that the capital-gains tax, like all taxation on savings, is double taxation on earnings that already have been taxed.
“He wants income to be all taxed at the same rate – as often as possible,” Nadler remarks. “He has no concept that the current income tax already falls more heavily on saving and investment than it does on consumption,” says Steve Entin, president of the Institute for Research on the Economics of Taxation and an assistant Treasury secretary in the Reagan administration. “Therefore, he has a misunderstanding of what constitutes evenhanded treatment of economic activity.”
Or maybe he does understand it. A few years ago, as Insight first reported, Gephardt participated in a questionable land “exchange” for a seaside vacation home seeking to avoid capital-gains taxation. Nadler says Gephardt, who also has a proposal to require workplaces to offer pensions, may want to increase taxes on private saving so that individuals will be more dependent on the government and union pensions for their retirement money and vote accordingly. “Intuitively, he has always had a very negative attitude toward the conversion of union-negotiated ‘defined-benefit’ pensions to ‘defined-contribution’ pensions and IRAs, as has the union movement in general,” Nadler says. “They perceive, quite rightly, that it’s giving them less power and their members more power.”
For instance, Gephardt has argued against private accounts for Social Security, saying that individuals can’t be trusted to take on the risk of the stock market. But he has no problem trusting government to do that and has suggested that bureaucrats invest the Social Security trust fund in stocks to shore up the market. “We can achieve many of the benefits promoted by the advocates of privatization by allowing the [Social Security] trustees to gradually and conservatively invest a portion of the funds in the equity markets, just as insurance companies balance their portfolios,” Gephardt wrote in a Washington Post op-ed in 1998.
Hard as it may be to believe, in the face of statements like that, when Gephardt was first in Congress he was well to the right of the average Democrat there. He consistently ranked around 30 percent in the American Conservative Union ratings from 1977, his first year in Congress, and did so through 1982. He voted to restrict abortion, for aid to the Contras, supported Reagan’s tax cuts and fought forced busing and racial quotas. He even voted to abolish the left-leaning Legal Services Corporation. Then he became a prot?g? of House speaker Thomas P. “Tip” O’Neill and began to eye the presidency.
“In 1988, he decided to run for president, fired his local staff, hired Washington people and became pro-choice and pro- the Democratic Party platform,” says Bill Federer, Gephardt’s Republican challenger for the House in the 1998 and 2000 elections. “He embraced this radically liberal agenda while keeping his voting record hidden at home.”
Faux, whose group Gephardt often consults with on economic issues, has a more charitable explanation for Gephardt’s shift to the left. “He has a working-class family background, and I think as he got involved in the issues, he moved in the natural direction,” Faux says. “When you start thinking a lot about taxes, you start thinking about distribution of the tax burden and distribution of income, and I think pondering the tax code gives you insight on how the benefits of economic growth are distributed.”
Central to his political rise, and probably his move to the left, has been St. Louis Democratic powerbroker Joyce Aboussie, who now has the official title of vice chairman of Gephardt’s presidential campaign. “Nothing happens in St. Louis politics without Joyce Aboussie,” Federer says. Aboussie runs a telemarketing and polling firm and has worked for Gephardt campaigns and congressional offices on and off since the late 1970s. She is well-connected to prominent feminists and liberals as well as Hollywood celebrities, recently playing hostess to a charity fund-raiser in Florida with actress Marlo Thomas. Democratic Party functionary Donna Brazille and others credit her with being the driving force behind Gephardt’s surprising victory in the Iowa caucuses in his 1988 presidential campaign.
Aboussie serves as Gephardt’s “gatekeeper and bouncer,” according to the St. Louis community paper, Riverfront Times. “She puts people in office; she keeps others out.” And she also can be fierce, according to critics, supporters and local press reports. Federer believes Aboussie was behind an “assault” charge brought against him when he was campaigning against Gephardt in 2000. In September of that year the papers were splashed with charges that Federer had shoved James Larrew, a 22-year-old college student, during a parade. But, according to Federer, Larrew had been following him closely with a camera for 14 minutes, then shoved the camera inches from Federer’s face and stepped on his foot, causing Federer lightly to push the younger man away. Larrew claimed he simply was videotaping the parade, but the tape played at trial showed he almost exclusively took shots of Federer. In January a jury acquitted Federer of the charges in 35 minutes, according to the Post-Dispatch.
What makes the case more interesting is that Larrew turned out to be a paid intern in Gephardt’s congressional office and admitted to being under the supervision of national political adviser Aboussie. And Aboussie admitted in a deposition to two conversations with Larrew on the day of the phony assault, though she was vague about what exactly was said. Federer now is suing Gephardt, Aboussie and Larrew for allegedly trying to violate his civil rights. He is being represented by Judicial Watch, the Washington public-interest legal group. As with the tax issue, Gephardt’s offices did not get back to Insight, but in other press reports they have called the lawsuit frivolous.
Federer still managed to hold the sitting House minority leader to less than 60 percent of the vote, as he had in the 1998 election. In a fierce fight with black Democratic Rep. William Lacy Clay, Aboussie had managed to grab some of the St. Louis inner city for Gephardt’s district, giving him a better margin of safety.
Still, Federer is planning to run again in 2004, whether Gephardt is running for Congress or for president. If running against Gephardt, he plans to stress again how much the congressman has deviated from the values of his district. “All I had to do is let the people know who he had become, and I didn’t have to tell them anything other than his voting record,” Federer says.
In running for re-election to Congress or the presidency, Gephardt might do well to ask himself whether the majority of voters are more like his father as he remembers him – the worker grateful to the union for his job, or as his brother remembers him – the independent-minded Republican who left a union-controlled job driving a milk truck to become an entrepreneur and sell real estate, and who thought most of the Democratic programs were just an excuse to expand government and raise his taxes.
John Berlau is a writer for Insight magazine.
