Devil in the Details

A Redder Senate in '06?

After the pummeling they took on November 2, Democrats consoled themselves by thinking that history will be on their side in 2006. After all, midterm elections normally spell congressional gains for the party out of power in the White House. Sure, that axiom didn't apply in 2002, or in 1998 … but it's a rule, damn it, and Dems clung to it as the election-night horror show unfolded before their eyes.

On the Senate side, however, the makeup of the actual seats in play in two years gives Dems little cause for hope. Looking at the 17 Democratic and 15 Republican seats up in the '06 cycle, one is hard-pressed to find a plausible way for Dems to reach a net gain of six -- enough to take back power. “I don't think they have a great chance to take back the majority” in two years, says Jennifer Duffy, managing editor and political analyst for The Cook Political Report. Indeed, just maintaining the status quo won't be a walk in the park.

Granted, the terrain will be friendlier to Dems than it was this year, when the party had to defend a slew of open seats in red states. In '06, Dems won't likely be on the defensive as much; they just won't have many opportunities to go on the offensive, either. Of the 17 Democratic incumbents up for re-election in two years, four face real Republican challenges: Mark Dayton of Minnesota, Maria Cantwell of Washington, and, as Duffy likes to call them, “the Nelsons -- Ben and Bill,” of Nebraska and Florida, respectively.

Among the 15 GOP incumbents, it's tough to name a single particularly vulnerable candidate residing in a red state. Of the three blue-state Republicans -- Lincoln Chafee of Rhode Island, Olympia Snowe of Maine, and Rick Santorum of Pennsylvania -- only Mr. Man-On-Dog seems potentially ripe for picking off.

Given the stable playing field, the “key in the '06 cycle is retirements,” says Duffy. That might not work to the Dems' advantage, though. The one certain retirement, Bill Frist's in Tennessee, will definitely present an opportunity for them. But six Dems up for re-election in '06 will be more than 70 years old, and several more will be getting close. While the granddaddy of them all, West Virginia's Robert Byrd (currently 87), has made it clear he plans to run for re-election, according to Duffy, the prospect of remaining in the minority for at least several more years may weigh on the minds of some of the others. “I'm wondering if that impacts someone like [New Mexico's Jeff] Bingaman or [California's Diane] Feinstein,” says Duffy. “Will they sign up for another six years knowing that there probably aren't committee chairmanships in their future?”

The biggest fear of all is that if, as seems likely, the Democrats remain in the minority through at least 2008, more and more senators will come to share that same thought and start thinking of alternative routes to power and stature. The current spectacle of two Democratic senators simultaneously considering gubernatorial bids -- Jon Corzine in New Jersey and Chris Dodd in Connecticut -- is hardly a good omen. As our prez might say, pessimism never created a Senate majority.

-- Sam Rosenfeld

Sales-Tax Scam

Basking in the glow of his first actual presidential victory, President Bush held a November 4 press conference in which he claimed a broad mandate for big-time “tax reform,” the details -- or even broad outlines -- of which he spelled out neither on the campaign trail nor at the post-election media event. House Speaker Dennis Hastert, however, has spoken of his fondness for the idea of replacing the income tax with a single national sales tax. Vice President Dick Cheney, according to press reports, also likes the idea.

The closest thing to a concrete proposal for such a tax that we have on the table is HR 25, co-sponsored by several House Republicans, which aims to finance the federal government on the basis of what it calls a “23-percent sales tax.” This is not, however, a 23-percent sales tax as the term is generally understood; this is adding a $23 tax to an item that costs $100 before tax. Instead, the item would cost $130, with the 23-percent figure arrived at by the unorthodox method of dividing $30 (the amount of tax) by $130 (the after-tax price) and getting 23 percent. So 23 percent means 30 percent.

Even that rate is arrived at only by assuming that the tax base would be extraordinarily broad, with no exemptions for the purchase of any sort of goods. Of course, the current income tax could be lower were it not for the political pressure to exempt mortgage costs and health care, along with a whole raft of special-interest loopholes that have popped up in the legislative process. Why shifting to a sales tax would eliminate such pressures is something on which its advocates remain studiously mute. If a sales tax did get rid of these kind of exemptions, though, eliminating the one for health-care costs would cause an estimated 6 million to 14 million individuals to lose their health insurance. Families with children that currently receive significant help -- child credits, education credits, dependent deductions, and so forth -- would lose all that and likely find themselves overburdened.

Worse, the 23-percent “estimate” takes no account of the fact that some taxation would doubtless be evaded. Under the current system, income-tax evasion stands at around 15 percent. But as the Brookings Institution's William G. Gale points out, this breaks down into a 5-percent rate for income that is withheld and reported by employers, and a 50-percent rate for non-withholding employers. Under the sales-tax system, merchants could evade the tax by not reporting the sale -- so all revenue would resemble non-withheld income and possibly be subject to a correspondingly high rate of evasion. In fact, governments around the world have historically found that rates higher than 12 percent produce so much evasion as to be useless and unenforceable.

On the other hand, the very wealthy people who currently suffer the indignities of progressive taxation would not only be freed from that burden but would also see any money they plow into investments go untaxed. Thus, absent a major market crash, wealth would beget more wealth with even less impediment than under the current system. Problems aside, that may give the president all the reason he needs to learn to love the sales tax.

-- Matthew Yglesias

Top of the World, Ma

Love it or hate it, the World Bank is one of the most influential forces in fighting poverty. Led by James Wolfensohn, the bank provided $20.1 billion for projects in developing countries this year and currently employs 9,300 people.

“It's like a gigantic ship,” says Nancy Birdsall, president of the Washington-based Center for Global Development. “It's very hard to turn it, but once it gets turned, it makes a very big difference.”

The ship may soon have a new skipper. President Bush will appoint a new World Bank president in 2005, and it's known that Bush would like to make a change if for no other reason than his bias against retaining anyone appointed by Bill Clinton. But Wolfensohn is fighting hard to keep his post.

Officially, Wolfensohn “remains focused on the agenda we have in front of us,” says World Bank spokesman Damian Milverton. In November, he traveled to Kazakhstan and India. Wolfensohn's hero is former World Bank President Robert McNamara, who turned the institution around by giving “impassioned speeches and cranking out anti-poverty rhetoric” during his tenure from 1968 to 1981, says Sebastian Mallaby, author of The World's Banker. Wolfensohn, appointed by Clinton in 1995 and now reaching the end of his second five-year term, admired McNamara's approach. During his own presidency, Wolfensohn has moved many of the World Bank's employees from the Washington headquarters into offices in developing countries and started anti-corruption programs in 100 nations.

In Mallaby's assessment, Wolfensohn has no intention of giving up his post. The onetime head of Carnegie Hall would like to serve the same amount of time (13 years) that McNamara did. “He'll say, ‘Look, I've got a lot of support in European capitals,'” Mallaby explains. “Further, he'll sweeten the deal by saying, ‘I'll only serve half a term.'”

If he loses, there's another McNamara in the making: Colin Powell, who's been mentioned as a possible successor. Other names currently floating include mega-broker Charles Schwab; John Taylor, the Treasury Department's undersecretary for international affairs; and trade negotiator Robert Zoellick.

-- Tara McKelvey

Uno, Dos, Tres …

Oh, those exit polls! Stoking Democratic expectations in the afternoon and early evening of election day, only to have them come crashing down as the actual votes came in. Now those polls have been adjusted to more closely reflect the actual vote. And they're still all wet.

At least they are when it comes to the Latino vote. If you believe the National Election Pool's (NEP) exit poll, Bush's support among Latinos leaped from 35 percent in 2000 to 44 percent this November -- just about the biggest gain in any demographic that the president registered. Problem is, the poll's national figure is contradicted by its numbers in the individual states.

Political analyst Steve Sailer has done a yeoman's job of matching the national and state totals in the NEP's polls. For instance, the NEP's national poll breaks down the vote into regions, concluding that 64 percent of Latinos voted for Bush in the South. The NEP releases state figures only where Latinos are a large enough share of the electorate to get a big enough sample, and in the South, it has figures for four states: In Texas, if we're to believe its numbers, Bush won 59 percent Latino support; in Florida, 56 percent; in Georgia, 56 percent; in Oklahoma, 74 percent. Texas and Florida alone account for 80 percent of the Latino vote in the South. And because the NEP does report the share of the electorate that Latinos constituted in each state, we know that 253,000 Latinos voted in the other 10 states that comprise the South in the NEP's regional designations. And in order for Bush to have won 64-percent support in the South as a whole, he needed to win 480,000 of those 253,000 votes. The same kind of discrepancies, Sailer demonstrates, exist in the other regions as well.

In short, if you believe Bush really won 44 percent of the Latino vote, we've got a bridge over the Rio Grande we'd love to sell you.

-- Harold Meyerson

While You Were Sleeping

November was a bad month for schadenfreude. For two weeks in October, it looked like the most maddening man in America was destined for a humiliating fall from power. Blue America was all but squealing in anticipation. But when November broke, there he was on the television: those same smug eyes, that unreflecting and unrepentant smirk. The abyss hadn't opened up after all.

Bill O'Reilly had survived.

You couldn't have missed news of his sexual-harassment suit, although you may well not have noticed its settlement. First, though, let's recap the case (it's simply too delightful not to). On October 13, the day of the final presidential debate, the 55-year-old O'Reilly was sued by an O'Reilly Factor associate producer, Andrea Mackris, for allegedly harassing her over a two-year period, eventually (allegedly, allegedly) conducting phone sex with her against her wishes. We can't print the most salacious details, but let's just say that the phrase “plaintiff was repulsed” appears many times in her complaint. Audiotapes involving “loofahs,” “falafel,” “the little short brown woman,” and other obscure objects of desire seemed about to reach the public ear.

But it was not to be. O'Reilly, who had countersued, and Mackris settled both suits on October 28, while the nation's attention was focused entirely on the presidential election. The reportedly $2 million to $10 million settlement seemed to verify that the tapes existed, but the terms of the settlement prevent either party from discussing any aspect of the suits. It seems at this moment that the world will never hear the married author of The O'Reilly Factor for Kids: A Survival Guide for America's Families discuss what he wanted to do to his 33-year-old producer in a Caribbean shower.

-- Jeffrey Dubner

Brave New Words

MORE QUALIFIED More rigidly right-wing, as in Dr. James Dobson's remark that there are many Republican senators who are “more qualified” than Arlen Specter to chair the Senate Judiciary Committee

HAS BEEN ACHIEVED Has gotten worse. Outgoing Attorney General John Ashcroft explained in his resignation letter that it was time to go because “the objective of securing the safety of Americans from crime and terror has been achieved.”

SOFT LEAKERS Career intelligence professionals with a conscience who have gotten on the bad side of new CIA chief Porter Goss and are being purged