KINDER'S COMMENTARY: STATE, U.S. ECONOMY: IT'S A STRUGGLE

Gov. Mel Carnahan is echoing the national Democratic line on the economy that we're hearing out of 1600 Pennsylvania Ave.: Things are booming, and we've nothing to worry about. As Bill Clinton phrased it in his State of the Union address last week: "Our economy is the healthiest it has been in three decades." Well, maybe. Then again, maybe not.

Writes columnist George Melloan, author of a column on the world economy called Global Watch: "Tell it to a young mother I met in Santa Monica the other day who was trying to save up cash for private schools for her two children, the public schools having gone literally to pot.

"Or tell it to all those hourly wage earners who voted Republican for the first time in 1994 because they see their living standards dropping.

"Or tell it to any number of middle managers who have been beached in the prime years of their professional lives because of corporate down-sizing necessitated by cost pressures that public policy inflicts."

Melloan continues: "A harder look at the U.S. economy shows that the recovery of the last four years has been the weakest of recent record, with an average growth rate of only 2.5 percent. The recovery is now losing steam because many consumers have piled up about as much debt as they can handle and have been forced to cut back on credit card purchases. The personal savings rate remains anemic."

Melloan's Global View comments find an echo in new reports on the Show Me State's economy. "Americans fell into a blue funk last month, pinching pennies in their holiday shopping and sending consumer confidence readings plunging to a two-year low," writes an economic writer in the St. Louis Post-Dispatch of Jan. 31. "Tuesday's gloomy reports on confidence and Christmas sales added to evidence that America's economic engine is starting to sputter and wheeze."

The news article notes that customary practice at Christmas time is for retailers to hire extra help to handle the rush of holiday buyers, but that this past year they not only didn't -- they actually cut back payrolls by several hundred jobs. "I've never seen that before," said Missouri labor analyst Randall Clark.

"Every time you pick up the paper, there's another major company announcing a layoff. Some people are wondering, 'Am I going to be next?'" said Russell Signorino of the St. Louis County Economic Council.

Some analysts are saying we're already in a recession or soon to tumble into one. While this remains a minority view, economist John Mueller forecasts a weakening economy in the first six months of the year, which is what we currently are seeing, followed by an actual economic contraction of approximately 2 percent in the second half. Citing a contracting manufacturing sector and job loss in that sector, Mueller notes that the index of leading economic indicators has declined in seven of the last 10 months.

Sounds to me as though the Missouri and American economies could use some good, old-fashioned tax cuts. And no near-beer, either, but the real stuff. That is why it is good to see Republican leaders holding firm on the need for tax cuts on working Americans. House Ways and Means Committee Chairman Bill Archer, R-Texas, this week reiterated the vital importance of a cut in the capital gains tax rate. This is the rate of tax paid by the seller of investments such as real estate or stocks and bonds, at the time they are sold. Owing to the fact this is an optional tax -- the seller pays it when he chooses to sell -- slashing it would unleash huge amounts of pent-up capital for new, job-producing investment. Archer's key committee is the beginning point for all tax legislation in the U.S. Congress.

At the state level, Mel Carnahan is betting voters will shower him with rose petals for his piddling proposal for a measly quarter-cent cut in the sales tax. Having raised taxes by more than $350 million back in 1993, without the vote of the people he had promised, Carnahan, his hand forced by the original Hancock Amendment he opposed back in 1980, is an election-year convert to tax cutting.

Republicans should see his tax cut and raise him. GOP proposals include eliminating the sales tax on food, abolishing the state inheritance tax and repealing the Carnahan income tax hikes of 1993.

November 1996 will belong to those candidates who can persuade voters they are serious about cutting taxes to get our sluggish economy moving again.

~Peter Kinder is the associate publisher of the Southeast Missourian and a state senator from Cape Girardeau.