B.E. 100s How to Prosper in the Second Bush Age.

As we face the hard realities of the new presidency and a slowing economy, our economists address your concerns about taxes, education, and affirmative action 

IN THE DAYS IMMEDIATELY FOLLOWING THE U.S. SUPREME Court decision that transformed George W. Bush from governor of Texas to leader of the Free World, the president-elect appeared to often have that deer-caught-in-the-headlights look in his eyes. "You actually took me seriously?" his face seemed to say. But there you have it. After one of the longest and most bizarre political battles, which some say he fought to avenge his father's loss to Bill Clinton in 1992, the country has its president and payback is a Bush.

Now the hard part begins, and, surprisingly, George II is more up to it than many predicted. It was a shaky start, though, with black voters feeling disenfranchised following the Florida fiasco. Then Bush stood by his man, John Ashcroft, supporting him in his fight to become the U.S. attorney general. But when it was time to create a Cabinet and fill some very high-level positions, Bush proved that he could see a rainbow, too.

He appears to be taking cues from both his father's and Bill Clinton's administrations. From the latter, he is learning the art of triangulation, in this case putting a Republican spin on liberal issues. And when he says he will give the nation a tax cut, he means it, with no intention of repeating his father's politically fatal mistake. Read his lips.

A few months ago, the BLACK ENTERPRISE Board of Economists got together at the New York offices of Earl G. Graves Publishing Co. Inc. to discuss the issues that readers say concern them regarding the new president and his policies. This meeting of the Board was precedent setting in ways beyond being the first of the second "Bush Age."

For the first time, the economists met in accordance with a new round-robin format. Due to the sheer size of the Board--now a dozen of the nation's top black economists (in the words of BLACK ENTERPRISE Editor in Chief Alfred Edmond Jr., "an embarrassment of riches")--the number of economists at each of the semiannual meetings will be limited to eight The goal is to have tighter, more focused sessions, with the expertise and specialties of the invited economists matched to the topics to be covered in any given meeting. Present at this gathering of the Board, chaired by Earl G. Graves Publishing Co. President Earl G. "Butch" Graves Jr., were Dr. Andrew Brimmer of Brimmer & Co. Inc. in Washington, D.C.; Dr. Thomas D. Boston of the Ivan Allen College of Economics at the Georgia Institute of Technology in Atlanta; Dr. Margaret Simms of the Washington, D.C.-based Joint Center for Political Studies; Dr. Gerald D. Jaynes of Yale University; Dr. Jessica Gordon Nembhard of the Institute of Urban Research at Morgan State University in Baltimore; Dr. Darrell L. Williams of Economic Analysis L.L.C. in Los Angeles; and, returning to the Board after a stint as assistant labor secretary in the Clinton administration, Dr. Bernard Anderson, now of Philadelphia's Wharton School of Business at the University of Pennsylvania.

Look to hear from Northwestern University's Dr. Marcus Alexis, Pomona College's Dr. Cecilia A. Conrad, South Carolina State University's Dr. Lucy Reuben, Benedict College's Dr. David Swinton, and the National Urban League's William Spriggs, director of research and public policy, at future meetings of the Board.

The second major distinction of this meeting was the presence of another special guest, one more important than any of the other participants: you, the BE reader. You determined the agenda for this meeting by responding to our call for questions--posted on our Website, www.blackenterprise.com--to be posed to our Board of Economists on the issues African Americans will face under a new president and in a slowing economy. Nearly all of your questions focused on three distinct areas: the Bush tax cut proposal, the promise of school choices and the potential role of school vouchers, and the uncertain future of affirmative action.

Here's what our economists had to say:

What effect will the proposed tax cut have on African Americans' bottom lines?

"Tax relief for America's families." "Lower income taxes for all, with help for those most in need." That's the spin Republicans put on the Bush tax plan, and they're sticking to it. If Bush is successful, the current five-rate tax structure will be replaced with four tiers at lower rates--10%, 15%, 25%, and 33%. The lower the marginal rate, the greater the incentive to find a better job, save for the future, or start a new business, says Bush. In addition, the child tax credit will be doubled to $1,000, and the marriage penalty will be reduced by reinstating the 10% deduction for two-income couples. Another critical highlight includes a repeal of the estate tax, which Bush says will allow family farms and businesses to be passed down without forcing heirs to break up Or sell assets. So far, the Republican-controlled House is in lockstep with the White House. The more evenly divided Senate, however, is saying not so fast.

Clearly those who earn the most will also benefit the most from Bush's plan, and that includes some African Americans. A childless single person, earning $40,000 to $60,000, can expect a break of approximately $300 to $600, and a single parent in the $20,000 range will not benefit at all because of the earned income tax credit. But the biggest impact on African Americans is not apparent in these figures, says Dr. Andrew Brimmer, but in what he calls their secondary consequences.

And therein lies the rub.

How will the tax cut be financed? What must be cut to pay for it? Is the sacrifice of much-needed housing, health, and social-welfare programs and services worth a few hundred extra bucks a year?

Look at Bush's tax proposal as part of the president's overall budget plan, advises Dr. Bernard Anderson. Using a campaign-style approach to bolster support across the nation, Bush uses words like "sputter" and "doldrums" to describe the nation's ailing economy. Critics have accused him of painting a gloomy scenario to justify his proposal. But to pay for these cuts, warns Dr. Thomas D. Boston, Bush will probably also need to cut spending in healthcare ("something you don't hear a lot about anymore") and other areas of concern to African Americans. "The economy is slowing down, so the amount of revenue coming in to the government will be significantly cut back," explains Boston. "So, in reality, there won't be enough money in the budget to pay for both the tax cut and the healthcare program that Bush advocated during the presidential campaign. I would also anticipate he won't be able to maintain a commitment to keeping Social Security sound."

The Board of Economists also believes that repealing the estate tax will be of no benefit, and might even be harmful to the vast majority of blacks. "One way past racism shows up is in wealth passed from generation to generation," says Dr. Darrell L. Williams. "The children of people who benefited from earning a lot of money when we didn't have an opportunity to do so continue to have an advantage over our children. Enabling them to maintain that advantage doesn't help us or put us on an even playing ground."

Recommendation: "Remember that the key question is, How will the tax cut be paid for and what may be sacrificed to do so? When people say, `Well, Mr. President, how can you make a commitment to this $1.6 trillion tax cut and, at the same time, hold to your commitment to domestic programs?' that's when we will see some substantial backtracking," predicts Boston.

How will vouchers impact the quality of our children's educations?

Education is one issue that Bush and the black community can agree on. A study conducted by the Joint Center for Political and Economic Studies shows that it is a top priority for African Americans and that a majority support school choice.

During the presidential campaign, education vouchers were a centerpiece of Bush's education platform. Lately, though? Not so much. However, his education secretary, Roderick Paige, an African American who was Houston's school superintendent before coming to Washington, is an avid supporter of vouchers.

Co-opting "no child left behind" as its slogan, the Bush education agenda now focuses on a $5 billion Reading First initiative; increasing accountability by rewarding schools whose students' test scores have improved and sanctioning those where they have not; empowering parents; and improving teacher quality. The president also talks about "expanding parental choice" by allowing children in failing schools to move to better schools, and increasing the number of charter schools. In Washington, D.C., ads depicting black low-income parents touting the benefits of school choice air regularly, but numbers are never mentioned. There's a good reason. A private, parochial, or special needs school education in the nation's capital costs an average of $38,000 from grade school to high school, an amount far beyond the reach of the parents in the ads.

According to Paige, vouchers are still an important part of the Bush agenda. Members of Congress, on the other hand, are less than enthusiastic about the idea.

If you are shopping around for an alternative to your local public school and hoping a voucher program will help pay for it, "buyer beware" is Dr. Margaret Simms' advice. Parents would receive an estimated $1,500, which is less than the average cost of a year at a parochial school. Thinking about private school? Think again. Private school tuition can range from several thousand dollars to more than $20,000 a year. But more important, says Simms, "resources will be withdrawn from [the public] schools that are most in need of it."

The federal government contributes only approximately 7% of the cost of public education. The bulk of funds used to support public schools comes from the states. "The federal government has traditionally used that money as leverage to get states and localities to pay attention to special problems," says Simms. Simms believes that without this leverage, it is the programs designed to help students who are physically, mentally, linguistically, or otherwise challenged that will suffer.

Bush's insistence on standardized testing to rate a school's performance is also troubling. "What you end up doing is punishing students because the teachers were not good or they did not have enough resources, as opposed to actually helping them gain the proficiencies," says Dr. Jessica Gordon Nembhard. "The bottom line is with the states, but I think we should expect some kind of federal leadership."

Recommendation: "I would urge African Americans to turn more of their attention and political capital toward influencing what their state legislatures and governors do with respect to public school funding instead of focusing on what the Education Department in Washington will do," Anderson counsels. Like politics, education is local.

What can we expect from the Justice Department under Attorney General John Ashcroft?

The controversy clouding his nomination must have caused John Ashcroft a sweaty moment or two of insecurity as he defended himself against charges of racism. But thanks to Bush's unwavering support and a large dose of pressure from the right, he now heads up the Justice Department. Since then he has both surprised and delighted some in the black community by naming African Americans to two of his department's most senior posts.

It's a setup, our Board of Economists agrees. The Republican Party has got its eye on a very specific prize and it's the Supreme Court. "They want to buy time and don't want the fight [over affirmative action] at this point," Anderson explains.

"Affirmative action is not going to be a high priority," says Dr. Gerald D. Jaynes. "There won't be any attempt to abort the system in areas like federal contract compliance, but it isn't likely to have the teeth we have come to expect in the last eight years." Bush has asked Ashcroff to look at racial profiling and find a way to end it, but will the department sit on the sidelines when other important issues come up?

"If Justice (under Janet Reno) had not been involved, affirmative action at the federal level would not exist," says Boston. "But it stepped in, along with Commerce, and looked at ways [it] could address new guidelines and joined defendants in a number of cases around the country." It is not likely that it will do so under Ashcroff.

As Brimmer points out, "The real gatekeeper is the federal court judge. That's where the real tests are being carried out, day to day." Unfortunately, a number of Reagan and Bush I appointees are holding the key.

Recommendation: Keep your eye not only on what Ashcroft does but also on what he does not do, says Williams. Expect the Bush II administration to assume a posture of not-so-benign neglect when it comes to affirmative action.

Janice Sibley-Reid

Should African Americans embrace the Bush tax plan?

Wait and see. That's the stance Janice Sibley-Reid has taken when considering President Bush's tax package. Sibley-Reid, age 41, and her mother, Shirley, own the Hair Gallery, an upscale salon in Houston. It is a business her mother started close to 25 years ago, and then turned into a family affair when her children expressed an interest in joining her in the business. For the past 17 years, Sibley-Reid's sister, Yvonne, and brother, Allen, have also worked at the salon.

"Bush's proposals sound great, but they have not been implemented yet," says Sibley-Reid. "If they are implemented, it will be great for the average person and small businesses. If he drops the tax rate, the average person will be able to keep more of their money." She believes that any amount saved will be helpful, particularly to average-income earners. "That little bit may be the bit that helps them get over," or avoid, a financial difficulty, says Sibley-Reid. "In essence, what I think he's trying to do is put more money back into Americans' pockets so they'll spend more. If they spend more, that will fuel the economy."

As a business owner, she is particularly interested in Bush's proposal to repeal the estate tax. However, it may be difficult for Sibley-Reid and her husband--and impossible for the vast majority of other African Americans--to reach the lofty bar necessary to take advantage of this proposed tax cut. An estate worth less than $600,000 is not taxed, says economist Bernard Anderson. Taxes escalate very quickly, however, for estates valued at $2 million or more. Such estates are rare among African Americans, who have an average net worth of less than $5,000.

Sibley-Reid and her husband, Omar Reid, a supervisor for UPS, do not know if their daughter, Briana, now 5, will follow in her mother's footsteps. "We're setting up the business to be passed on and to continue to survive and thrive even if Briana doesn't work here," says Sibley-Reid. She hopes her family's years of hard work will not be lost to the taxman. "Right now, we're in a wait-and-see mode. If it doesn't pan out, we've dealt with the tax situation the way it has been, and we'll continue to operate in that mode."

James and Wendy Keyes

Can school choice result in better schools for our children?

During the many years they have been married, James and Wendy Keyes, both 40, have agreed on just about everything regarding their six children. But when it comes to education, they are somewhat at odds. James, who works as a database supervisor for NBC-TV in New York, believes that taxpayers ought to take advantage of the services they're paying for. Before buying their home, he researched several school systems before settling on Union, New Jersey, purportedly one of the state's best.

Wendy, however, is not so sure the system is equipped to deal with her children's individual needs. JaNee, 10; James Jr., 9; JaVonne, 7; JaNique, 5; Ja-El, 4; and JaLene, 1, each approach learning in their own unique way. So, when a friend introduced her to a school choice group called Excellent Education for Everyone (E3), she was all ears--and eyes.

In March, Wendy and other members of E3 went to Milwaukee to look at how that city has handled school reform. "I got an opportunity to hear from both sides," says Wendy, who visited private, public, and faith-based schools. "I was kind of sad," she says, having seen resource-filled classrooms. "Union has the title of the model school system; it received a presidential award, which to me meant it was an ideal school system, and that's why we moved to Union. I was really quite shocked when I went to Milwaukee and saw how all the schools there have exposed the children to technology.

"E3 is very excited about Bush's education proposals and thinks the administration will provide fertile ground for its whole concept because he is for school choice," says Wendy.

As a homemaker Wendy does not contribute to the family's income, so private school has not been an option. As Baptists, the family is also not interested in parochial school.

James is grateful his wife has both the time and energy to devote to making sure children in Union get the best education possible. "If you're paying taxes and paying private school tuition, how much money are you going to be able to put away for college?" he asks. "We can make this [public school] system work for us, and that's what we're going to have to do."

Erika Dowdell

Will the Bush administration eliminate affirmative action as we know it?

Erika Dowdell, a 20-year-old history major at the University of Michigan at Ann Arbor, is a bright and articulate young woman. As a high school student, she participated in the battle to continue a race-conscious admissions system at the university, and continues to be active in the case. In March, the University of Michigan's law school suffered a blow when a federal judge in Detroit ruled that its affirmative action policy is unconstitutional. Dowdell, who hopes to attend the law school, has also been active in that fight.

Dowdell earned top grades at Detroit's best high school and did well on her college entrance exam. This was achieved despite a woeful lack of books and an adequate teaching staff. In addition, the city's high schools are largely segregated. And it is this lack of resources that spurs Dowdell on in her cause.

She could have gone to other schools with full academic scholarships, but Dowdell says she made a conscious decision to attend U. of M. "We encounter a lot of racism here because most of the high schools in Michigan are segregated," she says.

And so she stays and continues to fight. "In his decision, [U.S. District] Judge [Bernard A.] Friedman acknowledged that racism and segregation still exist in society, and to say there's nothing we can do about that is unprincipled," she says with disgust.

Despite her fierce commitment to this cause, Dowdell holds no illusions about what side the Bush administration is on. Neither Bush nor his attorney general, John Ashcroft, made any public comments following the law school's defeat in court. "I don't think that the Bush administration will actively try to preserve affirmative action and there may be more attacks under this administration," she says. Dowdell believes Bush will follow the example set by his brother, Gov. Jeb Bush, in Florida. "It's very frustrating, but we have to keep educating people on the truth about affirmative action. If I could speak to Bush or Ashcroft, I'd tell them that the attacks on affirmative action are unfair because they deny blacks and other minorities access to education, and that needs to be stopped."