“Republicans To Wealthy; We Just Can’t Quit You”: Giving Equal Benefits To Everyone Would Be Ridiculous
Any marginally aware citizen is familiar with what I like to call the Four Pillars of Conservatism: low taxes, small government, strong defense, and traditional values. The simplicity and clarity of these ideas allows any Republican anywhere to move into politics with a ready-made ideological program, and as long as they stay abstract, it’s reasonably popular. It’s only when you start to get into specifics that the agenda becomes problematic.
The trick is that if you’re proposing something unpopular, to speak about it in the most abstract terms possible. “Low taxes” sounds great, because who wouldn’t like to pay less in taxes? The trouble is that what Republicans actually want is to cut taxes for the wealthy. They’re perfectly happy to cut taxes for other people if the opportunity presents itself, but the value of tax cuts for the wealthy is an absolutely foundational belief.
They know, however, that most Americans don’t agree. So when they talk about taxes, they’re supposed to be circumspect and careful, answering questions about tax cuts for the wealthy by saying that tax cuts in general are good for everybody. Which is why it’s so surprising when one of them is candid, as House Ways and Means Committee chairman Kevin Brady was in an interview with John Harwood published today.
Brady, who is in charge of tax policy, just comes out and says that Republicans won’t accept any tax reform that doesn’t include reducing the top income tax rate. All that talk of making the tax code simpler is all well and good, but there’s one thing they will absolutely not compromise on, and that’s the top rate, which is currently paid by those making over $415,000 a year:
HARWOOD: Could you envision a tax reform that you could go along with that had many elements that you liked that did not decrease the top rate?
BRADY: That’d be difficult to accept, because I think that holds back investment, both by businesses, small businesses, and by families.
HARWOOD: Because there are some conservatives who are arguing that in the environment that we’re in now, that conservative tax reformers ought to focus on things other than the top rate.
BRADY: I’d have to disagree, and here’s why. Besides businesses investing, when individuals, after they make that dollar, they have three choices. They can spend it, they can save it, which is good as well, but they can reinvest it back in the economy. And earners, not just high earners, all along the scale do that. I want to encourage families and environments to do more of that. And so on that side of the ledger, let’s look at those pro-growth packages.
There’s a rationale here, which is that when you give rich people more money, they’re more likely to invest it, which helps grow the economy over the long run. But conservatives sell this idea not as a long-term way to sustain investment, but as a short-term strategy to bring prosperity to all. This year, every Republican running for president essentially pledged to bring back George W. Bush’s economic policies. There were differences in the details of their plans, but all of them centered on large tax cuts for the wealthy, and all promised that the effects would be spectacular.
But here on Planet Earth, there is zero real-world evidence that large tax cuts for the wealthy super-charge the economy. If it were true, then Bush would have been the most economically successful president in American history. But he was actually one of the worst, and when it comes to job creation, the last two presidents who raised taxes on the wealthy — Bill Clinton and Barack Obama — were among the best. The economy created 22 million jobs while Clinton was president, and Obama is on pace to see around 16 million new jobs created since the trough of the Great Recession in his first months in office (I discussed this at length here — with charts!).
Meanwhile, media coverage continues to suggest that Paul Ryan represents some kind of sober alternative to the presidential candidates. But he has long advocated slashing the top rate from its current 39.6 percent down to 25 percent, which would represent an enormous giveaway to the wealthy (he says it’ll be paid for by “cutting loopholes,” which are never specified). Just a month ago, Ryan was asked whether he might consider a plan that’s “distributionally neutral,” in other words, one that gives equal benefits to every income group. Here’s what Ryan said:
So I do not like the idea of buying into these distributional tables. What you’re talking about is what we call static distribution. It’s a ridiculous notion. What it presumes is life in the economy is some fixed pie, and it’s not going to change. And it’s really up to government to redistribute the slices more equitably. That is not how the world works. That’s not how life works. You can shrink or expand the economy, and what we want to maximize is economic growth and upward mobility so that everybody can get a bigger slice of the pie.
To translate: Giving equal benefits to everyone would be ridiculous. The only way to expand the economy for all is to shower benefits on the rich. But most people don’t quite understand what Ryan is talking about; all they hear is that he wants more pie for everybody. That’s how you’re supposed to talk about taxes.
And this is the key thing to understand: no matter which Republican ends up being the presidential nominee, cutting taxes for the wealthy will be at the absolute top of the agenda. Even Donald Trump, who has been happy to buck Republican orthodoxy on a variety of issues, issued a tax plan the greatest benefits of which went to the wealthy — just like every other candidate.
In this election, just like in every other election, Democrats will charge that Republicans only want to help the rich. It’s an effective attack, mostly because it’s true. Or to be more generous, Republicans want to help everyone, it’s just that they really want to help the rich, and they see helping the rich as the best way to help everyone else. But it’s possible that the Democratic attack could be particularly potent this year in winning over independents and even a few Republicans. The Republican Party has spent the last year in a brutal argument about their own perfidious elites, who supposedly look with scorn on the masses in their party. And after all that, the centerpiece of their economic plans for the future is still cutting taxes at the top.
When a party advocates something that politically dangerous, it isn’t because they’re stupid. It’s because they believe in it, down the marrow of their bones.
By: Paul Waldman, Senior Writer, The American Prospect; Contributor, The Plum Line Blog, The Washington Post, April 12, 2016
“The GOP Needs To Change”: Paul Ryan Just Revealed That The GOP Has Learned Nothing From Its Trump Debacle
Paul Ryan is, at least arguably, the leader of the Republican Party. He was the GOP’s vice-presidential nominee in 2012. He’s now speaker of the House of Representatives. And he remains the party’s unofficial wonk-in-chief.
So what lessons has the savvy, brainy Ryan drawn from the stunning ascent of Donald Trump, as the billionaire (probably) businessman closes in on the Republican presidential nomination?
Maybe none. Certainly none that suggest Ryan thinks the party needs a big change of direction.
In a CNBC interview on Thursday, reporter John Harwood repeatedly probed Ryan on what the rise of Trump means for the future of the GOP. Not only is Trump against many of the GOP’s traditional policy pillars — including free trade, immigration, and entitlement reform — but he is also attracting working-class voters who are equally skeptical of center-right economics as practiced in Washington.
To his great credit, Ryan insisted that he will continue to push for Social Security and Medicare fixes to prevent a future debt crisis. And he still supports the Pacific trade deal, noting that “America should be at the table, writing the rules of the global economy instead of China.”
All good stuff, as far as it goes. But at no point did Ryan acknowledge that the rise of Trumpism possibly signals a Republican agenda inadequate in meeting the anxieties and real struggles of middle- and working-class America. This exchange between Harwood and Ryan about the tax burden is illustrative:
Harwood: “On taxes, when your predecessor as Ways and Means chair, Dave Camp, came out with a comprehensive tax reform a few years ago, he adopted as a principle that it was going to be distributionally neutral. It wasn’t going to give an advantage to any group over the current system. Is that still a principle that you think is appropriate for the Republican tax agenda?”
Ryan: “So I do not like the idea of buying into these distributional tables. What you’re talking about is what we call static distribution. It’s a ridiculous notion. What it presumes is life in the economy is some fixed pie, and it’s not going to change. And it’s really up to government to redistribute the slices more equitably. That is not how the world works. That’s not how life works. You can shrink or expand the economy, and what we want to maximize is economic growth and upward mobility so that everybody can get a bigger slice of the pie.”
Harwood: “And you’re not worried that those blue-collar Republican voters, who are voting in the primaries right now, are going to say, ‘Hey, wait a minute. You’re really taking care of people at the top more than you’re taking care of me.'”
Ryan: “I think most people don’t think, ‘John’s success comes at my expense.’ Or, ‘My success comes at your expense.’ People don’t think like that. People want to know the deck is fair. Bernie Sanders talks about that stuff. That’s not who we are.”
In other words, Republicans should keep deeply cutting taxes for the richest Americans — as part of across-the-board tax cuts — and not give any special preference to targeted or direct middle-class tax relief.
Not only does Ryan’s position clash with the Trumpist truths of 2016 — his position makes little sense from a policy standpoint. Analyses of the tax plans of the various GOP presidential candidates show their deep individual income tax cuts — such as slashing the top rate from 40 percent to 28 percent — would cost the most revenue while producing the least amount of economic growth. That 2014 big-bang tax reform plan by Camp would have likely increased the size of the economy by less than one percent over the next decade. And if you ask Silicon Valley about pro-growth policy, entrepreneurs and venture capitalists are far more likely to mention burdensome regulation than income tax cuts.
Ryan’s professed politics are also dodgy. Most middle-class Americans seem to think they’re already paying their fair share in taxes. And a YouGov finding poll last year found 45 percent of Americans disagreed with the idea that lower taxes on the wealthy creates shared prosperity vs. 29 percent who agreed. Also, fair or not, voters see the GOP as the party of the rich. A recent Pew survey found 62 percent say the GOP favors the wealthy, compared to 26 percent who say it favors the middle class. And recall that in 2012, 81 percent of voters who wanted a president who empathized with them voted for Barack Obama.
The same middle class that does not trust the GOP on trade and immigration is also unlikely to trust them to reform Medicare and Social Security or the tax code. So maybe the GOP ought to listen to the recommendation of National Review editor Reihan Salam and take a break from tax cuts for households making over $250,000 a year. Even better: Use your political capital to formulate a middle-class agenda that acknowledges the challenges as well as the opportunities from globalization and technological change. This might mean expanded tax credits or payroll tax cuts for working-class families. Maybe even broad wage insurance for people who lose their jobs, whether to offshoring or the robots. Social Security reform that improved benefits for those at the bottom. And wouldn’t the GOP be better off if voters thought it was the party obsessed with making higher education a better value for students as opposed to cutting taxes at the top?
The GOP needs to change. If conservative reformers in Washington won’t do it, then populist outsiders like Donald Trump just might.
By: James Pethokoukis, The Week, March 18, 2016
“Basically Impossible”: Chris Christie Promised To Tell It Like It Is. Here’s What That Would Actually Sound Like
In his presidential campaign announcement Tuesday, the reliably brash and blunt Chris Christie vowed that “telling like it is” would be both his campaign motto and his promise to voters.
Even for Christie, whose entire political persona is based on no-nonsense candor, consistently “telling it like it is” is basically impossible. Can you imagine if the New Jersey governor — or any of the other Republican candidates — really told it like it is about the most important issues and challenges facing America? What would that even sound like? Well, maybe something like this:
“…and that’s why I am announcing my candidacy for president of the United States! [Applause.] Thank you! Thank you! Now during my campaign, I’m going to tell it like it is. I’m going to let ‘er rip! [Applause.] Hard truths need to be spoken, and I will speak them.
‘What are these truths?’ you ask. For starters, we Republicans are way too focused on President Obama. Trust me, I’ll have a lot to say during this campaign about the president’s mistakes. Heaven knows, there’s been a lot of them. [Extended applause.] But he’s gone in a year and half. [Extended applause.]
Here’s the thing: The U.S. economy didn’t run into trouble the day Barack Obama took the oath of office. Even before the Great Recession, there were signs something wasn’t quite right. The economy grew by 4 percent annually and created 20 million new jobs during both the Reagan and Clinton booms. But in the [candidate makes air quotes] “Bush boom” of the 2000s, we couldn’t even hit 3 percent growth. And we created only about seven million jobs. Income growth was also a lot slower. I could go on and on. Productivity growth has been terrible during Obama’s Not-So-Great Recovery, but the slowdown started in 2006, when we had a Republican president. We’ve had problems with jobless recoveries and middle-income job lag since the early 1990s. Heck, the new business startup rate in this country has been falling for 30 years!
You can’t blame ObamaCare or Dodd Frank for all that. [Confused murmurs from audience.] The truth is technological automation and global competition are presenting new challenges to American workers. To meet those challenges and to turn them into opportunities means embracing new approaches, not recycling old ones. Certainly tax reform is part of the answer. I mean, we’re Republicans after all. Tax cuts are what we do. But you have to be savvy about cutting taxes when you’re already $18 trillion in the red. You need to pick your spots and get the most bang for your buck, like tax cuts and credits that boost working-class incomes — a rising tide is not lifting all boats right now — and spur business investment.
You want to do deep, across-the-board tax cuts like President Reagan did? Fine. God bless you. But keep in mind that for every percentage point you cut from those tax rates, you lose about $70 billion a year in revenue. And don’t expect to make up anywhere near that in economic growth. Even the Reagan tax cuts lost money, and the tax code was in far worse shape back then. [Unintelligible shouts from audience.] Heck, 40 percent of Americans don’t even pay income taxes.
Oh, and while we’re thinking about tax reform, keep in mind the federal tax burden will almost certainly need to rise in the future because we’ll have a lot more old folks. [Booing.] And we’ll have to pay for their pensions and healthcare. Smart entitlement and healthcare reform can reduce that tax increase — in that way it’s like a future tax cut — but it’s highly unlikely to eliminate it. Democrats need to accept that projected future benefits will need reduction, and Republicans need to accept a higher tax burden. [Extended booing.] Republicans should also be in favor of spending less money on rich people through tax breaks for homes and health insurance. [Several fist-shaking audience members stomp out.]
There’s just too much short-term thinking in this country. I mean, I’m no scientist, but we are doing something new to our planet and it hardly seems crazy to take out some insurance against a worst-case outcome. [Boos continue, get louder.] Let’s invest more in basic clean-energy research and remove regulatory barriers to more nuclear power. Maybe also eliminate the corporate income tax and replace it with a carbon tax. I note that even my friends on the Wall Street Journal editorial page said the other day that might be a good idea. And let’s not let Corporate America off the hook here. Too much short-termism there, as well, not just in Washington. Too much cash being returned to investors rather than going to fund new investment and innovation.
Now turning to foreign policy… Wait, where did everybody go?”
By: James Pethokoulis, The Week, July 2, 2015
“A Contest Of Anti-Tax Purity”: The Fight For The Soul Of The Republican Party Is Over: The Rich Won Again
It was just eight months ago that a New York Times Magazine profile giddily described the rise of “a small band of reform conservatives, sometimes called reformicons, who believe the health of the G.O.P. hinges on jettisoning its age-old doctrine — orgiastic tax-cutting, the slashing of government programs, the championing of Wall Street — and using an altogether different vocabulary, backed by specific proposals, that will reconnect the party to middle-class and low-income voters.”
After the Republican Party had turned itself into a machine committed relentlessly to the singular goal of cutting taxes for the rich, the reformicons seemed to be poised to take control of the party’s intellectual apparatus.
The reformicons always assumed they could bypass Congress and focus all their attention on developing an innovative platform for a presidential candidate. (This was a shaky plan to begin with, as a prospective Republican president would need to sign something passed by Congress.) But as the Republican candidates have formulated their early platforms, the party’s center of gravity, rather than jettisoning its hoary policy of orgiastic tax-cutting, has instead continued and even deepened its fervor.
The Republican Party’s determination to cut taxes for the rich was never rooted in electoral calculation. (Indeed, this has always been a handicap for the party to overcome.) It arose from the fact that extremely powerful forces within the party, including but not limited to its funders, believed in it as a matter of ideology as well as self-interest. The plutocrats initially held back in the face of the reformicon movement, perhaps unaccustomed to facing any challenge within the party, which for decades has treated their doctrine as holy writ revealed to the world by Reagan himself.
They were never going to yield control of the party without a fight. The disintegration of campaign-finance restrictions has given the funding class greater leverage over the nomination, and as the presidential field has formed its domestic-policy platforms, its influence has been evident. Jeb Bush is wooing the fanatically anti-tax Club for Growth. Scott Walker has firmly allied himself with the party’s most unreconstructed supply-siders. Rand Paul is promising “the largest tax cut in American history.” Ted Cruz is, well, Ted Cruz. The Republican primary has turned into a contest of anti-tax purity. “We’ve got maybe an embarrassment of riches here in that we’ve never been able to support somebody before, and now we may get overwhelmed with people we think are worthy of support,” gloats recently departed Club for Growth president Chris Chocola.
Nowhere is the triumph of the supply-siders more evident than in the progress of Marco Rubio and Mike Lee. Rubio and Lee are the paradigmatic spokesmen for the reformicon platform — Lee as an ideas pitchman, Rubio as a candidate.
Last year, Rubio and Lee unveiled a tax-reform plan that their allies touted as a manifesto of reform conservatism, positioning the Republican Party on the side of hard-press working families rather than the rich. Lee’s plan “actually help[s] middle-class families rather than mostly cut taxes on the investor class,” gushed Ross Douthat, one of the most fervent and optimistic advocates of the reform-conservative faction.
Eventually, the Tax Policy Center crunched the numbers on Lee’s plan and found that it did nothing of the sort. Its provisions to benefit hard-pressed low-income workers turned out to be wildly oversold. Brookings economist Isabel Sawhill concluded, “very few if any low income families with children would benefit from the plan.” And, far from being the “tax reform” it claimed to be, Rubio and Lee had merely constructed a gigantic tax-cut plan that would reduce federal revenue by $2.4 trillion over a decade, a larger tax cut than George W. Bush passed in 2001. What’s more, the Lee-Rubio plan lavished far more benefits on the rich. The average earner in the lowest income quintile would save on average $79 a year, or 0.5 percent of her income, from the plan. An earner in the second-lowest quintile, the heart of the working class, would save $338 a year, or one percent of her income. The top one percent earner would see its income boosted by 2.8 percent on average, or more than $40,000 a year. The plan was simply a reprise of Bush-era debt-financed regressive tax cuts.
Reform conservatives took the setback in stride. Perhaps this was just an oversight or a mild computational error. Douthat hopefully suggested that Rubio and Lee would take a second pass at the issue and rectify the problem:
The liberal response to the Lee plan’s disappointing score, from Chait and others, has been to suggest that it illustrates the continuing unrealism of G.O.P. proposals. But notably, Lee himself didn’t respond by, say, denouncing TPC and insisting that some version of dynamic scoring would make the deficit numbers come out right; he responded by announcing that he was partnering with Marco Rubio (cough, 2016, cough) to develop a revised family-friendly proposal.
And, indeed, Rubio and Lee have come out with a revised version of their plan. But it didn’t get better. It got much, much, much worse. The new Rubio-Lee plan keeps most of its old structure, with its stingy treatment of low-income workers. It layers on top of that two changes: a far more generous treatment of business income, and a complete elimination of all taxes on capital gains and dividends. [Update: The plan would also, unbelievably, completely eliminate the tax on inherited estates, which for a married couple only begins to apply to inheritances above $10 million.] Both of these new features would lavish massive additional tax cuts on the rich, in addition to those already in the original version. The new Rubio-Lee plan would surpass anything George W. Bush or Mitt Romney ever proposed to do in its ambitions to relieve the richest Americans of their tax burdens.
Perhaps the fullest measure of the supply-siders’ triumph can be seen in the acquiescence of many of the reformicons themselves. Ramesh Ponnuru and Yuval Levin, both reform conservatives featured prominently in the Times story, responded to the new Lee-Rubio plan with fawning praise. James Pethokoukis, a reformist conservative, calls the plan “a big step toward persuading middle-income America that Republicans care about more than just the richest 1 percent.” (If this is a big step toward persuading America that Republicans care about more than the rich, what would the next step be? Legalizing servant-flogging?)
Perhaps the reform conservatives have capitulated completely in the name of party unity. Or maybe they were misunderstood from the beginning and never proposed to deviate in any substantive way from the traditional platform of massively regressive, debt-financed tax-cutting. Either way, the movement has, for now, accomplished less than nothing.
By: Jonathan Chait, Daily Intelligencer, New York Magazine, March 5, 2015
“A House Divided”: Its Pretty Hard To Actually Govern In A System Designed To Require Compromise
The plan was to force President Obama to either sign a bill repealing his executive actions on immigration or veto it and shut down the Department of Homeland Security. But things didn’t work out that way.
Senator McConnell couldn’t get the 6/7 Democratic votes he needed to pass a bill that paired funding for DHS to repealing the President’s immigration actions and Speaker Boehner was unwilling to pass a stand-alone funding bill with primarily Democratic votes. So we got a one week reprieve before we do this all over again.
The good news is that we found out that neither Republican leader is willing to follow through with their threats to blow up hostages in order to force Democrats to give them what they want. So at some point, they’ll pass a bill that funds DHS.
After the Republicans gained control of the Senate and increased their margins in the House in the November elections, both Mr. Boehner and Senator Mitch McConnell of Kentucky, the majority leader, promised to reverse Congress’s pattern of hurtling from crisis to crisis, even over matters like appropriations that were once relatively routine.
But in their first big test, the Republican leaders often seemed to be working from different playbooks, at times verging on hostility, with each saying it was time for the other chamber to act.
The funding stalemate bodes poorly for any larger policy accomplishments this year, leaving lawmakers pessimistic that the 114th Congress will be able to work in a bipartisan fashion on more complicated issues.
The Office of Management and Budget has said that a vote to increase the nation’s debt limit will be necessary by mid- to late summer, and lawmakers were also hoping to take up trade policy, as well as at least a modest overhaul of the nation’s tax code — undertakings that now look increasingly imperiled.
When you’ve spent the last six years convincing your base that your opponent is a tyrant who is out to destroy the country and that his party’s agenda is the tool by which he will do that, its pretty hard to actually govern in a system that is designed to require compromise.
I wouldn’t say that any of that is a big surprise to those of us who have been paying attention. But what is surprising – and will be worth paying attention to over the next few months – is the apparent hostility between McConnell and Boehner. I don’t think anyone saw that coming. But it does suggest that there is more than one fault line in this divided house.
By: Nancy LeTourneau, Political Animal Blog, The Washington Monthly, February 28, 2015
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