Republicans, taxes, and poverty

Really interesting Tom Edsall piece on Republicans challenging the party status quo on tax rates and how best to help Americans:

Senator Mike Lee of Utah, a Tea Party favorite, is worried about economic unfairness. Here he is, arguing for what he calls a “conservative reform agenda”:

Today, the United States is beset by a crisis in inequality. It’s not a crisis of unequal wealth or income, exactly – it’s a crisis of unequal opportunity. We see it up and down American society. The underprivileged are trapped in poverty, sometimes for generations. The middle class is caught on a treadmill, running harder every year just to maintain the economic security and social cohesion that were once taken for granted.

Lee’s commentary reflects a break with conservative orthodoxy by one faction on the right, even as it remains consonant with a populist critique of elites:

At the top of our society, we find political and economic elite increasingly exempted and insulated by law from the rigors of competition and the consequences of their own mistakes.

Note that line about “the rigors of competition.” Lee and others of like mind are shifting the focus of populist anger from liberal elites to economic elites. They are challenging Democratic domination of issues like wage stagnation, the power of the 1 percent and the diminished opportunities a majority of Americans face.

The Republican appropriation of leftist populist rhetoric (and even policies) poses a significant threat to liberal prospects in 2016. They plan to bring the fight to the Democrats on their own turf.

But at the same time, the growth of dissension within Republican ranks on the question of what should be done about the economy and in whose name it should be done testifies to the strength of a contemporary reform conservative movement that has, somewhat oddly, become known as the “reformicon” movement.

Of course, Democrats don’t actually have to be worried.  Lee’s plan calls for restructuring taxes in ways that help the lower and middle classes far more than the rich:

Lee and Rubio are proposing a major revision to the tax code, which calls for a substantial share of its benefits to be directed to the working and middle classes. Their revision would raise the refundable child care credit to $3,500 from $1,000. In addition, it would establish just two tax rates: 15 percent on earnings up to $87,850 for an individual ($175,700 for married couples), and 35 percent on all income over that.

The nonpartisan Tax Policy Center concluded that the Lee-Rubio proposal would cost the government $2.4 trillion in revenue over 10 years. Lee and Rubio have outraged many of their more traditional colleagues in the conservative movement by failing to endorse a major cut in the top rates of high-income taxpayers.

Not surprisingly, they have gotten slammed for rejecting the orthodoxy that the key to all good things is low marginal rates on the richest Americans.  Now, from my perspective their plan is a huge problem in that 2.4 trillion revenue cut (there’s no mention of what they might actually cut in spending to make up for this– waste, fraud and abuse, I’m sure).  That said, the basic design strikes me as pretty reasonable reform.  All you would have to do to keep it revenue neutral is lower the income level for those in the top bracket (or, raise the top rate a bit and just add more progressivity).  Of course, given that it strikes me as basically reasonable, you can be quite sure it is going nowhere in the Republican Party.

Edsall writes:

If the Republican Party continues in its current direction – a very big if for a party with an adamantly conservative primary electorate — it’s Democrats who should be scared…

The danger for Democrats is that they will lose ownership of the issues of stagnation, opportunity and fairness. But they also face what may be a deeper problem: What happens when their candidates are not the only ones who can harness the emotional power that stems from the anger many Americans feel as they helplessly watch the geyser of wealth shooting to the top?

The real issue going into 2016 is: Can Republicans really abandon so central a pillar of conservative ideology as lower tax rates for those at the top of income distribution?  [emphases mine]

Okay, so if I’m supposed to be a worried Democrat, color me not worried– at least about this.  The writings of some “reformicons” and a tax proposal going less than nowhere do not exactly strike me as a “current direction.”  Not to mention, I would say there’s absolutely no evidence Republicans stand ready to abandon what has been a central pillar of the economic thinking (despite all the empirical evidence on the matter).  I would love it if the Republican Party actually moved in this direction– rather than the policy nihilism that has characterized it in recent years.  That might be worse for the Democrats, but better for the country that deserves to political parties that take public policy seriously.

About Steve Greene
Professor of Political Science at NC State

3 Responses to Republicans, taxes, and poverty

  1. itchy says:

    “What happens when their candidates are not the only ones who can harness the emotional power that stems from the anger many Americans feel as they helplessly watch the geyser of wealth shooting to the top?”

    Um … what happens is that a geyser of wealth is no longer shooting to the top. That’s what happens.

    I can only assume he’s talking about Democratic candidates, not Democratic voters. Even so, this is sickeningly cynical. In other words, Democrats don’t really want anything to change. They prefer unfairness that they can blame on the Republicans.

    I don’t doubt there are some candidates who think this way, but I’d hope there are many more who do not.

    • Steve Greene says:

      Great point. If you have two parties that actually care about limiting growing inequality then you limit growing inequality. I don’t care if it’s Democrats or Republicans that get us there (though, I really doubt the latter would ever happen).

  2. John F. says:

    Are the Democrats really harnessing any anger on these issues in a meaningful way that translates to a countervailing movement like the Tea Party? I don’t think so.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: