Ever since income inequality began its sharp rise in the 1980s, one favorite conservative excuse has been that it doesn’t mean anything, because economic positions change all the time. People who are rich this year might not be rich next year, so the gap between the rich and the rest doesn’t matter, right?
Well, it’s true that people move up and down the economic ladder, and apologists for inequality love to cite statistics showing that many people who are in the top 1 percent in any given year are out of that category the next year.
.. This is why you shouldn’t grieve over Marco Rubio’s epic political failure. Had Mr. Rubio succeeded, he would simply have encouraged his party to believe that all it needs is a cosmetic makeover — a fresher, younger face to sell the same old defunct orthodoxy.
.. What we’re getting instead is at least the possibility of a cleansing shock — of a period in the political wilderness that will finally force the Republican establishment to rethink its premises.
Tax Cuts Can’t Motivate the Republican Base Anymore
It wasn’t just the level of taxes, which was high; it was also how that level interacted with inflation.
.. In an era of double-digit inflation, this was a big problem, and it focused people intently on how much they hated their taxes. It also gave people the feeling that the government was going to go on taking more and more, while delivering less and less in the way of either public order or economic growth. That made people well down the income distribution very receptive to promises of tax cuts.
.. it’s going to be very hard to get those bottom three or four quintiles interested in your tax reform, because their income taxes are already negligible. And since that group has 80 percent of the people in the country, that means it’s going to be very hard to get elected on a platform of tax cuts.
.. Moreover, Republicans now have the same problem that Democrats and Republican New-Deal-Lite types had in 1979: they’ve delivered on the tax cuts, and the tax cuts did not deliver on the fabulous promises of economic growth.
Folks Before Kochs
To save itself, the Republican Party must finally put the working class ahead of the donor class.
.. While conservatives have traditionally emphasized the central importance of limited government, Trump has built his campaign around the promise of an unlimited government that will solve every problem that ails America, provided it is fully under his command.
..No candidate was more ideologically orthodox than Bobby Jindal, the government-slashing, hard-right governor of Louisiana, yet Trump ridiculed his campaign out of existence...Barack Obama’s rhetorical gifts mask the many ways in which he is a deeply conventional political figure, a man who trusts the wisdom of technocrats rather than seeking to overturn the established order... One could argue that the Obama presidency rescued America’s upper classes from a more ferocious post-crisis backlash, at least for a time. The twin insurgencies of Trump and Sanders demonstrate that the anger is still there—that it was just waiting for the right person to conjure it up... He is channeling the Republican id .... Why can’t his GOP opponents convince Republican voters that they would do a far better job than Trump of defending middle-class economic interests? The answer is that they are trapped by the delusions of the donor class, and they can’t break free... But whether or not they succeed, the GOP establishment must acknowledge that the Trump campaign has surfaced important and uncomfortable truths. Those truths can no longer be evaded... There is only one way forward in the post-Trump era. The GOP can no longer survive as the party of tax cuts for the rich. It must reinvent itself as the champion of America’s working- and middle-class families... For high-income Republicans, skilled immigrants are their colleagues, neighbors, and friends, and less-skilled immigrants provide them with the low-cost child care, restaurant meals, and other services that allow them to lead comfortable lives... To unite the right, the GOP ought to embrace a simple immigration reform principle: The U.S. will only welcome immigrants who can pay their own way. Immigrants who earn high wages are less likely to need public assistance than those who earn low wages. They are in a better position to provide for their families, and their children are more likely to flourish as adults. Republicans should not shrink from advocating immigration policies that protect the interests of American workers. That means welcoming immigrants who are economically self-sufficient and who can help finance social programs for poor Americans—whether native- or foreign-born, of every racial and ethnic group—rather than relying on those social programs themselves... Republicans might back a package of reforms that would encourage older Americans to work by slashing or eliminating their property taxes and that would ensure that all seniors receive a benefit that would keep them from falling into poverty, which is not currently the case... Republican anti-poverty rhetoric often reeks of condescension. When George W. Bush spoke of compassion for the downtrodden, it was very clear that he meant well... this proposal will still be difficult for supply-siders to bear. And that’s to the good. For too long, Republican have been excessively beholden to voters at the top of the income spectrum, and swearing off tax cuts for the rich would be an excellent way to prove that they’ve turned over a new leaf... What defenders of the Republican status quo fail to realize is that unless the party speaks to the interests of working-class voters, they won’t just face slightly higher capital gains taxes or more wasteful spending under a Hillary Clinton administration. They will face a backlash from within that threatens to profoundly damage a party that, at its best, is a champion of the core social and economic institutions that made America great in the first place.
Two-Percent Growth Is a Loser for the Angry Middle Class
Real middle-class wages are still flat-lining. These folks get nothing out of 2 percent growth.
.. Research has shown that middle-income wage earners would benefit most from a large reduction in corporate tax rates. The corporate tax is not a rich-man’s tax. Corporations don’t even pay it. They just pass the tax on in terms of lower wages and benefits, higher consumer prices, and less stockholder value.
.. Slash the corporate tax rate to 15 percent for large C-corps and small S-corps, go to immediate tax deductions for new investment, and make it easy for firms to repatriate their overseas earnings.
.. This would be the single-most stimulative program for reigniting economic growth. Principally, it’s a middle-class tax cut. If you combine that with regulatory rollbacks and a stable dollar, within less than a year the U.S. economy can break out of its doldrums.