The two leading stories on the nightly news for the past week have been the Occupy Wall Street protests and the Republican primary race, a contrast so vivid that the reports could be coming from two different planets.
First, we see thousands of citizens so frustrated and angry with economic inequality in the U.S. that they have organized to protest in hundreds of cities around the country. Then we see a group of contenders for president agree that the only economic problem we have is that wealth and influence are not sufficiently concentrated at the top.For the GOP, the protests renew an old dilemma. When Ronald Reagan became president, Democrats charged that he would was guided by the theory of "trickle-down economics," in which benefits are bestowed upon the wealthy, and the blessings eventually trickle down to the rest of the country —i.e., the 99 percent. Republicans replied indignantly that this phrase misrepresented Reagan's agenda; they preferred "supply-side economics."
Then, in 1981, David Stockman, Reagan's budget director, admitted to a reporter that slashing the top income tax rate was the administration's highest priority, saying "It's kind of hard to sell 'trickle down,' so the supply-side formula was the only way to get a tax policy that was really 'trickle down.'" Stockman's candor was treated as a scandalous revelation.
Despite the unpopularity of "trickle-down," last week there was Ronald Reagan, staring down from a video screen over the Republican presidential contenders in a New Hampshire debate, arguing for closing tax loopholes and "raising revenue from those who are not now paying their fair share." The candidates quickly dodged the question of whether their hero was right, but their positions show that just as you can be more Catholic than the Pope, you can be more of a trickle-downer than Reagan. Without exception, those running for president in the GOP are.
Just look at their diagnosis of the American economy and their prescriptions for fixing it. Are inequality and corporate capture of government a problem? Surely you jest. All the candidates agree that the Dodd-Frank financial-reform bill passed in 2010 must be repealed in order to free banks from pesky government oversight and the rules that constrain their ability to engage in the kind of creative finance that brought us the meltdown of 2008. Regulations aimed at ensuring clean air and water, safe workplaces, or untainted food have got to go lest they prove inconvenient for large corporations. The candidates also all agree that it would be a disaster if income taxes were to revert to their Clinton-era rates, with a horrifying 4.6 percentage point increase at the top, and that taxes on capital gains and inheritances should be slashed or, preferably, eliminated. In other words, economic oppression does keep this group up at night, but it's the oppression suffered by wealthy heirs and hedge-fund managers. Ask them if, like Reagan, they'll end up compromising on tax issues, and they will protest that the thought itself is abhorrent to their finely tuned moral instincts.
Take the now-famous "9-9-9" plan offered by this week's hot candidate, Herman Cain. It would eliminate all current federal taxes and replace them with a 9 percent tax on corporate profits, individual income, and sales. One analysis after another has demonstrated that the effect of 9-9-9 would be to decrease taxes on the wealthy and dramatically increase taxes on the poor and middle-class. This is, as techies say, not a bug but a feature: Redistributing the tax burden downward is the whole idea. The other candidates' plans may not have the catchy name, but they're geared in the same direction.
That's part of why the candidates seem so baffled by the growth of Occupy Wall Street. When they were asked in last week's debate whether the protesters had a legitimate beef with Wall Street, they couldn't quite wrap their heads around the idea. Michele Bachmann, dialing in as usual from an alternate universe, claimed that Wall Street was blameless for the meltdown, because government forced banks to issue subprime loans against their will. Newt Gingrich agreed that it was all government's fault; he even said that Chris Dodd and Barney Frank should be jailed.
No one expects conservative politicians to suddenly turn their backs on everything they've been arguing about economics for the last 30 years. The policies we favor are based partly in practical judgments about what works and what doesn't, and partly in moral judgments about how things ought to be. But you might expect them to make at least some concessions to reality. We did, after all, have a test of their theory that cutting taxes for the wealthy and slashing regulations will inevitably create economic nirvana. It was called the George W. Bush administration, and it didn't work out too well.
I suppose that kind of straight talk is what has fueled Cain's rise among Republican primary voters. At last, someone who doesn't sugarcoat his message or pretend to have sympathy for people who have proven how unworthy they are by failing to be rich. Herman Cain isn't concerned about how far the trickle in "trickle-down" reaches—he can barely pay lip service to it. Which means that he may be appealing to Republican primary voters, but even they probably understand that he's a bit too unvarnished for the general election electorate. "Quit whining, you lazy bums" isn't exactly a winning slogan.
In the first round of polling on Occupy Wall Street, most Americans say they are sympathetic to the movement, while support of the Tea Party, to which the GOP has genuflected with such enthusiasm, has plummeted. So by next November, Republicans may come up with a new way to describe their economic ideas, something to counter the idea that they're just serving the wealthy. Perhaps they could blow the dust off "supply-side economics."
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