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Perry, Cain and Flat Earth Government
Posted on Oct 23, 2011
It’s one of the strangest things in our politics: The only “big” ideas Republicans and conservatives seem to offer these days revolve around novel and sometimes bizarre ways of cutting taxes on rich people.
Given all the attention that Herman Cain’s nonsensical and regressive “9-9-9 tax plan” has received, the Republican debates should have as their soundtrack that old Beatles song that droned on about the number nine.
Now, Texas Gov. Rick Perry hopes to pump up his campaign with a supposedly bold proposal to institute a flat tax, which would also deliver more money to the well-off. Perry plans to outline his proposal this week, but has already touted it as a surefire way of “scrapping the 3 million words of the current tax code.”
There is absolutely nothing new about this idea, and candidates who pushed flat taxes in the past saw their campaigns flat-line, most prominently businessman Steve Forbes in 1996 and again in 2000. Politically, the idea falls apart rather quickly when middle-income voters realize that its main effect is to cut taxes on the financially privileged while usually raising them on Americans with more modest incomes.
Note to Perry: Voters are shrewd in figuring out whether tax proposals really benefit them. It’s why raising taxes on millionaires—the exact opposite of what Cain and Perry want to do—wins support from a broad majority.
But the more interesting question is: Why are today’s Republicans so enthralled by tax gimmicks? This is a party that was once innovative in thinking about affirmative uses of government. The Grand Old Party instituted the Homestead Act and created land grant colleges, the interstate highway system, student loans, the Pure Food and Drug Act and, yes, a prescription drug benefit under Medicare.
It was Richard Nixon who supported laws establishing both the Environmental Protection Agency and the Occupational Safety and Health Administration. In signing the OSHA bill, Nixon called it “one of the most important pieces of legislation, from the standpoint of 55 million people who will be covered by it, ever passed by the Congress of the United States, because it involves their lives.” Yes, government regulations save lives, which is now a heretical view in the GOP.
It is because Republicans have boxed themselves into a rejection of both their own traditions and the idea that government can do any good that they are confined to endless fiddling with the tax code. Almost everything conservatives suggest these days is built around the single idea that if only government took less money away from the wealthy, all our problems would magically disappear.
There is a history to this. The Republican fixation on taxes goes back to the mid-1970s when supply-side economics began taking hold. The late Jude Wanniski, an editorial writer for The Wall Street Journal who campaigned indefatigably on behalf of lower marginal tax rates, came up with the “Two Santa Clauses” theory. He argued that if Democrats earned support by giving voters benefits through government programs, Republicans should play Santa by giving people tax cuts.
Wanniski sold his tax ideas to Jack Kemp, one of the most ebullient political figures of his generation, who in turn sold them to Ronald Reagan. Reagan made Kemp’s 30 percent tax cut (co-sponsored with Sen. Bill Roth) a centerpiece of his 1980 campaign. Political scientist Wilson Carey McWilliams perfectly described the result in a 1981 essay. “After years of learning that ‘you don’t shoot Santa Claus,’ ” he wrote, “the Republicans decided to nominate him.”
But Republicans have a problem now. In the Kemp-Reagan days, they were selling across-the-board tax cuts. Most of their benefits flowed to the rich, but almost everyone got a piece. Today, many Republicans complain resentfully that less prosperous Americans don’t pay enough in taxes—overlooking the fact that citizens who don’t pay income taxes still shell out a significant share of their earnings in payroll, sales and (directly or through their rents) property taxes.
Reagan’s optimism has thus been replaced by crabby put-downs of the less affluent. Perry said it directly in his announcement speech: “We’re dismayed at the injustice that nearly half of all Americans don’t even pay any income tax.” Considering the other injustices in our society, this seems an odd and mean-spirited obsession.
“Tax the poor” is a lousy political slogan. That’s why Cain’s 9-9-9 plan and Perry’s flat tax are doomed to fail. Among conservatives, Santa Claus has given way to Scrooge.
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