Whereas Bernie Sanders’ supporters look to the 1970s for inspiration, many of the Republican Party’s presidential candidates seem stuck in the 1980s.
In a debate on Tuesday, televised by the Fox Business Network, all of the contenders for the Republican presidential nomination called for more deregulation and tax cuts: a combination of supply-side economic policies that has served their party well in the past.
But James Pethokoukis argues in the Financial Times that big tax cuts, particularly for the wealthiest, do not work in an age of high inequality and heavy debt. “Republicans need an economic agenda that respects markets while also recognizing the challenges facing America and its anxious middle class,” he suggests.
Deregulation and tax cuts under Ronald Reagan propelled America into a new era of prosperity.
Times have changed.
This blog would like to see more deregulation but recognizes that most Americans, with the exception of those who own a business, don’t see the need. If anything, they probably feel big businesses are underregulated.
Some of the candidates recognized as much on Tuesday when they rallied against big banks and admitted that the gap in pay between bosses and their workers has grown too wide.
Tax cuts — which almost inevitably benefit the rich more than the poor — shouldn’t be their priority.
America’s corporate tax rate is now the highest in the industrialized world. It should come down. Even President Barack Obama, a Democrat, has said so — even if he has failed to act on it.
But other tax rates are just fine. Pethokoukis cites polls that show more than half of Americans think their taxes are fair. Nearly half of American households pay no federal income tax at all. Less than one in three voters believes lowering taxes for companies and their owners would generate higher incomes for all.
America’s fiscal situation also makes deep tax cuts implausible, he writes.
The federal debt-to-gross domestic product ratio is three times higher than when Reagan took office. There is more spending en route in the form of unfunded government pension and health-care programs.
Republicans’ priority should be reforming the tax code — currently among the biggest and more complicated in the Western world — so average Americans can file their taxes without professional help.
And they should concentrate their efforts on reining in the growth in spending, particularly on the big entitlement programs Medicaid and Social Security that threaten to become unaffordable as the population ages.