If you’ve been following recent political news, you’ve probably seen stories about senior Republicans acknowledging that it’s time, finally, for the Party to confront the issues of rising inequality and income stagnation. Speaking in Detroit last month, Jeb Bush said, “Far too many Americans live on the edge of economic ruin, and many more feel like they’re stuck in place, working longer and harder, even as they’re losing ground.” According to numerous reports, Bush is now working toward an economic plan, in anticipation of his expected run for the G.O.P. Presidential nomination, that would tackle some of these issues.
In certain Republican quarters, there is even talk of the Party downplaying its commitment to trickle-down economics: the old mantra of cutting taxes, primarily on the rich. “Bush and any other Republican running needs to do a better job … of talking about economic issues in a very different way than Republicans have in the past,” Tony Fratto, a deputy press secretary in George W. Bush’s Administration, told Politico’s Ben White. “If you go to Americans and ask them what their greatest fears are, they won’t say it’s that their taxes are too high. They will talk about things like technology removing the need for hands-on workers and their children not receiving the skills and education to allow them to compete in the global economy.”
A few Republicans have put forth some actual proposals to address inequality, such as Senator Marco Rubio’s idea to convert the earned-income tax credit, one of the few redistributive programs that enjoys bipartisan support, into a universal subsidy for low-wage workers. One of the shortcomings of the earned-income credit is that it is targeted to low-income families; low-paid workers who don’t have children receive much smaller credits. Rubio’s reform could conceivably address this problem. But still, whenever I hear talk that the Republicans intend to tackle inequality, I can’t help thinking of Deep Throat’s adage: follow the money.
As E. J. Dionne, Jr., has pointed out, in the journal Democracy, Rubio’s wage-subsidy proposal would be far more interesting if the senator would explain how he would pay for it without hurting the current beneficiaries of the earned-income tax credit. More broadly, it is difficult to take seriously the idea that the Republican Party is changing its ways when its elected officials are simultaneously seeking to bestow more tax cuts on the richest of the rich and slash programs aimed at the poor and the middle class.
On Wednesday, the G.O.P.-dominated House Ways and Means Committee voted to repeal the federal estate tax, which Republicans have, for years, been labelling a “death tax” that ravages the bequests of ordinary Americans. “This tax doesn’t just hit the big guy,” the committee’s chairman, Paul Ryan, said. “It hits the little guy—like the small business and the family farm.”
The facts? Since George W. Bush entered office, in 2001, the estate tax has already been reformed several times, and it now applies only to inheritances valued at more than $5.4 million. According to an analysis by the nonpartisan Tax Policy Center, in 2013, the latest year for which figures are available, about 0.2 per cent of estates—that’s two in a thousand, or fewer than four thousand estates in total—owed the estate tax. As Congressman Jim McDermott, a Democratic member of the Ways and Means Committee, pointed out, “You cannot call twenty-three-thousand acres a family farm.” A repeal of the estate tax, he said, would amount to a “massive unfunded tax break” for the very wealthiest people in the country. The Joint Committee on Taxation estimates that the move will raise the budget deficit by about two hundred and seventy billion dollars over the next ten years.
On the same day that this attempted exercise in upward income redistribution was going on in Ryan’s committee, just down the hall, in the main chamber of the House, Republican representatives were approving a new budget that, according to its primary sponsor, Tom Price, the chairman of the Budget Committee, would balance the budget within ten years, primarily by cutting expenditures by nearly $5.5 trillion, as compared with the projected costs of current policies. Who would be most hurt by those spending reductions? You guessed it.
An analysis by the liberal-leaning Center on Budget and Policy Priorities shows that more than two-thirds of the proposed spending cuts would come from programs that serve low-income and middle-income Americans. Almost three trillion dollars (yes, trillion) would be saved by repealing Obamacare, which provides income-based subsidies for the purchase of private insurance plans, and by slashing funding for Medicaid, the federal health-care system for the poor, which would be converted to a block-grant program and handed over to the states. The Price budget would also cut spending on food stamps by more than a third between 2021 and 2025. It would allow some existing tax credits for low-income and middle-income families to expire over the next few years. And it would significantly reduce funding for Pell Grants, which help students from families of modest means to afford college.
In one sense, of course, none of this congressional maneuvering matters. As long as a Democrat occupies the White House, there’s practically no chance that G.O.P. spending cuts will be enacted, marking the Price budget as more of a political wish list than an actual funding bill. But wish lists matter, too, especially for a Party that is supposedly trying to change its public image. And in 2015, it seems, the most that the Republicans can hope for is to shower more gifts on the wealthiest households in America, while depriving poor families of health care, food stamps, and college tuition.
