A job seeker fills out an application in Santa Clara, California. The Republicans are discussing whether tax cuts are enough — or if the middle class and poor need something more. (Justin Sullivan/Getty Images)
FEBRUARY 25, 2015
Leading Republicans are clashing over a signature issue the party has treated as gospel for nearly 40 years: the idea that sharply lower taxes and smaller government are enough by themselves to drive a more prosperous middle class — and win national elections.
That simple philosophy has been the foundation of every GOP platform since the days of Ronald Reagan. Now, some of the party’s presidential hopefuls — along with some top conservative economists and strategists — are sending strong signals that they believe today’s beleaguered workers need more targeted help, even if growth speeds up. They are embracing plans to give direct relief to low- and middle-income workers; a few of those plans mirror ideas that President Obama has proposed.
Rifts are beginning to form in the party’s prospective 2016 field over the dispute.
On one end, Sen. Marco Rubio of Florida has built an economic agenda around tailored tax breaks for workers and families with children. On the other, Wisconsin Gov. Scott Walker has reassured prominent conservatives in recent days that he supports a strictly Reaganesque economic approach, including lowering income tax rates and reducing the number of tax brackets.
In the middle, for now at least, sits former Florida governor Jeb Bush. This week, his presidential campaign hired April Ponnuru, a major advocate for Republicans overhauling their economic agenda to target wage stagnation and other contemporary economic anxieties, as an adviser.
That followed Bush’s maiden economic speech, in which he repeatedly discussed economic opportunity.
Bush has also been consulting with a leading conservative economist who wants a “radical expansion” of a tax break that benefits single workers — a group that has been struggling in the recovery.
Still, Bush has not endorsed major new policies that challenge GOP orthodoxy and is likely to try to hold on to the mantle of Reagan even while advancing new ideas so as not to turn off the party’s faithful.
The debate is ramping up as Republicans come to grips with the fact that their economic plans have not in recent years delivered the results they’d like at the presidential level.
Republicans are wrestling with the question of whether their tax-cutting message has lost potency — and what new ideas are there to deal with the twin problems of relatively slow growth and long-stagnant wages.
GOP hopefuls will speak this weekend in Palm Beach, Fla., to the Club for Growth, a group that has threatened primary chal-lenges to Republicans who do not embrace a hard-line view on taxes and spending.
It is too early to tell what specific economic proposals most candidates will put forth. What is shaping up is a struggle for candidates’ attention among factions of economic thinkers within the party.
Reaganite stalwarts Arthur Laffer and Stephen Moore recently formed a group called the Committee to Unleash American Prosperity to push candidates to advocate traditional Reaganesque economic policies.
“Our concern is that vision — what we’d call the Reagan vision — is not shared by everybody” in the GOP, said Larry Kudlow, an influential conservative economic strategist and former Reagan administration official who is also leading the group. “One reason that the GOP has been losing is that Reagan’s message has not been used.”
Republicans roundly agree that their party needs an updated economic message to improve their chances at retaking the White House. They are looking for new ways to critique Democrats on the economy now that the recovery from recession is accelerating.
Doug Holtz-Eakin, a former top adviser to 2008 nominee John McCain, said crafting policies to benefit the middle class is essential for the party’s chances in 2016. “If we’re going to play on the same turf we’ve always played on, we’re going to have a beautiful set of policies for aging white guys in the South,” he said. “That’s not going to work.”
The intraparty debate centers around the question of whether Republican policies, and not just rhetoric, must evolve along with economic circumstances.
Middle-class incomes are no higher today than they were 25 years ago, after adjusting for inflation. There is a growing sense among many conservative economists that faster growth by itself will not suffice to lift those incomes at the rate middle-class workers came to expect a generation ago .
“There’s a recognition that folks in the middle and bottom of the income distribution are in need of [new] policy solutions,” said Michael Strain, an economist at the right-leaning American Enterprise Institute who has pushed hard for conservatives to consider more targeted measures for those workers. “And I expect there to be an effort on the right to address that with policy. I think that’s starting now.”
The most recent GOP president, George W. Bush, signed two tax packages that cut rates from the top bracket on down — and then watched the economy deliver the slowest job growth of any presidency in the modern era.
The 2012 nominee, Mitt Romney, proposed a rate-reduction plan that he promised would rev up the sluggish recovery from the Great Recession, but he lost the election.
It’s too soon to tell where many of the would-be candidates will fall in the debate.
Kudlow and Laffer’s group recently met with Walker, whom Kudlow said delivered a “Reagan-esque” message. He said the group will meet with “everybody” in the field.
Some contenders still appear to be finding their way to economic plans. Former Texas governor Rick Perry has met with Laffer and Kudlow’s group. He has also hosted marathon briefing sessions with economists who favored a new approach to the economy. New Jersey Gov. Chris Christie has given little indication of which camp he might join, several conservative economists said.
Bush walked a careful line in his first major economic speech of the cycle earlier this month, adopting the language of middle-class assistance but proposing few specific policies beyond the promise of growing the economy at 4 percent per year. He pledged to offer more detailed plans in the weeks to come.
Bush’s economic advisory team is still shaping up. But if he follows the lead of one of the top economists he has been talking with, he could be on the path to more targeted tax cuts.
“Traditional economic policy from conservative politicians and conservative economists has been about economic growth,” Glenn Hubbard, a former top adviser to Romney in 2012, said in an interview. “But that belies the question of who gets the benefit of that, and are we empowering opportunity?”
Hubbard, who many conservative economists expect will head up economic policy for Bush this cycle, has consulted with Bush and other prospective candidates but would not say if he had signed on to a campaign. He said he favors a “radical expansion” of the earned-income tax credit for single workers.
“It wouldn’t do, I think,” Hubbard said, “for a platform just to be about growth, and not about work and opportunity, too.”
jim.tankersley@washpost.com
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