Crony capitalism, subsidies, tax breaks, and corporate welfare all hit the middle class hardest.
It is getting hard to ignore the growing number of conservative reformers. Utah senator Mike Lee has been a veritable innovation factory since he entered Congress, promoting new ideas on education, taxes, and energy, among other issues. Last year’s publication of Room to Grow: Conservative Reforms for a Limited Government and a Thriving Middle Class brought together the brightest conservative minds to think through tough problems. And now Paul Ryan is chair of the House Ways and Means Committee, giving a boost to the hope that someday soon we’ll see tax reform.
Meanwhile, the Left seems stuck in the failed policies of the mid 20th century. Barack Obama’s recent tax proposal was a classic example: Sock it to the wealthy, and spend the money on new entitlements, plus a huge payoff to profligate state governments and unions via new infrastructure spending. In Obama’s world, it is always 1935.
Conservatives are the ones coming up with new ideas on how to improve the fortunes of middle-class America — but, as it stands, the plans are incomplete. A comprehensive strategy to boost the middle class has to include an aggressive assault on political corruption.
Every year, the government wastes an obscene amount of money through corrupt public policies. And let’s be careful with our terms here. If we think of corruption merely as illegal activity, we’re defining it too narrowly. As I argue in my new book, A Republic No More: Big Government and the Rise of American Political Corruption, the better way to understand it is as James Madison might have. In Federalist 10, he worried about the “violence of faction,” which he defined as a group “united and actuated by some common impulse of passion, or of interest, adversed to the rights of other citizens, or to the permanent and aggregate interests of the community.”
This is all too common in public policy. From farm subsidies to Medicare, regulatory policy to the tax code, and highway spending to corporate welfare, our government does violence to the public interest by rewarding the interest groups that lobby it aggressively. The total price tag every year extends into the tens of billions of dollars — and beyond.
Of course, these policies are inevitably disguised as helping the country at large, or some sympathetic group. Maybe it’s the struggling family farm, or the senior citizen who can’t pay his medical bills, or the small business in need of a loan. But the rhetoric does not match reality. When you look more closely at federal policy, you see just how regularly it works against the public interest. Pressure groups with a stake in some obscure issue ply members of Congress with money, lobby them aggressively, and implicitly promise them cushy gigs after they leave office. The strategy works, time and again. So, underneath these seemingly virtuous policies lays a wide-ranging patchwork of interest-group payoffs. Madison called it factionalism. Sometimes, we call it cronyism. But it is all corruption.
Ultimately, corruption is a loser for the middle class. Middle-class Americans do not have the money to pay for lobbyists to make sure they are getting a piece of the action. They don’t usually contribute to political candidates, and when they do, it is typically for a presidential candidate whose ideas they think are sound. They do not subsidize the otherwise obscure subcommittee chairman with oversight on a critical policy. And, of course, they cannot offer politicians seven-figure employment opportunities for post-government life.
And yet the middle class foots the bill. Average Americans pay higher taxes to subsidize this misbehavior, and their children will have to pay down an ever-higher debt burden. But beyond that, corruption distorts the economy and limits the nation’s potential for growth. For instance, any time Congress creates a tax loophole, it shifts the flow of capital from some otherwise productive outlet to the tax-preferred end. And this is true not just of tax policy; any dollar spent by the government corruptly is a dollar better spent somewhere else. There are, in other words, substantial opportunity costs to be paid, mostly by the middle class.
This has to be brought to an end, but who is up to that task? The Left is so mired in machine-style politics that expecting the Democratic party to fight corruption would be like looking for the sun to rise in the West. It is just not going to happen. Conservatives must therefore answer the call.
Reform conservatism is an exciting new movement. Conservatives are looking beyond traditional GOP tropes to think about how to fix issues like K–12 education, energy, health care, and higher education. The animating belief is that these policies are not optimized for the middle class, and that smart reforms can fix that.
The same goes for the government itself. In truth, the public-policy process is as broken as the energy, tax, or health policies it produces. Washington systematically tilts the law toward the wealthy and well-connected, at the expense of the middle class. Conservative reformers need to figure out how to bring an end to this corruption.
— Jay Cost is a staff writer for The Weekly Standard. His new book is A Republic No More: Big Government and the Rise of American Political Corruption.