Help the needy, not the greedy, as a wise man once argued.
Help the needy, not the greedy, as a wise man once argued.
T he Republican Party sweep in the election was based on an entirely new political coalition. Once the preserve of the nation’s upper class, the GOP is now a collection of a multiethnic working class and the still-large remainder of the old, Bush/Romney-era party.
This conservative-populist coalition cannot hold together if the party simply returns to its old agenda. That’s especially true in domestic policy and economics. There’s a reason the new working-class converts formerly backed Barack Obama and in many cases Hillary Clinton and Joe Biden as well.
But giving the converts carte blanche over the party’s legislative agenda won’t fly either. Their votes helped tipped the election to Republicans, but they were added to those of a loyal conservative base that has endured many defeats before arriving at what could be the promised land.
These considerations mean the forthcoming domestic agenda needs to be a synthesis of both strands of Republicanism, building something durable and new out of the old.
One example of that is a bill that Senator Tom Cotton sponsored a few years ago. His bill would have rebated to working- and middle-class taxpayers the revenue raised through President Trump’s tariffs on Chinese goods. This approach would deliver targeted tax relief to the GOP’s new voters and tie that relief to the president’s signature initiative.
Conservatives worried about the budgetary impact of this could insist on tying the rebates to increases in inflation in the goods on which tariffs are imposed. This approach would insulate the GOP from charges that the tariffs will hurt Americans through price hikes. If those hikes don’t happen or are transitory, as tariff advocates believe, the revenue could flow to the treasury and reduce the gargantuan deficit.
Another Cotton idea is also worth resurrecting: taxing the endowments of large nonprofits. It might surprise many readers to learn that entities such as the Gates Foundation and Harvard have endowments in the tens of billions of dollars yet pay only a 1.4 percent tax on investment returns — a mere fraction of what they would pay if they were private companies.
Raising that tax to 10 percent, which would still be less than half of the 21 percent corporate-income-tax rate, would raise billions of dollars that could reduce the deficit or offset tax cuts for more productive economic sectors. The fact that this tax would primarily fall on overwhelmingly progressive institutions whose members are among the GOP’s biggest critics would surely find favor even among the staunchest fiscal conservatives.
It’s clear that the coming crackdown on illegal immigration will cause perhaps millions of people here illegally to leave. Businesses will howl, since many look the other way and hire these people despite their status. A solid conservative-populist immigration plan needs to have a good solution to this legitimate concern.
Convincing Americans who live in declining areas to leave for the vibrant places that illegal migrants often flock to would be a good start. This “new Homestead Act” could include giving recipients of federal benefits information about jobs outside of their regions, providing subsidies to people with little disposable income to pay for a move, or allowing recipients of federal benefits such as Section 8 housing or Medicaid to take their benefits with them when they move.
Conservatives may not like increasing federal spending but surely would love providing American jobs for American workers. Populists would welcome putting the federal government squarely on the side of the people who have long been treated by Washington as globalization’s collateral damage.
Entitlement reform is another, perhaps surprising, area of potential agreement. While populists and their working-class voters would surely blanch at reviving the reform ideas of former House speaker Paul Ryan, they would surely welcome removing subsidies for people who don’t need them. It turns out there’s a lot of money hidden in those well-trimmed bushes.
The Manhattan Institute’s Brian Riedl showed that the amount of federal money flowing to retirees with incomes over $174,000 is staggering. He estimates that simple changes to their Social Security benefits and Medicare premiums would save hundreds of billions of dollars over ten years and perhaps trillions of dollars down the road.
These reforms should be easy to sell politically. Why should people with so much money saved that they make hundreds of thousands of dollars a year in retirement get the same cost-of-living adjustments to their Social Security as someone who is just scraping by? Why should retirees making over $276,000 a year still get government subsidies of up to 35 percent on their Medicare premiums? Let the Democrats defend sending money to the rich: Conservative populists are happy to fund safety-net programs but not welfare for the well-to-do.
There are surely many more similar ideas, but the principle animating them should be clear: Help the needy, not the greedy. That’s what Ronald Reagan argued decades ago. An innovative, conservative-populist domestic policy could finally bring his dream a bit closer to reality.