The Grand Republican Strategy: We Win, You Pay!

On a recent trip to London, I got into a conversation with a wealthy oil and gas investor about climate change. He didn’t disagree we need to shift from fossil fuels to renewable energy, he said. His job is to make sure the lights in our homes still turn on while we make the transition.

Fair enough, I said. Would you support a carbon tax or a cap-and-trade program to speed up the transition?

“Sure,” he said, to my surprise, without hesitation. “As long as the revenue is spent on new technologies, and not given away to poor people.”

Ah. There’s always a catch.

At first, I thought it was a strange caveat, especially since we’d just got done talking about income inequality, an issue that he seemed quite concerned about. It wasn’t until I saw the Republican presidential hopefuls unveil their new economic plans that it all made sense:

I really want to do the right thing, he’s saying, as long as I don’t have to pay for it.

Carbon Tax BurdenThe reason for his concern, by the way, is that poor people have to spend a higher percentage of their income on oil and gas than rich people, so the burden of a carbon tax or a cap-and-trade program would fall the hardest on them. Many people think that’s unfair since (a) they’re already strapped for cash and (b) they’re not the ones profiting from all the carbon emissions. So progressive proposals usually include a rebate of some sort to ease their cost.

Our friend the oil-and-gas investor would rather give that money to — surprise, surprise — corporate America.

This, I realized, is the grand strategy of the new “reformocon” movement in the Republican party. No longer can a Republican run for president without admitting that the government must do something about our nation’s most pressing problems — but neither can he ask his friends in the One Percent to pay for it. Thus is born a new slogan: We win, you pay!

Mike Lee and Marco Rubio, two of the leading reformocons in the Senate, put this strategy to the test earlier this month when they released an ambitious tax plan centered around an expansion of the Child Tax Credit for middle-income households. Sounds great, right? Rather than cutting government spending for the middle class, these Republicans want to spend more. Heaven knows they could use it, after decades of dismal income growth. But who will pay for it?

Certainly not the rich. The Lee-Rubio plan eliminates taxes on investments, where they get most of their income, and it lowers the corporate tax rate and the income tax rate for the top bracket. Add it all up, and it turns out to be an enormous tax cut for the wealthiest Americans and barely any relief for everyone else.

Republican Budget CutsAnd what happens when all these tax cuts increase the budget deficit by $400 billion a year? Well, if recent history is any indicator, these same Republicans will scream “Crisis!” and demand spending cuts. If you’re wondering where those cuts will come from, look no further than the latest Republican budget, which gets two-thirds of its cuts from programs that help low- and moderate-income households. It scorches their budgets by 40 percent!

So, who will pay for the reformocons’ new plans? You know who.

No sooner had the ink dried on Marco Rubio’s deceptive debut than his presidential competitor Jeb Bush announced, in a speech about income inequality, that he would abolish the federal minimum wage.

Among the reformocon movement, Jeb Bush is not alone in this desire. You may wonder how they can expand the Child Tax Credit in one breath and abolish the minimum wage in the next, since the two policies are basically intended to help the same people?

It’s very simple really, once you understand the “we win, you pay” principle. Wages are paid by corporations. Tax credits are paid by…well, you just saw who, and it ain’t the corporations.

So, for the reformocons: Tax credits, good. Wages, bad.

The most egregious example of this strategy is our first official presidential candidate, Ted Cruz, who’s advocating a “flat tax,” charging the same rate to everyone, regardless of their income. For that to work, he’d have to raise taxes significantly on most Americans in order to cut them significantly for the richest Americans because the only way to raise the same amount of revenue is to find a rate somewhere in the middle of what the two groups pay now. It’s basic arithmetic.

But you never hear the reformocons talk about arithmetic in their speeches. They talk about inequality and upward mobility and the American middle class. They talk about all sorts of expensive new plans, and they never mention that there’s a catch.

They can’t mention the catch because it undermines the entire point of their reforms. If they win, you pay. And if you pay, they’re not helping you after all.

So, who are they helping? You know who.

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This op-ed was originally published in the Huffington Post.

Even the Shutdown Can’t Kill Old Republican Fallacies

Annualized Growth in Real GDP per Capita, by President

Old fallacies die hard.

You would think, for instance, that Americans wouldn’t trust Republicans anymore. Poll after poll has shown that the American public holds them responsible for the government shutdown — and the American public hated the shutdown. Their approval rating plummeted to 21 percent, while President Obama’s held steady at 42 percent.

And yet, according to a Pew Research survey released at the end of the shutdown, Americans still believe that Republicans do a “better job dealing with the economy” than Democrats.

Clearly, it will take more than a two-week shutdown to kill the myth that simply won’t die.

And it is a myth. Since the government started collecting economic data around World War II, we have accumulated plenty of evidence to measure each party’s success at “dealing with the economy” — and none of it makes Republicans look good.

In their book Presimetrics: What the Facts Tell Us About How the Presidents Measure Up on the Issues We Care About, economist Mike Kimel and journalist Michael E. Kanell use this data to calculate the performance of the economy under every president from Dwight D. Eisenhower to George W. Bush. Here’s what they found…

Real GDP per capita. The most basic measure of economic success is the growth of output per person, adjusted for inflation. The fastest growth came in the Kennedy/Johnson years, when “real GDP per capita” grew 3.48 percent per year. The second-fastest came in the Clinton years, a strong 2.49 percent per year. Compare those numbers to laggards like Eisenhower and Bush Sr., who oversaw annual growth of 1.11 percent and 0.93 percent, respectively. When you add up all the Democratic years and all the Republican years, you find that the economy grew 2.82 percent per year under Democratic presidents and 1.54 percent under Republicans.

You may say, “What about the Great Depression? Aren’t they cherry-picking numbers by excluding the biggest economic event of the 20th century?” Actually, if you add Hoover, Roosevelt, and Truman, the Democrats’ average score goes up, and the Republicans’ goes down.

Another common criticism is that presidents inherit the problems of their predecessors. Should we really hold them responsible for the beginning of their term, when the economy’s fate is decided largely by the last guy’s policies? Fair enough. Let’s exclude the first year of each president’s term and recalculate the numbers. Guess what? Again, the Democrats’ score goes up, and the Republicans’ goes down.

Employment-to-population ratio. Instead of focusing on output, we could focus on jobs. Is the economy creating enough jobs to employ the same percentage of the population? Under Democrats, the employment-to-population ratio increased. Under Republicans, it decreased.

Real average weekly earnings. Often, economic growth doesn’t translate into the average American’s pocketbook. Why not look at weekly wages? Okay. Under Democrats, average weekly earnings, adjusted for inflation, increased. Under Republicans, they decreased.

Real median income. But wages only tell part of the story. Maybe Americans work more hours or get more income from investments. Let’s look at the average household — the “median” — and see how their inflation-adjusted income changed: Under Democrats, it increased much faster than it did under Republicans.

Real net average disposable income. But Democrats are known for raising taxes (and, indeed, Kimel and Kanell find that the tax burden went higher under Democrats than Republicans). What if all that income growth winds up in the government’s pocket, negating the gains? Let’s measure average income after taxes: Still, the Democrats oversaw much faster income growth than Republicans!

Poverty rate. Under Democrats, the poverty rate decreased. Under Republicans, it increased.

Real adjusted S&P 500. The stock market grew much faster during Democratic administrations than it did during Republican presidencies.

Value of the dollar. Under Democrats, the dollar appreciated, as foreigners invested more in us. Under Republicans, the dollar depreciated, as foreigners invested less.

Of course, the picture is incomplete. Someday, we will add the completed Obama presidency to the list, and the numbers will change. But already GDP growth under Obama is faster than it was under George W. Bush, and it’s only improving. The stock market is surging up, and the shutdown confirmed what the data has proven: Republicans do not do a “better job dealing with the economy.”

The longer we believe that fallacy, the more shutdowns and recessions we will invite.

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This op-ed was published in the South Florida Sun-Sentinel.

The Republican Riddle: What the States Know That the Feds Don’t

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I’m going to tell you a riddle. It’s a paradox of sorts, and it’s confounding some of the brightest political minds of our time. Here it is…

The Republican Party has lost the last two presidential elections. In the House of Representatives, they lost the majority of the nation’s votes. In the Senate, they’re outnumbered 55 to 45.

The future looks even dimmer. The youngest generation is more liberal than its immediate predecessors, and they’ve been turning out in record numbers. The electorate is becoming more educated and more diverse — two liberal trends that don’t show signs of stopping anytime soon.

And yet, at the state level, the story is completely reversed. Republican governors outnumber Democrats 30 to 20, and they control a majority of state legislatures.

How can that be? What are Republican politicians doing right at the state level that they aren’t doing at the federal level?

I’ll give you a hint: They aren’t who they say they are.

The answer to this riddle is the greatest act of hypocrisy in modern politics. It’s a magic act, really. An illusion. Don’t be fooled by appearances. Look at what they do, not what they say.

Republican politicians say they want smaller government. They say the states are better at governing than the feds. They say we can afford tax cuts. They say we need tax cuts.

But their actions tell a different story.

Take Obamacare for example. The Affordable Care Act instructed the states to set up exchanges where people could purchase affordable health insurance that they weren’t getting from their employers. Twenty-six governors declined, choosing to let the federal government do it for them. Of these twenty-six, twenty-four were Republican.

These Republican governors, who say the states are better at governing than the feds, ceded enormous power to the federal government, violating a core principle of their party’s ideology. And then they crowed that Obamacare was a failure because it required a massive federal bureaucracy — the very bureaucracy that they chose to create!

The dirty little secret of Republican politicians at the state level is that they love the federal government. They need it. They depend on it.

In fact, Republican states receive far more federal spending, relative to the taxes they pay, than Democratic states. For every dollar they put in, Republican states get $1.46 back. Democratic states get $1.16. Of the 22 states that voted for John McCain in 2008, 86 percent received more federal funding than they paid in taxes, compared to only 55 percent of the states that voted for Barack Obama.

Then the Republican politicians have the temerity to brag that their states have lower taxes. Well, of course they can afford lower taxes: The feds are picking up the tab!

What they don’t tell you is that they’re spending just as much money. They’re just being subsidized by the Democratic states!

It’s no surprise, then, that Republican state governments are more popular than Democratic ones. They have lower taxes and more federal funding — both of which are very popular.

Thus the riddle is solved: At the state level, Republicans are cynically and diabolically riding to victory on the wings of a big federal government while claiming to be doing the exact opposite.

At the national level, meanwhile, they’re just starting to learn how to play this game. In Washington, Republicans really have been trying to shrink the federal government, so much so that they threatened to default on the nation’s debt and blow up the global economy if the President didn’t agree to cut spending on everything, including retirement programs.

It wasn’t until they realized that the spending cuts were extremely unpopular — because, you see, the public actually needs the services that the government provides — that they backtracked and claimed that they never supported them in the first place. And when the President finally proposed cuts to retirement programs, they attacked him for even considering such an idea…even though they basically forced him to do it.

But the award for worst hypocrisy surely belongs to Oklahoma Senators Jim Inhofe and Tom Coburn, who went all-out to prevent sending federal aid to Hurricane Sandy victims and then demanded that the federal government send aid to their home state in the wake of the recent tornado disaster.

Maybe they’re finally starting to figure out what state-level Republicans have already discovered: The government is an essential part of our social fabric. It does important things, and someone has to pay for those important things. You can’t cut spending without hurting people, and you can’t cut taxes without cutting spending or blowing up the deficit.

There’s no such thing as real magic. Anyone who says differently is trying to trick you.

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An abbreviated version of this op-ed was published in today’s South Florida Sun-Sentinel.

The Great “Fiscal Responsibility” Hoax

You’re probably worried about the federal budget deficit. Seven out of every ten American voters say the deficit plays a “very important” role in deciding whom to vote for.

And you probably think that Mitt Romney is the candidate who would do a better job of reducing the deficit. In this category, voters favor him over Obama, 51 to 37. That’s a big gap, considering the national polls are a statistical tie.

Even the South Florida Sun-Sentinel believes the hype. One of the reasons they gave for endorsing Romney was to “exercise…fiscal discipline” and “get government spending under control.”

They’ve been had. You all have.

The belief that Republicans are more fiscally conservative than Democrats is an old one. It’s so deeply ingrained in the American myth that it’s hard to know where it started. But it’s completely, factually, undeniably wrong — and has been so for awhile.

In their book Presimetrics: What the Facts Tell Us About How the Presidents Measure Up On the Issues We Care About, economist Mike Kimel and journalist Michael E. Kanell calculate the change in government spending under every president from Dwight Eisenhower to George W. Bush.

They found that government spending, relative to the size of the economy, increased much faster under Republican administrations than under Democratic ones. George W. Bush presided over a greater increase in government spending than any president since Lyndon Johnson, and George H.W. Bush wasn’t far behind. Bill Clinton, in contrast, was the only president since Eisenhower to actually reduce government spending. Even Reagan didn’t do that.

Since Mitt Romney has promised to increase the Pentagon budget by $2 trillion over the next decade, I find it hard to believe that he would be any different from his Republican forebears.

Kimel and Kanell also report how the budget deficit fared under each president. Here’s where the “fiscal responsibility” myth really falls apart: The Republicans increased the deficit, while the Democrats reduced it!

The least “fiscally responsible” administrations were Bush Jr., Bush Sr., Ford, and Nixon. The most deficit reduction came under Clinton and — believe it or not — Jimmy Carter.

In fact, the only presidents in this group who added to our national debt burden were Reagan and the two Bush’s. Everyone else presided over a decline in government debt, relative to the size of the economy.

For goodness sake, they said so straight to your face.

“I am not worried about the deficit,” said Reagan. “It is big enough to take care of itself.”

“Deficits don’t matter,” said Dick Cheney.

So, when economists complain over and over and over that Romney’s math doesn’t add up, they’re not just making an academic point. When Obama asks him how he’d pay for a $5 trillion tax cut, the fact that he can’t answer — the fact that every fact-checker in the known universe has said that his tax plan will blow up the budget deficit — is a flashing red warning sign that he will do what Republican presidents have been doing for half a century.

Which brings me to his opponent, Barack Obama.

On January 7, 2009, two weeks before Obama was sworn into office, the Congressional Budget Office reported that George W. Bush was bequeathing a budget deficit of $1.2 trillion. This year, the deficit is $1.3 trillion.

In other words, 92 percent of the deficit that everyone blames on Obama was actually inherited from his predecessor.

Here are the facts: In Reagan’s first term, government spending grew 8.7 percent per year. In his second term, it grew 4.9 percent per year. Under Bush Sr., 5.4 percent per year. Under Clinton’s two terms, 3.2 percent and 3.9 percent. Under Bush Jr., 7.3 percent and 8.1 percent.

Got all those numbers? Okay. Brace yourself. Under Obama: 1.4 percent.

Our current budget deficit has nothing to do with out-of-control Democratic spending and everything to do with a massive recession, tax cuts, two wars, and a scare campaign that Republicans have been successfully waging for decades to cover up their serial fiscal irresponsibility. Whether you let them fool you again is entirely up to you.

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This op-ed was published in today’s South Florida Sun-Sentinel.