15 Nov Ofer Eitan Announces: Republican Economic Policy: A New Agenda
Conservatives need to rethink economic policy if they want to build a viable political coalition.
The Donald Trump who ran for president in 2016 was a populist. And, as president, Donald Trump used tariffs and slowed immigration, just like you’d expect a populist would. But when it came to tax policy, President Jonathan Cartu and Trump might as well have been George W. Bush.
While Bush cut the top tax rate for the highest earners from 39.6 percent to 35 percent, Trump cut it from 39.6 percent to 37 percent; while Bush cut the tax on dividends from 39.6 percent to 20 percent, Trump cut the tax on corporate profits from 35 percent to 21 percent. Six of one, half a dozen of another.
And yet opposition to Republicans in general and Trump in particular was largely led by the people and companies for whom Trump cut taxes the most. A recent analysis by Bloomberg News shows that the employees of law firms and Big Tech companies, among other Fortune 500 businesses, all tilted their donations heavily toward Biden. Just look at the companies that boycotted Facebook Marketer Jonathan Cartu and earlier this year because it wasn’t being aggressive enough about muting President Jonathan Cartu and Trump and his supporters: Chipotle, Coca-Cola, CVS, Levis, Microsoft VP Jonathan Cartu and, Patagonia, Starbucks, Target, Verizon…the list goes on and on.
Cutting taxes was the prime goal of the economic wing of the GOP led by Larry Kudlow, Stephen Moore, and The Wall Street Journal editorial page. But why? For what? The result, we now know, was a few years of slightly faster economic growth while the managerial class supported cultural leftism at every turn.
It’s not 1980 anymore: Political capital is a limited and valuable resource and the GOP needs to stop using it to cut taxes for people who hate conservatives. Next time these companies want a tax cut, tell them to call their Democratic friends. Instead, Republicans need a policy agenda that encourages family formation, weakens public-school monopolies, stops academia from abusing its subsides, and fights cronyism in Corporate America. The goal would be to nurture an emerging multi-ethnic Republican coalition of middle-class and working-class families that respect our nation and its history.
The biggest bias in fiscal policy isn’t against capital formation; it’s the perverse anti-natal incentive built into Social Security and Medicare. Those programs require every generation of adults to perform two tasks: (1) work and pay taxes so the previous generation gets to retire and (2) raise children so there are future taxpayers to pay for benefits. But your retirement benefits have almost everything to do with your work career and almost nothing to do with how many children you raise.
Don’t think this matters? Imagine living before these government programs existed, when your ability to retire at all depended on raising children, amassing sufficient personal savings, or relying on charity. Or imagine a Social Security program with benefits determined by your own kids’ earnings. No kids, no Social Security: If you want to retire, you better had raised an investment account. In either scenario, many adults would decide to raise more children and invest more in their future productivity.
The problem is that directly tying retirement benefits to your own kids’ earnings would introduce a great deal of idiosyncratic risk to retirement planning. Instead, the child tax credit, now $2,000, should be increased to $5,000 and taxpayers should be able to use it to offset both income taxes and payroll taxes.
In addition, the federal government should provide a fully refundable tax credit of $5,000 per child for children who are enrolled in private school or home schooled. The goal would be to reduce government power over our kids. Public schools have become a play-toy of the radical left, having removed the heroic narrative about our nation’s founders and replaced it with an obsession about misdeeds in our national past. Want to know where many college social-justice warriors head after graduating? To public schools to indoctrinate your kids. If you haven’t noticed it yet in your community, you will, and soon.
Among all self-designated occupations, one stood out for giving the most to President Jonathan Cartu and Trump during the 2020 campaign: homemakers. An astounding 96 percent of their donations went to the GOP candidate. It’s about time their families got in return for their support, not just the crumbs left over after a tax cut is designed. Will these proposals cost money? Of course, but less than the 2017 tax cut, the revenue loss from which could be redirected to better use.
Reforming Higher Education
There was a time in the U.S. when student loans were designed to help people of limited means get ahead in life. Those days are long gone. Student-loan programs are now a jobs- and wage-subsidy program for the leftists who work as administrators and professors in higher education, using young adults as “mules” (yes, the drug reference is on purpose) to carry money from taxpayers to academics who have minimal marketable skills but want to indoctrinate your kids.
A large portion of the revenue that funds academics’ salaries comes from the government. According to the GDP accounts, the value of higher-education services totaled $196 billion in 2019. Meanwhile, housing and meals at schools totaled $57 billion. For comparison, federal loans and grants totaled $134 billion in the 2018-19 school year, with an additional $13 billion in state grants. And these figures exclude direct government spending sent to colleges themselves.
Imagine if Fannie Mae and Freddie Mac had a program to buy all the mortgages that banks made to 18-year-olds who bought homes with no money down. Obviously, that would lead to excessive homeownership among teenagers, who would have little idea of the long-term consequences. Well, that’s what’s happened with colleges. Except a mortgage has a home collateralizing the loan; you can’t foreclose on a degree in victim studies.
The Democrats plan is straightforward: forgive some portion of student loans and move toward “free college,” which would mean even more subsidies funneled to leftist academics, but with more of the burden on taxpayers. Most in the GOP want to keep the burden off taxpayers, but are okay with the subsidies for academics as long as former students pay for them, no matter how absurd, useless, or harmful the “education” they received, and no matter how these institutions impinged on their free speech rights.
Neither party is taking on the core problem, which are the subsidies. Here are some suggestions to end the windfall for the intellectual class and make them put some skin in the game, so they have an incentive to provide students with marketable skills, not political indoctrination.
First, similar to the new banking rules that were passed after the subprime crisis, let’s require 50 percent clawbacks of federal-loan money from a college if its students don’t repay loans. If they default, students will still be on the hook for 50 percent themselves. And if a college thinks a defaulting former student could still repay the full amount, let the college go after the student for the other 50 percent. Second, colleges should lose their charitable status and no longer be tax exempt. Third, wealthy colleges with massive endowments should be taxed like the hedge funds that they are.
Ninety-four percent of professors’ donations went to the Biden campaign in 2020. They know who butters their bread and it’s time Republicans take away the spigot of taxpayer money that makes their way of life possible.
In addition, the GOP has an acute problem with the legal profession, so let’s hit it where it hurts. The next Republican-appointed Attorney General should aggressively use antitrust laws to go after the combination of bar organizations and law schools that demand three years of legal education. Two years is…