Finally GOP Candidates Start Talking About Growth
Last month the GOP suddenly awoke.
As Michael Tomasky wrote in the March 19 issue of the New York Review of Books:
As matters are shaping up so far, the sense of many people I speak to is that the election appears destined to be about the condition of the middle class, the issue of wage stagnation, and the recognition (finally) that the American economy has been working far better for those at the top than for those in the middle or, obviously, on the bottom.
Tomasky is dead right. Those of us committed to equitable prosperity have been impatiently waiting for the GOP to seize on (and own) its destiny. At last, thanks to Bush and Paul, the GOP emerges from its lethargy.
First, Jeb Bush in his official declaration, highlighted his commitment to 4% economic growth.
Next, Rand Paul unveiled an impressive, radical, flat tax plan.
Then… along came Paul Krugman to drop an extra olive into the high-octane political martini. “Krugtron the Invincible,” in Voodoo, Jeb! Style, made an overdue public confession of “a dirty little secret of economics — namely, that we don’t know very much about how to raise the long-run rate of economic growth.”
Just because economists don’t know very much about how to raise the long-run rate of economic growth doesn’t mean it’s impossible. Or, even, improbable. Thomas Carlyle, for very good reasons, called economics “the dismal science.” That’s a status it has managed to preserve since 1849, when Carlyle thus indicted economics during his call for reintroducing slavery to the West Indies. Prof. Krugman carries on a distinguished tradition of deep wrongheadedness on the part of economists.
Gov. Bush in his announcement speech declared:
So many challenges could be overcome if we just get this economy growing at full strength. There is not a reason in the world why we cannot grow at a rate of four percent a year.
And that will be my goal as president – four percent growth, and the 19 million new jobs that come with it
Economic growth that makes a difference for hard-working men and women – who don’t need reminding that the economy is more than the stock market.
Growth that lifts up the middle class – all the families who haven’t gotten a raise in 15 years. Growth that makes a difference for everyone.
It can be done.
Gov. Bush then laid out the broad strokes on how:
Leaders have to think big, and we’ve got a tax code filled with small-time thinking and self-interested politics. What swarms of lobbyists have done, we can undo with a vastly simpler system – clearing out special favors for the few reducing rates for all.
What the IRS, EPA, and entire bureaucracy have done with overregulation, we can undo by act of Congress and order of the president.
Federal regulation has gone far past the consent of the governed.
In another venue Gov. Bush recently made some pertinent observations on how the Federal Reserve System, another bureaucracy, is implicated in our sluggish growth. As the June 2nd editorial of the New York Sun observed:
The former governor of Florida was making an appearance at WMUR television at New Hampshire ….
Mr. Bush …: “We’ve never had a time where our central bank is just printing money like nobody’s business. And that depreciates our currency. It lowers our interest rates and depreciates our currency.”
Gov. Bush’s call for 4% growth drew vast notice and comment. Politico, Business Insider, and, of course, Slate, promptly ridiculed it. One columnist at The New York Times injected a note of more moderate skepticism. Lawrence Kudlow, writing in The New York Sun, says Yes, We Can. 4% Growth Can Certainly Be Done As Reagan, JFK, Proved. A columnist at no less than the FT assessed the claim as by no means outlandish and thought that Bush might be “aiming too low.” Forbes.com‘s own John Tamny calls 4% “puny” and says that Jeb Bush “needs to be more ambitious.” The New York Sun‘s Ira Stoll provides a splendid recapitulation of candidate JFK’s pledge of 5% growth (and the aspersions thrown at it by his rival Richard Nixon), calling on America to raise its sights.
As the echoes from Bush’s trumpet began to die away Sen. Rand Paul stepped forth and upped the ante. Gov. Bush had stated “we’ve got a tax code filled with small-time thinking and self-interested politics.” Rand Paul, in a Wall Street Journal op-ed called to Blow Up the Tax Code and Start Over. Even Politico treated his proposal with respect, in Rand Paul threads the needle on flat tax, summarizing the essence:
Paul, calling his plan for a 14.5 percent flat-rate tax an “an economic steroid injection,” argued that the U.S. tax code had “grown so corrupt, complicated, intrusive and antigrowth” that it was no longer “fixable.”
Paul’s new “Fair and Flat Tax,” crafted with the help of the Heritage Foundation’s Stephen Moore and Arthur Laffer, the famous father of “supply-side” economics, would cover capital gains, rents, salaries, and individual wages. It would also preserve charity and mortgage deductions. Paul claimed it would amount to a $2 trillion tax cut and spur a GDP boost of 10 percent over 10 years while creating “at least 1.4 million new jobs.”
Sen. Paul, also, as the prime Senate sponsor of the Federal Reserve Transparency Act, and the second Senator to sponsor, in the 113th Congress, the Brady-Cornyn Centennial Monetary Commission legislation (expected soon to be reintroduced in the 114th Congress), has double credibility in raising the key role of monetary policy in fomenting, or retarding, a climate of equitable prosperity.
Prof. Krugman’s attendant confession and attack on the principle of high, equitable, economic growth displays a severe memory lapse. Krugman:
Why, then, would Mr. Bush imagine that he is privy to secrets that have evaded everyone else?
One answer, which is actually kind of funny, is that he believes that the growth in Florida’s economy during his time as governor offers a role model for the nation as a whole. Why is that funny? Because everyone except Mr. Bush knows that, during those years, Florida was booming thanks to the mother of all housing bubbles.
Prof Krugman seems conveniently to have forgotten that he himself was the head cheerleader for, and undoubted enabler of, that housing bubble. In 2002, in Dubya’s Double Dip, Prof Krugman specifically called for a housing bubble:
To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.
It is absurd and unseemly for Prof. Krugman to indict Gov. Bush as a beneficiary of the housing bubble which Prof. Krugman himself helped conjure.
Prof. Krugman also has been lavish with his criticisms of Sen. Paul and can be expected to continue to pour his signature vilification on some of Sen. Paul’s statements. All to the good. Krugman thereby reveals himself as what he calls (in others) an “austerian.”
The Warrenista Mother Jones recently referred to one of the two co-architects of the Paul flat tax, Dr. Arthur Laffer, as Ronald Reagan’s “swami.” Yes indeed! Many prominent figures on the left are sticking their stilettos into the proponents of equitable prosperity through supply-side economics. All to the good.
The issue, at last, is joined. Conservative economic principles are an enormous electoral asset. Gallup notes, sotto voce, that by an overwhelming plurality of two-to-one the American people are economic conservatives. Only one-third even of Democrats consider themselves economic liberals. Proposals for government intervention might prove an asset in the Democratic primaries. They surely will provide a heavy liability in the general election.
Jeb Bush and Rand Paul, two of the top five presidential contenders within the GOP, now have taken up The Cause. Bush declares for 4% growth. Paul proposes, as an “economic steroid injection,” to “Blow up the tax code and start over.”
After months of preliminary positioning, throat-clearing, and skirmishing on marginal issues the GOP is finding its footing. The Republicans are taking seriously “that the election appears destined to be about the condition of the middle class, the issue of wage stagnation, and the recognition (finally) that the American economy has been working far better for those at the top than for those in the middle or, obviously, on the bottom.”
No more playing rope-a-dope with the left. The GOP’s leaders, at last, are offering credible propositions to restore equitable prosperity.
Welcome to the real start of the 2016 presidential race.
Originating at Forbes.com