You don’t have to agree with everything Josh Barro says or how he says it, but he has a point here:
Namely, these strategies all accept the premise that middle-class entitlements are unsustainable and must be constrained, and that one purpose of this constraint should be to make the federal tax burden lighter and less progressive.
Which reminds us of the longer-term spending problem. A combination of tax increases and spending cuts has brought the budget deficit all the way down to $640 billion or so, but we are still stuck with much larger long-term structural deficits. In the short-term, Republicans can avoid talking about it, but the reckoning will come. The Republicans will be the party of relatively larger spending cuts (though the two parties seemed have reached a consensus on the future level of Medicare spending in the last election).
This has implications for the mix of policies that Republicans can reasonable pursue. They can be the party of spending cut-based fiscal consolidation, but being the party of entitlement cuts and middle-class tax increases and high-earner tax cuts is poisonous. No amount of posturing about emergency or populist rhetoric will be able to obscure the math. You can almost picture the dialogue of Republicans with the persuadable segment of the public:
Republicans: We are facing a disaster of historic proportions. We are all out of money. We need to pull together, tighten our belts, and make sacrifices for our children to maintain the exceptionalism of the greatest country in the history of the . . .
Public: Well, that sounds unpleasant. But I guess if we have no choice and we all . . .
Republicans: That’s why we need to cut back on our unsustainable spending promises.
Public: I guess you can’t spend money you don’t have.
Republicans: That’s why we need to broaden the tax base so that the lower-middle-class have a positive tax liability and “skin in the game” and don’t go around demanding that the government spends other people’s money. Even some people who currently have a positive tax liability will have to pay a little more.
Public: Sheesh, that’s rough. It isn’t like those people have a lot of spare cash, but if there is no other way . . .
Republicans: That’s why we need to cut taxes on the high-earners so that they will create jobs and get the economy moving again because growth is the only way out of our current mess so we need the entrepreneurs who built that to . . .
Public: What? But you said . . . what?
Now Republicans won’t say “high-earner”. They will say something like “small business” or “job creator”, but the opposition will have plenty of media power to point out the distributional impact of Republican tax proposals.
The problem is that the center-right ecosystem is curiously divided. A vocal segment of conservative activists really do seem to believe that our problems are the result of too large a burden on a subset of high-earners (read: not Solyndra executives) and too small a tax burden (and too much spending) on everybody else. These are the people who are most enthusiastic about replacing the income tax with a flat tax and such. The average Republican presidential primary voter doesn’t seem to agree. When it became obvious that Herman Cain’s 9-9-9 plan was a high-earner tax cut and middle-class tax increase. Cain started backpedaling and changing his plan. The Republican rank and file seems to be more authentically populist than some of the activist corp.
If a Republican populism is to succeed, it can’t operate as merely high-earner interest group politics or treat the interests of everybody else as simply derivative of the interests of a job creator vanguard elite. Cutting subsidies to the politically connected can be part of an effective populist campaign, but only if the campaign takes the concerns of the middle-class seriously. Otherwise, attacks on crony capitalism will just look like a pitiful attempt at misdirection.
