Friday, January 11, 2008

A Column That Will Get Some Attention

David Brooks has a very interesting column in today's New York Times.  An excerpt:

Supply-side economics had a good run, but continual tax cuts can no longer be the centerpiece of Republican economic policy. The demographics have changed. The U.S. is an aging society. We have made expensive promises to our seniors. We can’t keep those promises at the current tax levels, let alone at reduced ones. As David Frum writes in “Comeback,” his indispensable new book: “In the face of such a huge fiscal gap, the days of broad, across-the-board, middle-class tax cutting are over.”

The political situation has changed, too. Republicans used to appeal to the investor class with economic policies and the working class with values, crime and welfare policies. But that formula has broken down. The workers are walking away from the G.O.P., and the only way to win them back is by listening to their economic concerns.

Brooks goes on to describe how a number of conservative politicians and thinkers have begun formulating various new policies specifically designed to appeal to lower-class workers without sacrificing (or, at least, further sacrificing) free market principles.  I don't believe that supply-side policies are being removed completely from the agenda (and I don't think that Brooks really means to assert that), but there seems little doubt that emphasis is shifting toward modernizing state services and away from enacting broad tax cuts.

Any one have any thoughts about how the GOP should modernize its economic policies without turning away from the principles of economic liberty?

5 comments:

Hancock.Tom said...

I am going to come clean and admit I haven't been following the debates as closely as a good citizen should...

Aren't a few GOP candidates in favor of abolishing the IRS?

A clean slate would leave a lot of possibilities.

Alex said...

Brooks works at odds with himself in this piece. Can't you win back some of the supposedly disgruntled middle class by lowering taxes for them and everyone else? He points the way to reducing spending, but then shouldn't reduced taxes follow as a matter of course? He hints that bigger government is now widely acceptable but does not address the arguments in favor of supply side economics.

I for one am for the old GOP orthodoxy on taxes. My views on entitlements are simple, radical, and probably all wrong.

Brian said...

Tom, you mean you didn't watch the three GOP debates between last Saturday and last Thursday with baited breath? You didn't watch three different sets of questioners ask mostly the same questions to the candidates and get mostly the same responses? For shame.

Actually, as far as I know the only candidate (aside from Paul) who says that we should get rid of the IRS straight away is Huckabee. Of course, even he would need some sort of tax enforcement agency to implement his national sales tax plan. We'll have a tax agency no matter what type of tax system we implement; the real disputes are over the structure and functions of that agency.

Personally, I like Thompson's plan, which would give people a choice between filing under the current system, with all of its deductions, or filing under a flatter and simpler system with no deductions but low rates. Hopefully, that plan could actually get passed and would pave the way for a full transition to a simplified system. Thompson doesn't have much of a chance to win the nomination at this point, but maybe the eventual nominee will pick up the idea (as Thompson did from some GOP Congressmen).

But probably not.

Brian said...

Alex:

I think I agree with Brooks's main overall point (or at least what I take his main overall point to be) that conservatives must shift and have, in fact, begun to shift some emphasis away from passing large, broad-based tax cuts and toward reform of large government programs. That view is supported by two basic truths about modern American politics. First, tax cutters are something of victims of their own success. The Reagan and Bush II cuts have made federal tax policy much more favorable to economic growth (of course, the Bush tax cuts must be re-enacted in the coming years for that effect to hold up), but have also largely sated the demand (no pun intended) for further large cuts. Secondly, and more painfully, it is now quite clear that there will be no drastic decrease in the size of the federal government anytime soon. Conservatives can hope to restrain the growth of government and institute financial and methodological reforms of government programs (which are tremendous challenges alone), but the era of big government is most definitely not over.

Alex said...

Brian,

Forsake your half-measure heresy, man! When it comes to tax cuts, the broader-based the better, now and forever.

It is at this moment, when the arguments against rightful tax principles come to us so gently and convincingly, clothed as they are in the mantle of the economic greater good, that we must preach the unadulterated gospel of lower taxes the loudest.

When in the span of a generation our side has lost a multitude of the economic faithful to the convenience of big government, further compromise on the fiscal morality of tax cuts will forever exile us into the economic wilderness never again to hold sway in the offices of power.

Keep the faith; cut the taxes; and, if you can at all help it, don't vote for a democrat.