Marco Rubio on economic policy

My project continues. I intend to look at the various candidates for President in this election and see where they stand on policy. What are their legislative priorities, what specifically do they intend to accomplish, how realistic are their plans? I’ve done this for Hillary Clinton and Ted Cruz; now it’s time to look at Marco Rubio.

It’s trickier for Rubio than it was for the other two. His website is frustratingly non-specific about policy, though exceedingly specific about the various ways you can donate money to the Rubio campaign. It’s a hard-sell approach. Marco Rubio is running for President, he’s a conservative, he doesn’t like Hillary Clinton, and he wants you to send him money. That’s the immediate take-away.

Rubio’s website has many many links, most of them non-substantive–things like ‘Meet our Nevada Campaign Chair!’ and ‘What was Marco’s first job?’ and ‘Marco answers a question from an eleven-year old!’ Very few actually deal with policy. But there are a few, including one on Debt. Here I find what I expected to see on Ted Cruz’s website, a strong stance on debt and spending and how it’s “Time to Rein in Washington Spending.” Cruz doesn’t seem to regard Debt as a priority issue in this campaign. Rubio, at least, pays lip service to it.

His actual proposals range from boiler-plate Republican to, frankly, kind of silly. He wants a Balanced Budget Amendment to the Constitution. He’s going to save ‘trillions’ in spending by repealing Obamacare. (Snork). He wants a line item veto. He wants to end ‘taxpayer spending on abortions.’ (Which right now is zero, so that one will help tons.) He’s against ‘pork-barrel spending.’ My personal favorite is one I haven’t seen before: “Allow states to refund unused spending to pay down the national debt.” Yeah, I bet states will be clamoring to do that.

He doesn’t really outline an economic plan on his website. There’s a link to something called ‘Rubio’s economic plan,’ but all you find there is another link, to a half-hour talk he gave in Detroit. I listened to the darn thing; it’s not uninteresting. Rhetorically, he posits an ‘economy of the past’ (high taxes, big government, excessive regulation) and an ‘economy of the future’ (no regulations, low taxes, smaller government–a libertarian paradise). He imagines a ‘New American Economy,’ by spinning a yarn, about ‘David’ a small businessman in Detroit, struggling to succeed, but overwhelmed by regulations and taxes, and ‘Danielle,’ David’s employee, a single Mom struggling to pay her bills.

Rubio, in the Detroit talk, does get specific. He wants to cut the corporate tax rate to 25%, including for small business. But ‘David,’ our fictional small businessman, could also apply his business expansion expenses to his tax bill, cutting his taxes further. Rubio wants to get rid of capital gains taxes. He’d remove most tax deductions. He’d increase the EIC. He would also provide a wage tax credit, an additional $500. He would get rid of Dodd-Frank, and cut other small business regulations. He would also cut personal income taxes, with just two tax brackets, at 15% and 35%. He’s in favor of the TPP.

There’s a lot to like here, honestly.  And I think corporate taxes should be cut. Right now, our corporate tax rate is non-competitive, which is why American corporations take advantage of every tax loophole lobbyists can persuade Congress to create. A high corporate tax that mostly doesn’t get collected ends up not actually raising much revenue, right?  I like expanding the Earned Income Credit. I think Dodd-Frank is a deeply flawed piece of legislation; if not repealed, it certainly should be reformed. (I would replace it with a reformed version of Glass-Steagal). I like the Trans-Pacific Partnership, and like the fact what that means: that he’s a free-trader.

In his Detroit talk, Rubio’s fictional small businessman looks at the regulations he has to live with, and agrees with some of them, but thinks others are foolish and burdensome. So essentially, Rubio isn’t so much anti-regulation as pro-regulation-reform. I suppose that, as a self-proclaimed liberal Democrat, I should be appalled by that. But I’m not. I think that makes a lot of sense. If there are small business regulations that don’t work or don’t make sense or are unnecessarily burdensome, I’m all in favor of getting rid of them. And I don’t know a single liberal Democrat who wouldn’t agree.

(This needs to be said: because conservatives like small government, it follows that liberals must like big government. But we don’t; liberals don’t care about the size of government. Because conservatives oppose business regulations, it follows that liberals must like business regulations, and want more of them. But we don’t. We don’t care how many regulations there are. We just want sensible ones. We want businesses to not pollute the air or water, not damage their employees, pay people adequately. We’re not pro-regulation; we’re anti-crook.)

So when I hear Rubio talk about a New American Century, and tell his tale of poor David and Danielle, the small business owner and his employee, I think there are some good ideas in there. I think that if Marco Rubio were to put those ideas into some kind of legislation, there are a lot of Democrats who would be happy to work with him.

But let’s be honest, as an entire package, the numbers just don’t add up. Here’s‘s the Wall Street Journal’s analysis:

The plan would eliminate trillions in tax revenue.

The Tax Policy Center, a joint venture of the Urban Institute and Brookings Institution that provides tax policy analysis, estimates $2.4 trillion in revenue would be lost in the first 10 years. The non-partisan Tax Foundation has an even steeper projection of $4 trillion.

“It’s not at all clear that he even intends to pay for his rate reduction, so I wouldn’t say his plan is corporate tax reform so much as just a giant corporate tax cut,” said Harry Stein, director of the fiscal policy at the Center for American Progress Action Fund, a progressive public policy research and advocacy organization headquartered in Washington, D.C. “That’s really the most important thing to keep in mind with this plan, is just how completely divorced it is from any sense of fiscal reality.”

Really hard-core supply-side economists do think that, long-term, those tax cuts would stimulate economic growth in positive ways. That’s an ideological position, though, not one factually grounded. In fact, when we look at the history of tax cuts and growth, it’s clear that massive tax cuts for the wealthy only stimulate growth under certain circumstances. If the biggest problem in the economy is a lack of investment capital, then a big tax cut on rich guys can help. That was the case with the Kennedy/Johnson tax cut in 1963, for example. But under most circumstances, tax cuts have almost no stimulative affect at all. And, of course, most of the time, tax cuts make for disastrous fiscal policy.

So with Rubio, we get strong anti-debt, anti-deficit rhetoric. He promises to balance the budget without raising taxes, by cutting spending to the bone. That’s actually not possible, really. Reducing deficits generally requires movement on both fronts; cutting federal spending, increasing federal revenues. And, of course, every time the government increases taxes, as happened with Clinton, with Bush 41, with Obama, the Right howls about how disastrous that tax increase will be for the economy. Tax increases will increase unemployment! They’ll send the economy into recession! And none of that ever happens. There’s essentially no reason to think that modest, carefully targeted tax increases negatively impact the economy.

Still, okay. Rubio proposes to balance the budget by cutting spending, without raising taxes. But then, when you look at his economic plan, it’s built on massive spending increases. He doesn’t call his tax cuts ‘spending increases,’ because spending=bad. But a tax cut is money that would go into the Treasury, but doesn’t. It’s money that goes to private individuals and their businesses instead to the government. And you could say ‘well, it was their money to begin with and anyway they’ll spend it more responsibly.’ Fine; I’m familiar with the rhetoric. It still doesn’t add up to fiscally responsible budgeting.

I’ve said it before, and I’ll say it again: if you are a conservative who is deeply concerned with the debt and deficit, and think fiscal responsibility is and should be an important issue in this Presidential campaign, you cannot, CANNOT vote for a Republican in 2016. Rubio paid lip service to debt reduction, and Cruz did not, but it doesn’t matter. They both propose budgets that will increase the deficit and debt by trillions of dollars. And as we continue with this exercise, I will demonstrate how this is true for all the rest of the field as well.

 

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