You are using an older browser version. Please use a supported version for the best MSN experience.

Today's Head-scratcher: Why, Like the Moth to the Flame, Are Republican Candidates so Drawn to Supply-side Tax Cuts?

The Huffington Post The Huffington Post 23/02/2016 Jared Bernstein

Let me paraphrase that title a bit: why are they so forthcoming about it in the midst of an anti-establishment election?

Read this useful NYT review of the depth of the R candidates tax-cut proposals.

The tax plans of the Republican presidential candidates would cut federal revenues as much as $12 trillion over a decade, a post-World War II record eclipsing the deep tax cuts of George W. Bush, Ronald Reagan and John F. Kennedy. And they would come just as America faces the costs of its aging baby-boom generation.

Tax expert Bill Gale provides an efficient summary of the problems with this:

"One, they are enormous tax cuts relative to anything we've done in the past. Two, the candidates don't specify how they're going to pay for these tax cuts. And three, they are hugely regressive" -- that is, the higher a person's income, the bigger the tax cuts that taxpayer would receive, both in dollars and as a percentage of income.

If the candidates "ever do get around to specifying how they're going to pay for the tax cuts," Mr. Gale added, the budget savings are "going to come from low- and middle-income households" because those Americans benefit more than the rich from the government's domestic spending programs.

I've disparaged the economics of trickle down ad nauseam, most recently, yesterday:

[trickle-down theory is based on] increasing growth by cutting taxes on rich people based on the faith that they'll create more economic activity (and create it here, not abroad). To put it mildly, that faith is misplaced. You know what happens when you cut taxes on the rich? They get richer.

[See here for more details and citations.]

But I'm not here today to talk economics or fiscal policy. I'm having a bit of trouble wrapping my head around the politics of all this. Consider these points:

-A very similar trickle-down agenda worked badly for Romney/Ryan, allowing the opposition to portray their candidacy as out-of-touch plutocrats, unconcerned about middle-class income stagnation and inequality.

-In this election, it seems particularly obvious that time-worn, establishment-conservative proposals like big tax cuts for the wealthy are out of tune with the Republican primary electorate. A non-trivial core of Republican primary voters appear to be (or worry about becoming) downwardly mobile middle-class people who might not react favorably to zeroing out taxes on investment income, as Marco Rubio proposes.

-Also, in this election, facts and coherent policy positions are not exactly what the conservative primary base appears to be clamoring for.

If I'm roughly right, why would a candidate feel compelled to lay out the type of proposals described in the NYT piece? Even if that's where you ultimately want to go, why not, especially if you're the current front-runner, just say, "I've got an awesome tax plan that's gonna work great!"? When they ask you, "what is it?," you just say "it's got something for everyone!" which is not completely false as these plans tend to cut federal income taxes for everyone who pays them, though far more for those at the top. (Although, if they really did try to offset the lost revenue with spending cuts, that would likely be at the expense of the least well-off, as Gale suggests.)

And yet, Trump, who claims to want to tax the rich, delivers 35 percent of the benefits of his proposed cuts to the top 1 percent (an e.g. of that bit about facts not mattering so much). His plan also loses the most revenue among those that have been scored so far.

One argument I often hear is that "they do this to signal their rich donors that they get it; they understand the real deal and recognize the pay-to-play standard in today's presidential politics." Maybe, but I don't really buy it. Unless their donors are all checked out, they must recognize that the candidate can't help them if they can't get elected. And Trump doesn't need their money anyway.

Perhaps it's all they've got. I'm more prone to believe this. Jimmy Pethokoukis, who also ponders these questions from the other side of the aisle, reminds us of Robert Novak's famous line: "God put the Republican Party on earth to cut taxes. If they don't do that, they have no useful function." Or, maybe it's just a dog whistle for starving the Treasury of revenues and reducing the size of government, although that's not how this sort of thing usually works out (instead, you end up with larger deficits; note that none of the candidates have actually articulated offsetting spending cuts).

But again, you can't cut taxes if you can't win. I'm not the political analyst here and you're within your rights to point out that these trickle-down plans don't seem to be hurting (or, for that matter, helping) any of the candidates in the primary.

It's more like they're just checking a box. And I guess that's kind of puzzling to me in a year when I think the electorate is less interested in that sort of thing if not downright likely to be pissed off about it.

This post originally appeared at Jared Bernstein's On The Economy blog.

More from Huffington Post

The Huffington Post
The Huffington Post
image beaconimage beaconimage beacon