ECONOMY

Republicans Shouldn’t Be Democrats-Lite

Republicans seem to be toying with the notion that the best way to erase the taint left by the Jan. 6 Capitol riot would be to shift toward the political center and offer Democrat Lite. The Republican Party took a similar politics-driven approach to economics after an earlier scandal, Watergate. The shift to the center failed then and will fail again.

Senator Mitt Romney of Utah has offered up a new Family Security Act that would supply child allowances of $4,200 per child each year to families, going down to $3,000 when the child turns six. Some of the particulars are disconcertingly precise, bespeaking an obsession with social engineering — why not age four, or age seven? — and the plan is so expensive that it envisions eliminating other tax benefits, some of which may be important to families.

Other prominent Republicans are also embracing ideas dear to Democrats. Romney and his Senate colleague from Arkansas, Tom Cotton, are cosponsors of a minimum-wage hike plan, to $10 per hour instead of the $15 preferred by congressional Democrats and excluding undocumented immigrants. Missouri Senator Josh Hawley would go all the way to $15 for employees of big companies.

Perhaps Romney and his colleagues think such  proposals can reverse some of the damage to their party inflicted by the assault on the Capitol in January. The logic seems to be that offering up these Democrat-friendly ideas can help Republicans capture the suburban and working-class center.

Economic merits aside — the record of family-benefit programs at improving jobs and pay is, to put it politely, subpar — history shows that this kind of post-scandal effort to hold the political center is unlikely to succeed.

After President Richard Nixon resigned in 1974 amid the Watergate scandal, his successor, Gerald Ford, had a choice.

Ford could continue Nixon’s economic policy: a politically driven, interventionist mishmash that went as far as adopting wage-and-price controls. Under Nixon and his Democratic Treasury Secretary John Connally, inflation and unemployment had moved dramatically higher.

Or Ford could drop the intervention and make the case for traditional Republican market-oriented policies, including lower taxes and tight monetary policy. There was even the possibility that Democrats in Congress would go along. Such market-friendly pullback after all had been pursued by a Democrat, President John F. Kennedy, whose tax cuts, signed into law by President Lyndon Johnson, had helped sustain the prosperity of the mid-1960s.

Ford opted instead to pursue more economic mishmash, doubtless because he thought that only conciliation would sustain his challenged party and his presidency. He developed a vast and complex plan designed to cheer up and cheer on voters. Under the mistaken notion that inflation could be controlled by consumers, Ford mounted an absurd campaign, dubbed “Whip Inflation Now,” aimed at getting Americans to spend less. The new president debuted with a tax-increase proposal, then, when the increase proved unpopular, reversed, proposing tax cuts — but overly crafted cuts more oriented toward consumers (the most voters) than producers (smaller in the vote count).  

The result of Ford’s chaotic equivocation was that the Misery Index, the sum of inflation and unemployment, stayed stuck above 10% right through to 1976, the year Ford ran for election on his own. The 1976 Republican platform featured more centrist patter, acknowledging that “the best tax reform is tax reduction,” but recommending only “structural tax adjustments” and Romney-esque tax credits for child care.

Ford’s hold-the-center plan didn’t work. The tactic opened fatal space to his right that his Democratic opponent, Jimmy Carter, was more than ready to claim. Before the presidential debates, Carter studied up on the Misery Index, using it to pound Ford en route to victory in November.

It may be that Ford was seeking to avoid the fate of Senator Barry Goldwater’s candidacy in 1964. Goldwater, the ultimate Cold Warrior, lost after a strongly conservative campaign, pushing for strong defense and attacking the very basis of modern tax structure, progressivity. But that does not mean Goldwater’s free-market notions did not come to be appreciated by American voters. After enduring the inflation and joblessness that ensued, a chagrined electorate got wise and began to see the advantages of pro-growth fiscal and monetary policy. Voters began to take an interest in tax cuts and the case for tighter policy by the Federal Reserve. In 1980, America voted in Goldwater’s heir, Ronald Reagan.

The Ford fiasco shows that the correct move now is for politicians, especially Republicans, to embrace economic fundamentals, which hold true whatever the political weather. Would-be leaders should also think hard before jettisoning market principles for politics. Otherwise, it may be their policy that guarantees a repeat of the purgatorial 1970s. That would be not just scandal, but tragedy.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Amity Shlaes, chairman of the Calvin Coolidge Presidential Foundation, is the author of “Great Society” and co-editor, with Matthew Denhart, of a new edition of Coolidge’s autobiography.

Matthew Denhart is president of the Coolidge Fund and co-editor, with Amity Shlaes, of a new edition of Calvin Coolidge’s autobiography.

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