The GOP's confused inequality message
By: David Nather
February 7, 2014 05:02 AM EST
Don’t ever accuse the Republicans of having nothing to say about inequality. They have lots to say about it. Lots of different things.
Now that President Barack Obama has put inequality on the national agenda, the GOP is on the hunt for something to say. They’re making progress, with prominent Republicans adopting some of the latest ideas generated by conservative thinkers — everything from rewrites of antipoverty programs to new tax breaks for middle-class families.
And they’re challenging Obama’s seriousness in actually addressing the economic inequality he warned about. “We are facing an inequality crisis — one to which the president has paid lip service, but seems uninterested in truly confronting or correcting,” Sen. Mike Lee of Utah said in the tea party response to Obama’s State of the Union address.
But for all of the headline-grabbing speeches by their rising stars, the GOP still isn’t ready to finish this sentence: “And the Republican plan for inequality is …”
The Democrats have a script on inequality — the lengthy script that Obama read in his State of the Union stemwinder. Republicans are more like the roomful of scriptwriters who are still writing things down and crossing them out, still debating each other about what the actual plot is going to be.
They’ve got some fully developed scenes, thanks to serious speeches by high-profile Republicans like Paul Ryan, Marco Rubio and Lee — but there are also some that really haven’t progressed beyond one-liners yet. (Why did Lee call Obamacare an “inequality Godzilla” in his State of the Union response? We’ll come back to that one.)
It’s another example of how the GOP can sometimes stumble around when it needs an answer to Obama’s policies. For years, Republicans have been hard pressed to identify an alternative to Obamacare, and although some Republicans are starting to outline their own plans now, Obama can still score points with the “What’s your plan?” zinger. Now that Obama is talking inequality, Republicans are being put in the same box.
But leading Republicans and conservative thinkers say it’s fine to keep hashing out the solutions — because for the GOP, it’s progress just to be talking about the issue at all.
“I think there is a general consensus that Republicans have solutions, so it’s something we should be talking about,” said Lanhee Chen, Mitt Romney’s former policy director. “The only way we’re going to grow our constituency and get more people to vote Republican is to address some of these issues head on.”
That was a major theme of the Growth and Opportunity Project report, the Republican National Committee-led effort to examine the lessons of its losses in 2012. The report warned that “if we are going to grow as a Party, our policies and actions must take into account that the middle class has struggled mightily and that far too many of our citizens live in poverty. To people who are flat on their back, unemployed or disabled and in need of help, they do not care if the help comes from the private sector or the government — they just want help.”
But when Republicans try to figure out what else to talk about besides the old standbys — welfare reform and economic growth — “that’s where you start to see a cacophony of voices and ideas” on how to tackle the growing economic divide, said Scott Winship, a senior fellow at the Manhattan Institute who has testified at congressional hearings about inequality and poverty.
Right now, the GOP responses to the inequality debate fall into these camps:
It’s not really about inequality. The one general area of consensus, most Republicans say, is that “opportunity” is the better way to frame the debate, rather than focusing on the income inequality that Obama and liberal Democrats like New York Mayor Bill de Blasio have talked about. To Republicans, a lack of economic opportunities is what causes inequality in the first place.
Lee, who talked about an “opportunity crisis” in a speech to The Heritage Foundation last year — lack of mobility for the poor, middle-class insecurity and too much privilege for political and economic elites — reframed the same three points as an “inequality crisis” when he gave the tea party response to Obama’s speech.
But Republicans note that even Obama has shifted gears. Even though he talked about the huge gap between average wages and the income of the wealthiest Americans, the slogan he’s using now is, “Opportunity for All.”
In general, Republicans and conservative think-tankers are responding to Obama by saying income inequality isn’t really the problem. For one thing, they say, it doesn’t make sense to go after rich people for making too much money. But they also argue that there’s little evidence that the income gap, by itself, makes it harder for low-income and middle-class Americans to thrive.
“Some say the problem is income inequality. The more the rich make, the less there is for the rest of us — and the harder it is to get ahead. It’s a compelling argument; the only problem is, it’s not true,” Ryan said at a House Budget Committee hearing on poverty on the day of Obama’s speech.
Even Rubio, who has said the statistics on the income gap are “startling figures” that deserve attention, argues that the problem is less about how much money a CEO makes than the cashier who can’t move on to a better job.
Winship, who testified at a Joint Economic Committee hearing that the impact of inequality has been overstated, said the majority of Republicans aren’t interested in reducing income inequality for its own sake. The more common view, he said, is that “if what we care about is inequality of opportunity, let’s address that.”
Lee, however, is fine describing the problem as “inequality.” But in his State of the Union response, he redefined the term expansively, describing it as everything from bad schools for poor children to marriage penalties, “taxpayer bailouts” for health insurance companies under Obamacare, government surveillance and ”denying viable, unborn children any protection under the law.”
It’s about upward mobility for the poor. Lately, a lot of the GOP energy has gone into fleshing out its antipoverty policies, with high-profile speeches by Ryan and Rubio that have hinted at alternatives to War on Poverty programs.
That’s often been dangerous ground for most congressional Republicans, whose most famous social policy agenda over the past year was cuts in food stamp funding. But by offering broad new approaches to aid to poor families, and not just a critique of the old programs, Ryan and Rubio “have defined the terms under which the other Republicans will debate the issue,” said James Capretta, a senior fellow at the Ethics and Public Policy Center.
Some Republican governors are getting attention for their stump speeches, too — especially Ohio Gov. John Kasich, who recently rallied the business community and faith-based groups to do more to prevent kids from dropping out of school. Unlike Ryan and Rubio, though, Kasich was calling not for an overhaul of government programs but more private-sector action to fill in the gaps. “We have experienced the limits of government effectiveness when it comes to breaking the terrible pattern of poverty and income inequality in our country,” he said.
Their basic premise is simple: If poor people are trapped in poverty, a big part of the answer is to prepare them for work better — and to give them better rewards for working.
Ryan, for example, has criticized the current antipoverty programs for cutting off poor people’s support too quickly when they go to work. And in a speech at the Brookings Institution last month, Ryan hinted that he might propose a social policy rewrite based on Britain’s new “universal credit,” which replaces six income support and benefit programs with a single payment that phases out more gradually when low-income people get jobs.
Rubio, meanwhile, is calling for two major social policy overhauls, though only in broad strokes so far. One, based on an idea first proposed by former Romney domestic policy director Oren Cass, is to turn all of the major antipoverty programs over to the states and call them a “Flex Fund,” to let them redesign the rules in creative ways.
Republicans have been proposing block grants for decades, but Cass has suggested the “Flex Fund” would adjust the money for the size of the population and for poverty rates. His version would allow states to provide different types of assistance to poor people depending on their circumstances —nonworking families could get Medicaid, for example, but working families would get wage subsidies instead.
Rubio’s other idea is to turn the Earned Income Tax Credit into a wage supplement, giving the extra money to families along with their monthly paychecks, rather than just once a year. He’s also planning a speech at Miami-Dade college next week about how to overhaul higher education to promote other alternatives, such as community colleges, so people who don’t have to get the traditional four-year college degree to develop important job skills.
Rubio’s wage supplement idea has one thing in common with Obama’s proposal to expand the EITC: Both would give assistance to childless workers for the first time. But even though Obama suggested in the State of the Union address that he and Rubio have found common ground, Rubio said they’re not really talking about the same thing — because Obama wants to expand the tax credit, not replace it. Rubio told a talk radio host that ”we’ve identified the same issue, but his prescription for it seems to be more of the same.”
Both approaches would require Congress to wipe decades of social programs off the books and start over, a task that would be sure to provoke the wrath of Democrats and liberals throughout the country. And it’s possible that Rubio’s wage supplement idea could create more paperwork for businesses by requiring them to keep track of workers’ incomes at other jobs as well, according to Jared Bernstein of the liberal Center on Budget and Policy Priorities.
But if other Republicans follow Ryan and Rubio’s lead by talking about more flexibility for benefit programs and more federal support for the working poor, “that is the beginning of a new Republican agenda, to be sure,” said Capretta.
It’s about economic growth and jobs. Other Republicans, including the House GOP leadership, are sticking closer to the party’s traditional prescription: Create more jobs, through lower taxes and fewer regulations, and the rest will take care of itself.
It’s a solution that doesn’t really advance the ball on GOP policies but allows Republicans to stick to their roots while exploiting what they see as Obama’s biggest vulnerability: It’s his economy now, and it’s not creating enough jobs.
That’s why House Speaker John Boehner keeps urging Obama to “work with us” on jobs, and it’s why House Republican Conference Chairwoman Cathy McMorris Rodgers, in the official GOP State of the Union response, declared that the GOP plans to close the economic gap “focus on jobs first without more spending, government bailout, and red tape.”
Republican pollster David Winston, who advises the GOP leadership and gave a presentation on inequality at the recent House Republican retreat, said Boehner’s critique acknowledges that the growth formula is the one most Republicans are comfortable with: Economic growth creates jobs, which in turn helps people earn more because more businesses have to compete for workers. “When you increase the value of labor by having lots of jobs, that is central to getting back on the right track,” he said.
There’s also a tactical side of the growth message, as other Republican strategists have been telling the party it can use the old standbys to block Democratic calls for a higher minimum wage, as popular as it is.
The YG Network commissioned a poll that found that, while three out of four Americans support raising the minimum wage, a majority said economic growth through lower taxes and fewer regulations is a better solution.
It’s about crony capitalism. Another camp favors the more populist, tea-party-friendly argument: Inequality is fueled by policies that benefit powerful interests like banks, insurance companies and lobbyists.
In his State of the Union response, Lee summed up the problem as “cronyist privilege at the top, where political and economic insiders twist the immense power of the federal government to profit at the expense of everyone else.”
And James Pethokoukis, a blogger for the American Enterprise Institute, wrote in National Review that the GOP should “own” the inequality debate by fighting cronyism, noting that “loophole-ridden laws are a cash cow for lobbyists and lawyers and go a long way toward explaining why five of the nation’s wealthiest counties are in the Washington, D.C., area.”
What they’d actually do about it is less clear, but they generally agree that Republicans should stand against “too big to fail”-style bailouts of big banks and end tax loopholes that can help lobbyists get rich. They’re also championing a bill by Mike Pompeo of Kansas that would end all energy subsidies.
And then there’s Obamacare — the law Lee called an “inequality Godzilla.” He didn’t explain that line in any great detail, but his communications director, Brian Phillips, said it captures all of the problems Lee sees in the inequality debate: It adds to the maze of government programs for the poor, increases health care costs for the middle class by creating plans with high deductibles, and benefits powerful insurance companies — especially with a provision that will give them extra payments if they attract too many sick people.
It doesn’t take any convincing to get Republicans to oppose Obamacare, of course, but Lee plans to have a more detailed anti-cronyism agenda in the spring that will include plans to fight corporate welfare and cut off energy subsidies — all part of an effort to signal to the rest of the party that it has to talk about the needs of middle-class and low-income Americans, not just fiscal policy and national security all the time.
“That’s not going to cut it anymore,” Phillips said.