GOP abandoned conservative principles with tax bills

It is hard to overstate the extent to which the recently passed House and Senate tax bills defy not only common sense and decency, but also basic conservative principles.

While exacerbating the already enormous gaps in income between the rich and everyone else, either bill will generate deficits and debt of over a trillion dollars in the next decade and trillions more after that — when the gimmicks used to keep the costs at this level (like slow phase-ins and phony expiration dates) no longer apply.

{mosads}The bills dramatically reduce corporate tax rates but fail to close large loopholes in this tax and “broaden the base,” for which conservatives usually argue, keeping this tax extremely uneven across companies and therefore inefficient.

The Senate bill eliminates the individual health insurance mandate of the Affordable Care Act (ACA), which not only stabilizes private markets but requires responsible personal behavior of the type usually advocated by conservatives.

It was first developed at the conservative Heritage Foundation, and first implemented by Republican governor Mitt Romney in Massachusetts.

In addition, by eliminating some deductions for state and local taxes, both bills punish states that adopt and fund their own policy innovations in education, health care and workforce development, rather than relying on the federal government alone. So much for “states’ rights” and policy devolution to them.

It is also hard to overstate how disappointing the behavior displayed last week by conservative Republicans in the Senate was, whom I have always respected. Sen. John McCain (R-Ariz.), after spending an entire career advocating fiscal responsibility and voting against profligate tax cuts, destroyed this reputation just as he is about to retire.

Sen. Jeff Flake (R-Ariz.) similarly undercut his history of fiscal conservatism and recently developed reputation for independence.

More moderate Senate conservatives, like Sen. Susan Collins (R-Maine) and Lisa Murkowski (R-Alaska), squandered the respect they had gained for saving ACA earlier this year by voting to kill the individual mandate on which ACA so crucially depends.

Even worse, Sen. Collins now pretends that the fairly modest funds in a new bill pushed by Sen. Lamar Alexander (R-Tenn.) and Sen. Patty Murray (D-Wash.) would fully offset the elimination of the mandate. No serious health economist I know believes that.

But the troubling actions of conservatives last week extended beyond those of congressional Republicans. Most analysts at conservative Washington think tanks criticize this very unconservative bill privately but not publicly.

Others publicly acknowledge the growing debt problem, but only after heaping praise on other problematic aspects of the bill, like excessive corporate tax rate reductions.

Indeed, conservatives who have helped write important recent reports on how to reduce poverty or raise employment among low-income men hesitate to publicly acknowledge that this bill renders moot a number of the proposals they’ve backed — like subsidizing jobs for the hard-to-employ or expanding tax credits for poor workers.

Indeed, virtually any sensible new spending on the poor will likely be precluded by the huge growth of budgetary red ink that flows from the tax cuts. 

Still, it is not too late for Washington conservatives to recover some of their lost principles. While House and Senate Republicans hash out differences in their respective bills in conference committee, fiscal conservatives should fight the budget gimmickry in a joint bill that artificially reduces its price tag, while limiting the cuts in the corporate tax or the top individual rate for the very rich.

They should reject the elimination of the individual insurance mandate and make up for lost revenue by reducing gratuitous giveaways to the wealthy through the elimination of estate or alternative minimum taxes.

They should stop punishing states for spending on their own innovative policies, and instead close a few loopholes in the corporate tax. They should also expand tax credits for the poor while limiting those for the richest Americans.

Next year and beyond, when congressional Republicans try to slash the safety net for the poor — as many have indicated they will — principled moderates and conservatives should push back. They should demand protections for vulnerable families with children and for adults whose physical ailments or drug dependencies prevent them from working.

While trying to strengthen participation in employment programs for benefit recipients, they should also demand needed supports for poor workers, like child care and access to high-quality job training. For those who cannot find work on their own, conservatives should support job subsidies for them in the private sector or service activities in the public sector.

Only then will conservatives who have recently lost credibility and abandoned their principles recover the respect and admiration they once richly deserved.                     

Harry J. Holzer is the LaFarge SJ professor at the McCourt School of Public Policy at Georgetown University and a former chief economist at the U.S. Department of Labor.