With the Iowa caucuses less than three months away, the Republican presidential candidates have suddenly begun discussing income inequality a whole lot more.
During the first two debates, GOP candidates used words like “inequality,” “disparity,” “rich,” “poor,” and “middle class” just 0.06 percent of the time, according to an analysis by the communications and consulting firm Logos Consulting Group. That rate tripled in the Oct. 28 debate, the first one after the Democratic debate that featured more discussion of inequality. It rose again to 0.20 percent in Tuesday night's GOP debate.
But Republicans have resisted policy shifts to match the change in rhetoric, and remain committed to lower taxes and fewer regulations, which took hold under Ronald Reagan, when taxes were higher and the wealth gap narrower.
“The only possible reason Republicans ever talk about inequality is if their polling is telling them they are vulnerable on that issue,” said Bruce Bartlett, a former senior policy analyst for Reagan who has since grown highly critical of the GOP. He argued that Republicans generally don't fret about inequality. “Concern for inequality leads to redistribution, which all Republicans believe is evil.”
In January 2012, when eventual Republican nominee Mitt Romney dismissed talk of income inequality as predicated on “envy” and “class warfare” that should be confined to “quiet rooms,” it reflected a widespread reluctance among those in his party to discuss the growing gap between the country’s rich and poor. That reluctance has subsided in the run-up to the 2016 election as Republicans find fault with rising inequality and stagnating wages that have contributed to a nagging sense of gloom despite an improving economy under under President Barack Obama.
“People are really struggling right now. In this economy, the disposable income of the great middle is down,” former Florida Governor Jeb Bush said Tuesday in the economy-focused debate hosted by Fox Business at the Milwaukee Theater.
If nothing else, rising inequality serves as a fresh way to attack Obama's economic record and position Republicans for the 2016 general election as unemployment falls to a seven-year low of 5 percent and stock markets are performing at record highs.
“I actually don’t expect inequality to be a feature of the primary landscape,” said conservative economist Douglas Holtz-Eakin, arguing that GOP discussions of poverty are about connecting with the poorest voters and as “an indictment of the Obama record—rising poverty, stagnant wages and median incomes” to which they want to tie Democratic front-runner Hillary Clinton.
‘They’re lip-syncing, not singing’
The tax plans of major Republicans feature large tax breaks that would provide disproportionate gains to the affluent, according to the conservative-leaning Tax Foundation. Bush’s proposal would raise after-tax incomes for the highest earners by 16.4 percent; more than any other group. Senator Marco Rubio’s plan would give the top 1 percent a 27.9 percent break, higher than an average 17.8 percent cut for all taxpayers. Senator Ted Cruz’s 10 percent individual flat tax would give the top 1 percent a 34.2 percent tax cut, compared to an average 21.3 percent across all groups.
Although Republican front-runner Donald Trump has raised hackles in calling for closing the “carried interest” tax loophole that benefits private equity and hedge fund managers, the billionaire's overall tax plan also disproportionately benefits the top 1 percent.
“I think it’s a real advance that they’re talking about our historically high levels of economic inequality,” said former Obama White House economist Jared Bernstein. “But when you look at the astounding regressivity of their tax plans, which would further drive up after-tax inequality, it’s clear that they’re lip syncing, not singing.”
Along with Trump and retired neurosurgeon Ben Carson, Bush, Rubio, and Cruz also oppose Democratic-backed proposals to combat inequality such as lifting the federal minimum wage. Republicans unanimously want to repeal Obamacare, the 2010 law that has slowed the rise of inequality by extending health-care coverage to nearly 17 million middle- and low-income Americans, funded in large part by taxes on the affluent. Many Republican candidates are also campaigning on cutting Social Security, which has dramatically reduced poverty among seniors.
Asked Tuesday if the widening wealth gap is a problem, Senator Rand Paul responded “absolutely” and cheekily noted that inequality is most acute in cities that are run by Democrats. The closest he got to an explanation for growing income disparities was the Federal Reserve’s policy of keeping interest rates low.
A challenge for the GOP is that growing inequality may exacerbate its so-called empathy gap—in 2012, Obama won 81 percent voters who wanted a candidate who “cares about people like me.” Debate moderator Neil Cavuto asked Rubio what benefits he'd take away from Americans; Rubio dodged. Maria Bartiromo asked former Hewlett-Packard CEO Carly Fiorina to respond to the fact that the economy added more jobs per month under Bill Clinton and (so far) Obama than under George W. Bush; she dodged.
To bolster their case with the middle class, Republicans argue that regulations serve to empower the rich, rather than protect consumers. Rubio said Tuesday that banking regulations hurt those who cannot “hire the fanciest law firm in Washington or the best lobbying firm to deal with all these regulations.” Carson blamed a “stampede of regulations” for raising the cost of goods for “the poor and the middle class.”
Though economic conditions have changed such that ordinary Americans are taking home fewer real wages for higher productivity, the fundamental tenets of Republican economic orthodoxy have not changed—taxes on upper earners should be cut, rules on business activity should be lifted, and national economic growth trumps targeted efforts at assisting those getting left behind.
“I think the key insight is the common belief that better growth will relieve the pressure for targeted programs,” said Holtz-Eakin. “Their tax, entitlement, health care and regulatory reforms are collectively aimed at that outcome.”