For several years, the phrase itself was itself a sad political punch-line: “Bush Tax Cuts.” The Bush/Cheney White House, in 2001 and 2003, cut taxes well beyond what the country could afford, making bold promises about job growth, vast prosperity, and balanced budgets.
Unfortunately for everyone, the jobs boom never happened; economic growth was weak; and the Bush/Cheney administration quickly added several trillion dollars to the national debt with very little to show for it. “Bush Tax Cuts” became synonymous with failure and conservative governance gone wrong.
Seven years later, Jeb Bush believes he’s ready to be president and the Florida Republican is eager to share “Bush Tax Cuts: The Sequel.” The former governor, whose campaign has struggled of late, makes his pitch for the “Reform and Growth Act of 2017” in a new Wall Street Journal op-ed.
…I want to lower taxes and make the tax code simple, fair and clear. It should be easy to understand and make it easy for people to fill out their own tax forms.We will cut individual rates from seven brackets to three: 28%, 25% and 10%. At 28%, the highest tax bracket would return to where it was when President Ronald Reagan signed into law his monumental and successful 1986 tax reform.
There are basically two broad ways to scrutinize Jeb’s “plan,” such as it is: as a matter of policy and a matter of politics.
Let’s start with the substance. Team Jeb hasn’t released any of the key policy details, so we don’t know, for example, what income levels will be tied to which marginal income tax rates. This makes it impossible to estimate what the plan might cost, but we nevertheless know that by shrinking the top rate from 39.6% to 28%, Bush intends to deliver a massive tax break to the wealthiest Americans.
Indeed, the whole package, based on the former governor’s description, appears to be one big, gift-wrapped present to the rich: Bush not only intends to slash rates, he wants to scrap the Estate Tax and cut the corporate tax rate.
The Politico headline late yesterday read, “Jeb Bush tax plan hits Wall Street.” That’s an extraordinarily generous way of describing the plan, and it’s in reference to Bush’s willingness to close the carried-interest loophole that allows hedge-fund managers and the private-equity crowd to pay lower rates than everyone else. Donald Trump has called for the same policy and it’s a break from Republican Party orthodoxy.
But really, that’s a minor concession in an otherwise far-right plan. New York’s Jon Chait explained:
[A] very large and very regressive tax cut is exactly what Bush has described here. It is a provable fact, despite his effort to escape scrutiny through vagueness. In 2012, the Tax Policy Center analyzed proposals by Mitt Romney, which ran along the same lines as what Bush has put forward. Like Bush, Romney proposed to reduce the top tax rate to 28 percent, eliminate the estate tax, and eliminate the taxes that pay for Obamacare. Romney also called his plan a “tax reform,” and promised it would not add to the deficit. The Tax Policy Center found that the loss in revenue from these proposed cuts was so large that even the complete elimination of every deduction and loophole that benefits the rich would not fill the fiscal hole. Therefore, enacting his proposed rate cuts without reducing revenue would have resulted in a tax hike on the middle class to pay for the tax cut for the rich.Bush, unlike Romney, does not promise revenue neutrality. But he is offering essentially the same goodies to high-income taxpayers. So his huge tax cut for the rich would – as a necessary, arithmetic outcome – result in some combination of higher taxes for the non-rich and reduced revenue – ergo, higher debt. Bush has not explained what spending he would cut in order to offset the higher deficits his tax cuts would usher in. He has proposed to raise the Social Security retirement age, but the savings of these cuts would be minuscule in comparison with the revenue loss.
OK, but what about the politics? On this front, Jeb’s problem is every bit as severe. He’s now offering a slightly more regressive version of his brother’s failed experiment – as if Americans en masse were thinking, “The trouble with George W. Bush’s economic agenda is that it wasn’t quite generous enough to rich people.”
Tax cuts for the wealthy aren’t popular. Indeed, Jeb’s top rival for the GOP nomination is Donald Trump, whose conservative populism – and calls for higher taxes for some at the very top – has put him well ahead of the Florida governor.
Jeb’s response, inexplicably, is to offer voters an unpopular policy that Americans have already seen fail. The former governor is simultaneously reaching out to far-right economists for support, despite their total lack of credibility, in a move Paul Krugman described as “pathetic.”
Everything about Bush’s approach seems wildly out of step and overly conventional. It’s not even clear who the Florida Republican is trying to impress with this rehash of old, bad ideas, except maybe the GOP donor class that Team Jeb was supposed to have locked up months ago.