Beyond Tax Cuts - To win, the GOP must comprehensively address the cost of middle-class living

National Review Online ^ | December 1, 2008 | REIHAN SALAM

[neverdem]

Michael Pollan, best known for his polemics against the food-industrial complex, has made a minor villain out of Earl Butz, Richard Nixon’s secretary of agriculture. Faced with a sharp spike in inflation, the Nixon White House sought to win the political allegiance of housewives by taking sweeping steps to lower agricultural prices. Butz slashed regulations and trade barriers while increasing subsidies. The result: Family farms closed down, huge agribusiness concerns expanded mightily, production soared, and domestic food prices fell dramatically. For Pollan, Butz’s machinations lie behind the current obesity epidemic and a broader coarsening of American life. But there is a very real sense in which Butz ended the specter of hunger in the United States. Apart from the subsidies, there is much to admire in his approach: His package of reforms delivered a better quality of life to millions of Americans.

Now, Richard Nixon is hardly a model for Republican domestic policy. His crude Keynesianism and his embrace of wage and price controls are rightly condemned by conservatives, not least because such recklessness helped set the stage for stagflation. But Earl Butz’s approach deserves another look.

We sometimes forget that strengthening the free market often requires policy activism. Standing pat has its place, but anti-market forces can turn the inaction of the other side to their advantage. This will become very clear in the first few months of an Obama White House. Aided by his shrewd enforcer, Rahm Emanuel, Obama looks set to reshape the American state in ways that will permanently ratchet up the size of government and the cost of living. And until the bill comes due, it is a safe bet that a majority of voters will cheer him on. For now, Republicans can only react to what Obama does. Over the longer term, the party needs to develop a strategy that, like Butz’s agricultural reforms, will have a significant impact on the quality of life of working-class and middle-class voters.

American workers are, as we all know, feeling anxious and vulnerable. And when we think of the political implications of this souring of the American mood, we tend to think, correctly, that it helps the Democrats. Barack Obama’s victory is not, as some self-described progressives dearly hope, a mandate for robust social democracy. Just as Bush did not win in 2000 and 2004 because of his supposed commitment to free markets, there’s no reason to believe that voters carefully evaluated Obama’s economic program and found it persuasive. Rather, Democrats won because recent developments have sharply reduced the number of Americans who are optimistic about their economic prospects. As the Pew Research Center has found over the years, economic optimists tend to be Republicans. That is, people who believe that they control their own economic fate, and that the future will likely be brighter than the past, tend to vote Republican by overwhelming margins. This is true among blue-collar workers as well as affluent professionals.

Earl ButzCharles Bennett/AP
As Thomas B. Edsall noted in his ill-timed Building Red America, published just in time for the massive Republican congressional defeat of 2006, blue-collar Republicans differ from blue-collar Democrats in a number of respects: They are more likely to be in intact families, they are less likely to belong to labor unions, and they generally believe market competition is a good thing. To put it crudely, blue-collar Republicans see themselves as economic winners — which is why the current downturn is bad for Republicans beyond the important fact that it has happened on a Republican president’s watch. Remember the old saw that FDR made working-class voters rich enough to vote Republican? In a similar vein, the broad prosperity of the 1990s, a shared legacy of Clinton and a Republican Congress, buoyed Republican fortunes.

As economic optimism erodes, there is a danger that we’ll fall into a vicious circle in which economic pessimism drives policy shifts that make it even harder for American workers to get ahead. In 2003, economists Alberto Alesina and George-Marios Angeletos published a provocative working paper titled “Fairness and Redistribution.” Their argument was that our beliefs about fairness shape our beliefs about redistribution. If you believe that the system works and that hard work is rewarded, you will favor low taxes and low levels of redistribution. If, in contrast, you believe that the system is broken and corrupt and that only insiders and cronies are rewarded, you will favor high taxes and high levels of redistribution.

The irony is that a system in which the state plays a larger role in the economy is a state in which rent-seeking behavior is more pronounced. So a belief in the unfairness of the system often becomes a self-fulfilling prophecy. If the United States really is sliding into crony capitalism, as Thomas Frank and other liberals have forcefully argued, the solutions on offer from the Left — which promise a bigger, more active government — create new opportunities for privileged insiders to make large fortunes by trading on their political connections.

How can Republicans escape this trap? It is important to keep in mind that inequality matters less than the prospects for economic advancement, and that a high and rising cost of living damages those prospects. The next Republican domestic policy needs to address multiple barriers to upward mobility, not just one. In 1980, a punishing federal income-tax burden was the key obstacle faced by middle-class families. At the time, a median-income family of four was paying 11 percent of its earnings in federal income taxes. Today the figure is less than 6 percent, but they’re still giving up too much of their paycheck in other ways. And now the obstacles to prosperity are more diffuse, which makes them tougher to understand and to unravel.

The Democrats have a keen understanding of this new landscape. During the 2004 campaign, Howard Dean blasted Republicans for what he called “the Bush tax hike.” Though your federal income-tax burden might have dipped, Dean argued, you were paying more in state and local taxes and for health care under Bush. So in effect, unless you were very wealthy, you didn’t see any real benefit from the tax cut — or so the argument went.

Luckily for Republicans, Dean was hardly the perfect messenger. But the idea was potent all the same: When Republicans focus almost exclusively on the federal income-tax burden, they talk past the public. Today’s median-income family of four may be paying less than 6 percent of its earnings in federal income taxes, but health-insurance premiums generally amount to far more than that. And because those higher premiums haven’t produced a higher quality of service, many Americans feel like they’re running in place. That’s how you feel when you’re paying higher taxes for the same unsafe streets and the same unresponsive bureaucracy. It is hardly surprising that Republicans have remained fixated on taxes since 1980: Fighting taxes is far easier than, say, fighting health-care inflation. The trouble is that health-insurance premiums affect households at least as much as taxes do.

If we think of middle-class prosperity as a bundle of goods, the challenge becomes clearer. Apart from health care, squeezed families are worried about housing, traffic congestion, and, more than 30 years after Butz left office, the price of food. Fortunately, there are pro-market policies that can address all these challenges. To win back the White House, Republicans need to start fighting for them.

Mr. Salam is an associate editor at The Atlantic and a fellow at the New America Foundation. He is the co-author, with Ross Douthat, of Grand New Party: How Republicans Can Win the Working Class and Save the American Dream.



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[AmericanGirlRising]

This is more of the same BS who use the DemocRAT definition of a “class” to provide wisdom for the other team (yes, they’re all liberal twits making a buck).

http://canadafreepress.com/index.php/article/5216

[NVDave]

You’re sick of identity politics, and then you suggest a policy measure designed to cater to one particular racial group? I don’t get it.

Farmers/ranchers are business owners. If the GOP loses the business community, especially small business, the GOP can pretty much look forward to the same political future as the Whig Party.

The problem for the GOP on ag policies is that they still don’t understand how ag works in this country and they refuse to do what is necessary to transition the country away from ag subsidies. The DNC looks utterly competent on ag subsidies by comparison - much like the growth of government in every other way, the GOP has increased government spending faster on ag subsidies faster than the DNC - because the GOP doesn’t take the time to understand the first friggin’ thing about the policies they propose.

Well, here’s the truth, hard and fast: if the GOP wants to cut government spending, and they want to eliminate ag subsidies (both good goals that are consistent with supposed GOP philosophies), then the US consumer had better get ready to pay more for their food. It is the Earl Butz subsidies that have corn running at less than $4/bu right now, when if the price were held just constant for inflation since 1973, corn would be over $14/bu. It is the vast ag subsidies that continue over-production and keep ag commodity prices artificially low.

So, what does this author want? The GOP that claims lower taxes and lower government spending, or the GOP that micro-manages the economy by interfering in basic business decisions, like who will plant how much of what crop as they’re chasing the latest ag program?

BTW — there is no, zero, zippo, nada chance of winning over blacks with GOP policies in one generation or 100 generations. None. The GOP was responsible for the career of Colin Powell, and who did he vote for, when push came to shove?

Right. So when you can show me a black voting demographic who isn’t making their vote on racist criteria, I’ll believe that any GOP policy might win their votes.

[ari-freedom]

the idea is to make food less expensive, because it is a stress on a family’s budget. Not sure how family farms will do that.

I can see a case for a safety net to protect against natural environmental conditions, such as a drought. Farms should not be protected against competition.

And we need a stable $ because monetary deflation is another big problem. That should be dealt with directly as it affects the whole economy and not patched up just for the farmers.

[NVDave]

You won’t see “family farming” ever come back. The reason is that people want more and more regulations on farmers. The more regulations you impose, the larger the big farmers will get and the higher the barrier to entry for small farmers becomes.

For big business, more regulation is just another bunch of papers that they throw into the “in” box of their regulatory compliance department. For a small business, it is a huge chunk out of the business owners’ days and a liability risk if they get it wrong.

Since the US consumer continues to demand more and more regulations on everything from pollution to food quality, you will see a further decline in the “family farm.” The upcoming regs on greenhouse gas emissions will pretty much finish killing small farms with any livestock in 10 years.

The USDA has no price controls, only price supports. The only crop where they had price controls was tobacco, and that system has now ended.

Oh, and from having seen urban youth up close and personal, I think there is a precise probability of 0.0 that you’re going to get them to raise their own food.

What this country needs is a good starvation. I’d like to see people in urban areas starve - not for a week or two. For about a year. I’d like to see farmers sit on their behinds for an entire planting season. This would weed out those who refuse to be self sufficient in about nine months.

[April Lexington]

Its real simple... get school taxes off the property tax so millions of empty nesters don't lose their houses to a confiscatory wealth tax that is designed to support the NEA racket and its communist agenda. Look at your tax bill and understand what these pigs are doing to you.

Move school funding to the general budget or the sales tax (if so burdened).

Nothing is more sinister than taxing older people out of their houses to pay for a failed socialist utopia.

[SierraWasp]

"Bring back family farming...including within city limits as workfare. Change zoning to make it legal and save energy." Really? Doesn't Ecoli concern you?? Would you do it, yourself???

"Let urban kids get a chance to harvest their own crops and be able to help feed the family in hard times. There’s a sense of pride in one’s own handiwork that all should experience."

"Big Ag is not good for America, agreed. And USDA price controls hinder the laws of supply and demand." No and quite true. Since you din't put a "?" after agreed, I assumed you were asking a question and I answered "No." I do NOT want to return to the pre-Butz days as I love my supermarkets brimming with fresh produce, fozen foods and other goods too numerous to list!!! That Pollan idiot on Bill Moyers show last night was bichin about all the oil we "squander" on movin food to market. Judas Priest!!! He's way worse than (BLEEPIN) Luddites!!!

"The thing I like best about the post...is the title which is profoundly true." Are you recommending pandering as a brilliant political strategery???

I believe this article was intended to be thought provoking. The only trouble with that is... most of the thoughts I had about it were quite provoking indeed!!!

[SierraWasp]

Yes... As my first born son squirted that fake whipped cream on his punkin pie at Thanksgiving dinner, he quipped:”look at all that carbon shootin out on this pie!” I asked him if he could please apply it to the pie in the shape of a foot-print. Phhhhhhhhhhhht!!!

[ari-freedom]

I think the point of the article was that you can’t just increase spending on all kinds of pork and entitlements and say you are a conservative just because you cut taxes. Even if it was on the top marginal rate.

[ari-freedom]

“So, what does this author want? The GOP that claims lower taxes and lower government spending, or the GOP that micro-manages the economy by interfering in basic business decisions, like who will plant how much of what crop as they’re chasing the latest ag program?”

read again
“Apart from the subsidies, there is much to admire in his approach: His package of reforms delivered a better quality of life to millions of Americans.”

[The Spirit Of Allegiance]

Future Farmers of America and 4-H need Conservative support and expansion or they will be completely hijacked.

In-town Farmer’s Markets are a starting point although most of what’s sold at the stalls is trucked in.

A little public education/classroom time on how NOT to fertilize the food you and yours will be eating is something worth considering....

Growing/cooking one’s own food is a start toward self-sufficiency, which is a step away from any need for the Nanny State.

Which is why it is a fight—and a worthy one.

[ari-freedom]

“You won’t see “family farming” ever come back. The reason is that people want more and more regulations on farmers. “

well I would think it is because of economies of scale.
There can be a market for boutique farms that cater to high earners that demand local, organic produce but they won’t be able to feed most of America, regardless of regulation.

[NVDave]

If it were not for the subsidies, the cost of food would have at least kept pace with inflation and would be about 3X the price it is today.

There is no way to say “apart from the subsidies...” and then talk about anything positive for the average American in Butz’s policies. Butz was responsible for setting a policy of huge over-production of ag commodities, which has resulted in ag commodity prices not keeping parity with inflation from 1973 to today.

You can have one or the other: ag subsidies and low prices, or free market principles and higher ag prices. Pick one.

[NVDave]

Organic farming is a marketing tool, nothing more. It caters, as you point out, to people with more money than they know what to do with in urban areas who know little or nothing about actual farming. They’ll trade an increased possibility of e. coli in their food for the self-satisfaction that they’re “living in harmony with nature” through “supporting sustainable farming practices” or some other such bilge-wash reasoning.

If we went back to organic farming on a large scale, you’d see yields on a national average drop substantially, and it would be likely that this country would be just able to feed itself; ie, ag exports would just about stop in many commodities.

[malia]

to read later

[The Spirit Of Allegiance]

ping

[Chet 99]

Cultural conservatives are the weakest link in the GOP. All the Dems have to do to win them over is run an ex football player who talks about his guns, and those voters are GONE. Because they’re basically as Socialist as any SF Liberal on every other issue.

[cynwoody]

Butz was a putz. From the Wikipedia:

At the 1974 World Food Conference in Rome, Butz made fun of Pope Paul VI's opposition to "population control" by quipping, in a mock Italian accent: "He no playa the game, he no maka the rules."^[2]

A spokesman for Cardinal Cooke of the New York archdiocese demanded an apology, and the White House ^[2] requested that he apologize.^[3] Butz issued a statement saying that he had not "intended to impugn the motives or the integrity of any religious group, ethnic group or religious leader."^[2]

Butz resigned his cabinet post on October 4, 1976 after a second gaffe. News outlets revealed a racist remark he made in front of entertainer Pat Boone and former White House counsel John Dean while aboard a commercial flight to California following the Republican National Convention. The October 18, 1976 issue of Time reported the comment while obscuring its vulgarity:^[4]

Butz started by telling a dirty joke involving intercourse between a dog and a skunk. When the conversation turned to politics, Boone, a right-wing Republican, asked Butz why the party of Lincoln was not able to attract more blacks. The Secretary responded with a line so obscene and insulting to blacks that it forced him out of the Cabinet last week and jolted the whole Ford campaign. Butz said that "the only thing the coloreds are looking for in life are tight p - - - - , loose shoes and a warm place to s - - -."

After some indecision, Dean used the line in Rolling Stone, attributing it to an unnamed Cabinet officer. But New Times magazine enterprisingly sleuthed out Butz's identity by checking the itineraries of all Cabinet members.

In any case, according to the Washington Post, anyone familiar with Beltway politics could "have not the tiniest doubt in your mind as to which cabinet officer" uttered it.^[3]

While the Associated Press sent the uncensored joke over the wire, Columbia Journalism Review says that only two newspapers - the Toledo, Ohio Blade and the Madison, Wisconsin Capital Times published the remark unchanged. Others bowdlerized the quote, in some cases replacing the female genital reference with "a tight [obscenity]" and the scatalogical reference with "a warm place to [vulgarism]". The Lubbock Avalanche-Journal said the original statement was available in the newspaper office; more than 200 stopped by to read it. The San Diego Evening Tribune offered to mail a copy of the whole quotation to anyone who requested it; more than 3,000 readers did.

According to Timothy Noah of Slate, this incident was "epochal" because while prior to this, politicians assumed such offensive remarks could be uttered safely in private, after Butz's resignation, politicians "could no longer assume your fellow whites would protect you for telling a joke insulting to blacks, and you could no longer assume your fellow blacks would protect you for telling a joke insulting to Jews."^[5]

The infamous quote was the origin of the movie title "Loose Shoes" which includes a skit "Darktown After Dark". In it, the quote is put to music in a lavish Big Band number.

[ari-freedom]

you don’t think the removal of trade barriers lowered ag prices?

[NVDave]

No, not in the US. We don’t import food the same way we import manufactured goods; we have food imports, certainly, but not in big bulk commoditie, and certainly not the “big six” commodities.

Lower the prices of some exotics, sure, but lower prices on staples like wheat, corn, beef, beans/bean meal, rice, milk, etc? No. Sugar is its own special issue; you might see lower prices on sugar for a short time if we lifted that trade barrier, but I don’t suspect that the low price would remain for any longer than it would take to clear out surpluses in Brazil (eg). This would be sort of like the cheap wool/lamb imports from Oz and NZ - when they cleared out their backlog, prices of imported wool & lamb went up to a point where much of their perceived “cheapness” went away.

What “free trade” has done for the US is allow us to find more markets for ag surpluses off shore. Here’s an example: corn prices went up. Ethanol was blamed - but commodity speculation played a larger role (look at how fast ag commodity prices have come down since this past July — that’s not because of ethanol going away). Who starts screaming? Mexico. Why? Because suddenly the price of corn shoots up in Mexico.

Why? Because the flood of cheap US corn exports to Mexico has killed their ag sector’s production by under-cutting them, leaving them largely dependent upon US corn exports and US corn prices. That’s what “free trade” did for the US ag sector - allow us to flood the markets of the world with cheap US exports to offload our commodity over-production, which has been (in part) caused by subsidies.

But help the US consumer with lower food bills? No, not outside some types of fruits and vegetables and exotic imports. You get more variety year-round by imports of vegetables and fruits grown in Central/South America, and therefore cheaper prices on those commodities out of *our* growing season, but while our growing season is on, you’re seeing prices ever bit as low as the imports or lower. eg, look at citrus prices - when in season, US citrus fruits are far lower than imported citrus has been in the last year.

The economics of imported food depend heavily upon cheap transportation, and in the last year, we got to see what a future with high oil prices will be like: much higher prices on imported foods.

[ari-freedom]

ah you put free trade in quotes because of the Bush policy of reduced trade barriers + higher subsidies (they threw out most of the 1996 farm bill)

You wrote:
“Lower the prices of some exotics, sure, but lower prices on staples like wheat, corn, beef, beans/bean meal, rice, milk, etc?”

Don’t forget Canada and NAFTA. The mid 90’s were pretty good.