WSJ_June 12, 2014 7:14 p.m. ET
With Washington determined to take a lesson away from Dave Brat’s rout of House Majority Leader Eric Cantor, let’s make sure it’s an enduring one. Let’s talk “reform” conservatism.
Yes, immigration came up in this race, though it didn’t get ugly until the end. It happens that Mr. Brat, an economics professor, spent the bulk of his campaign rallying voters to a traditional free-market, pro-growth economic agenda. It centered on a tough criticism of crony capitalism and a clarion call for a flatter and more efficient tax code.
Mr. Brat reprised his themes for Fox News’s Sean Hannity the night of his victory, explaining: “We need to take free markets seriously. That means we have to put an end to all these tax credits and tax deductions and loopholes. [Michigan Rep.] Dave Camp had a good bill which simplified the tax code and had a Reagan-esque 10 and 25 percent rate. That made sense and it was going to be pro-growth.” This clearly resonated with the 56% of voters who chose to rout a sitting majority leader.
Mr. Brat’s victory is surely awkward for a new wing of the conservative movement that has taken to arguing that the whole free-market, supply-side, Reaganesque agenda is passé. Humbly declaring themselves the “reform” conservative moment, this group has made some waves with their manifesto “Room to Grow”—including introductions by former Bush speechwriter Pete Wehner and National Affairs Editor Yuval Levin. “Room to Grow” has some interesting ideas, all overshadowed by the book’s central premise: That conservatives need to embrace government to better endear themselves to the “middle class.”
The authors are clear that politics, not principle, needs to drive conservative policy. Nowhere is that clearer than in the chapter by former Bush Treasury official Robert Stein on tax policy. A summary: Marginal tax rates are no longer popular because they don’t give much to the middle class. Republicans instead need to embrace redistribution and lard the tax code with special, conservative-approved handouts for said middle class—namely a giant tax credit for children, similar to that proposed by Utah Sen. Mike Lee. (The book has many more tax-credit suggestions, too.)
Absent from the chapter is any recognition of why Reagan, and the party, embraced tax cuts. It’s this thing called “economics.” Cutting taxes on capital—and cutting high marginal rates—spurs investment, which grows the economy, which benefits everyone, including the middle class. The good politics follows. The middle-class beneficiaries of Reagan’s economic boom showed their own appreciation by signing up for a conservative political realignment that lasted decades.
Mr. Stein never uses the word “capital” in an entire chapter on tax policy. It’s also devoid of a corporate tax reform—perhaps because talking about “corporations” isn’t a middle-class thing. Defenders of the new agenda have struggled to explain how tax distortions are “pro-growth.” AEI scholar James Pethokoukis has taken to arguing that supply-side economics is about a greater supply of children and to justify redistribution. Mr. Levin and National Review’s Ramesh Ponnuru this week explained that conservative redistribution is now acceptable, since it counters liberal redistribution.
The biggest cheerleaders for the conservative “reformers” are liberal commentators such as Ezra Klein. No surprise: They understand that “Room to Grow” is a capitulation to the left’s inequality and middle-class talking points. They are more than happy for future tax fights to center solely on which party gets more money to divvy up among Solyndra, parents, welfare, farmers and so on.
What matters to the “reformers,” explained New York Times columnist Ross Douthat last year, in praising the Lee tax plan, is moving conservative tax policy beyond “1979.” This again confuses policy and politics. Good economic policy doesn’t have a sell-by date. ( Adam Smith ? Ugh. He is just so 1776.)
What can require periodic overhaul is political messaging. The “reformers” are right that, politically, selling a cut to a 39.6% top rate is harder than was Reagan’s job of selling a cut to a 70% rate. What they miss is that the past 40 years have provided entirely new and powerful selling points for a flatter, cleaner code. Americans have grown frustrated with the insane complexity of taxes, furious over the crony loopholes, and wary of the power all this hands abusive IRS bureaucrats.
Which gets us back to this week’s rout. Mr. Cantor never endorsed the more dramatic proposals of the “reformers,” though he spoke broadly kind words about “Room to Grow.” His “Making Life Work” agenda made him a poster boy of that new GOP impulse to focus on populist initiatives that cater to the middle class.
Mr. Brat openly derided “Making Life Work,” referring to its “catchy little phrases to compete with Democrats for votes.” As he told Mr. Hannity: “I do not want the federal government trying to make my life work.” Mr. Brat also ably tied together the cronyism/complexity/growth arguments to make the case for real tax reform (rather than Democrat-lite tax spending).
The hallmark of conservative policy innovation is the use of markets to limit government and expand citizen freedom and choice. That’s reform. The lesson of the Brat-Cantor race is that the traditional reform concept is still popular (and populist). At least when it’s delivered with economic understanding and conviction.
Kim Strassel: What Dave Brat Taught Conservatives – WSJ.