Reagan: Real or Memorex?
Larry Kudlow attempts to rally the GOP by invoking cult hero Ronald Reagan on Real Clear Politics.
In other words, significant U.S. corporate tax reform would jack up wages and jobs — predominantly middle class wages and jobs. It would attract investment from all over the world. And to U.S. companies that shelter profits overseas, we’d be able to say, “Come home to America.”
The growth impact of significant corporate tax reform would also drive up the value of the dollar and allow the Federal Reserve to normalize interest rates much more quickly. That, by the way, was the Reagan policy. It worked for two decades, producing nearly 45 million jobs and roughly 4 percent wage growth. Lower tax rates and King Dollar. It’s a recipe for prosperity. Will any of you Republicans who claim to be Reagan followers make that case? Where is your Reagan economic voice?
The good news is Kudlow is making an actual policy proposal. The current GOP rarely does this, preferring to devote themselves to fact-challenged slams at President Obama and ginning up fake scandals. He is also at least in the neighborhood of accuracy describing Reagan’s corporate tax and regulatory policies as opposed to prevalent GOP mythology that omits the Gipper’s numerous second term tax increases and compromises with Democratic House Speaker Tip O’Neill.
Kudlow trips up by neglecting to mention that Reagan came to office in a completely different environment from the current one and his policies were responses to those conditions. In 1981, inflation, taxes and government regulation were much higher. Today inflation is negligible and taxes and government regulation have been slashed. They are as low as they have been in decades. It is debatable whether reforming corporate taxes (or eliminating them as Kudlow advocates) would result in the kind of economic growth he claims. However, arguing for thirty year old policies in a vastly different environment is not promising and lends itself to criticism of the right being stuck in the past.
Kudlow also assumes that corporations would share higher profits with employees by hiring more of them and raising wages. He fails to mention that we are in a time of record corporate profits while employment ills remain stubborn and wages are stagnant. He seems to subscribe to right-wing gospel that “the rising tide floats all boats.” The disparity of wealth numbers suggest that lower taxes for corporations and the wealthy float those yachts quite a bit better than they do the smaller craft.
Cross-posted from The Sensible Center