Warren’s big bad idea: Taxing our way to prosperity

David Winston, Tribune News Service

Last week, a New York Times headline caught my eye. “Could tax increases speed up the economy? Democrats say yes.” The story, written by Jim Tankersley, explained that Elizabeth Warren is “leading a liberal rebellion” against the “long-held economic view that large tax increases slow economic growth.”

Given the miserable track record of redistribution politics as economic theory and the strength of today’s free-market economy, I had to read on. Was this a case of economic illiteracy on the part of Warren and her fellow quasi-socialists who seem to be driving the Democratic debate? Or was this latest fascination with redistribution of wealth a focus group-tested battle cry for the base? Or maybe this was just the latest iteration of Democrats’ failed economic theories last seen in 2010 when Joe Biden promised a recession-weary America a “summer of recovery” that didn’t happen.

The central argument being made by Warren, Bernie Sanders and a band of liberal policy economists goes something like this: “There is something very wrong with the American economy today, something immoral and dangerous, and it’s called inequality. Taking money from big corporations and the wealthy frees money for more productive government spending that will bring growth.” Have any of them checked their IRAs lately or the latest unemployment and wage growth numbers, especially for minority communities? Despite the fact that the country is benefiting from one of the strongest economies in history, these progressives are peddling unproven economic theories without any credible economic modeling to support their claims or an ability to cite a successful implementation of this kind of redistributive economic policy.

The most recent foray into this sort of dubious government reengineering, the Obama-Biden stimulus program of 2009, gave us the slowest economic recovery from a recession since World War II. Thirty straight months of 9% or higher unemployment is quite a contrast with today’s 21 consecutive months of 4% or less unemployment.

Democratic presidents once understood that tax cuts are better drivers of growth than billion-dollar government stimulus programs. John F. Kennedy in 1963 and Bill Clinton in 1997 both embraced significant tax cuts. Going from 1963 to 1969, IRS revenues increased 48% and 13.9 million jobs were created. In 1998, despite Democratic cries that tax cuts would create deficits, Congress balanced the budget.

But that economic record hasn’t stopped today’s Democratic presidential contenders from a relentless and brutal assault on pro-growth policies and on those who promote them, with a fervor that defies logic. They don’t hesitate to call out free-market supporters on Capitol Hill or in the private sector as corrupt members of an elite ruling class out for themselves.

They portray American business leaders as greedy and heartless corporate autocrats who put “obscene profits” ahead of their own workers. And they offer up “solutions” like higher corporate taxes that make the country less competitive, new tax-the-rich schemes that depress investment, and an end to employer-based health care for millions of working Americans.

Clearly, Democrats have redistribution-of-wealth plans, but what they don’t have is an economic growth plan. Winning the political argument against this kind of misguided thinking, especially in light of the success of today’s freer-market economy, should be a fairly easy task. But you can’t win a debate if you don’t take the stage; and in 2018, Republicans stuck with a tired anti-Pelosi campaign strategy that cost them the House.

So why aren’t Republicans and other pro-growth conservatives speaking out more forcefully today about this record-setting economy? Not just touting the positive numbers but explaining free-market principles, why and how they work, and what they deliver for people and communities.