Despite Drubbing Democrats Continue to Push Redistributionist Schemes

Democrats suffered a mighty drubbing at the polls in November. That much is beyond dispute. The question now appears to be why.

Conservatives contend that the president’s policies were on the ballot (he said so himself) and voters soundly rejected them. Liberals, on the other hand, are attempting the same line of argument that Republicans used after losing badly in the 2008 and 2012 presidential races – that ideological purity is needed in order to excite your base (best of luck with that).

As utterly flawed as that line of thinking is, events from the past week suggest they are at least committed to seeing it through. Lori Montgomery reports for the Washington Post:

Senior Democrats, dissatisfied with the party’s tepid prescriptions for combating income inequality, are drafting an “action plan” that calls for a massive transfer of wealth from the super-rich and Wall Street traders to the heart of the middle class.

The centerpiece of the proposal, set to be unveiled Monday by Rep. Chris Van Hollen (D-Md.), is a “paycheck bonus credit” that would shave $2,000 a year off the tax bills of couples earning less than $200,000. Other provisions would nearly triple the tax credit for child care and reward people who save at least $500 a year.

This approach seems flawed for a number of reasons. First, I’m not sure it could be classified as a substantive change from what Democrats have been proposing for decades. Artificial wealth redistribution, achieved by raising taxes on certain people to pay for government programs for others, has been the bread and butter for every Democrat in recent memory. Don’t tell that to Rep. Nancy Pelosi’s though. She described the bill’s driving rationale as: “You have to think big, you have to think forward, and you have to think new. You have to think new and fresh.”

Second, do voters really want this? As the Post story goes on to note, an election postmortem conducted by Democratic polling firms found that “60 percent of moderates and 62 percent of independents said they would favor ‘a candidate who emphasizes growth’ over one who wants to ‘improve the economy through economic fairness.’”

But the Democrats’ recently released tax plan has nothing to do with growth. Indeed, it may inhibit growth by creating wrongheaded incentives. For instance, the plan eliminates tax deductions for businesses that don’t raise worker pay, which will lead businesses to falsely value labor costs over other production-boosting investments. The real aim of the bill is an attempt to do what a majority of moderates say they don’t care about as much – using government mechanisms to try and create “fair” outcomes rather than fair opportunities.

Third, and perhaps most important, it opens the door for Republicans to offer pro-growth plans that focus on creating a more robust economy, higher wages, and job growth. As Ramesh Ponnuru writes for Bloomberg View:

The elements of the Democratic tax proposal would almost certainly poll well, but Republicans have an obvious counter to it. Senators Mike Lee and Marco Rubio have been working on a plan that cuts taxes on business investment while increasing the tax credit for children. Unlike the Democratic proposal, it seeks to help the economy grow rather than just milk it. And increasing the tax credit for children would benefit a broader range of parents, and give them more freedom over how to spend their money, than increasing the tax credit for child care.

Of course, that’s not the only pro-middle class plan that Republicans have proposed recently. Sen. Rubio has a plan to replace the Earned Income Tax Credit with a federal wage enhancement to boost the take home pay of workers in qualifying low-wage jobs. The plan incentivizes work, especially compared to staying on government assistance. Rep. Dave Camp has offered a plan to simplify the tax code in a way that would cut the taxes of those between $10,000 and $20,000 by 50 percent and for those between $40,000 and $50,000 by 11 percent while also cutting the corporate tax rate by 10 percent. Republicans have also offered plans to combat cronyism, expand innovation in higher education, alleviate student debt burdens, and lower health care costs.

If Democrats want to right their political ship they’ll have to do better than simply repackaging the same redistributionist schemes. The goal should be to grow the economy, not destroy it.