Why is tax reform so important to the American future? The standard answers focus on economics. The complex and uncompetitive nature of the American tax system strangles economic growth. It's reducing American competitiveness, killing American jobs, destroying the mobility for which the U.S. was long known, increasing inequality, and giving rise to malaise and unrest throughout American society.
The economic case for tax reform is unassailable. But there is another observation, mistakenly relegated to the realm of "just politics," that may be even more important in shaping the future of America. That observation is that — even more than the repeal of Obamacare—pro-growth tax reform is critical to determining whether or not Republicans are capable of governing.
While the importance of that question to Republicans is obvious, its centrality to the American future may be less clear. But it goes to the heart of the long-raging economic dispute between the Western right and the Western left — represented in America today by the Republican and Democratic parties.
The basic terms of that dispute are simple. The economics of the right argue that an unrestrained, competitive economy will produce perpetual growth, leading to higher living standards for all. The economics of the left argue that structural forces intended to exploit the lower classes and benefit the upper classes guarantee inequity and perpetual misery independent of the size of the economy.
When it comes to translating those economic beliefs into politics, the left has a significant and unfair advantage. To succeed, the left must be able to demonstrate continued inequality; blame some plausible, prominent, conspiracy of the wealthy for that inequality; and convince voters that the left is leading the fight against these villains. For the right to succeed, it must deliver demonstrable economic growth.
The left’s challenge is immeasurably easier. President Barack Obama was a marvelous leftist politician. Not only was his entire economic agenda oriented around the case for structural inequality and the identification of the villains living in our midst, but he extended the logic of a structural struggle to sow similar dissension on a full range of social issues.
To the Obama economic team, growth was a secondary consideration. The struggle against entrenched structural forces was primary. While President Obama was not averse to economic growth, he was willing to sacrifice any amount of growth if it enhanced the image of the struggle.
The anemic 1.5 percent growth rates that he and his advisers touted as the "new normal" is likely about the maximum growth compatible with government policies that prioritize the struggle.
The Obama administration and its Democratic allies provided the American people with a clear picture of the leftist vision for our nation’s future: Class and race-based groups fighting for shares of a static pie. Increasing numbers of Americans trapped in the economic and ethnic stations to which they were born. A nation focused inward, constantly fighting amongst itself.
Can the Trump administration and the Republicans provide a clear alternative vision?
To date, the administration has been quietly effective in rolling back regulatory abuse, rescinding agency guidance that promoted race and gender-based discrimination, and promoting a broad sense of optimism. Without legislative support, however, those gains will prove fleeting. They will evaporate within the first few months of the next Democratic Presidency.
The heat is on a Republican Congress that has yet to deliver much of substance. The current tax reform proposals are far from ideal, but they would all be great improvements over the status quo. More importantly, they are all pro-growth.
They would all reinvigorate the creativity and risk-taking central to a robust American economy, social mobility, rising living standards for all, and an increased emphasis on the commonality among Americans, rather than on the distinctions between Americans claiming different roots.
If the Republicans can deliver on these promises, the country will face a real choice between two competing visions for the American future. If they cannot, only the leftist future will remain.
The country will experience periods — like the Obama years — in which Democratic control of the government pushes the leftist vision forward.
It will experience periods — like the past year — in which GOP control of the government stalls the leftist advance while leftist control of the culture refines its vision.
The deck is stacked against the political right. Inequality and potential scapegoats have been fixtures throughout human history. Economic growth has existed only during selected, lucky, golden ages — at least until capitalism powered the truest golden age in all that history.
The left will always be able to illustrate its vision. The right will have to work to do it. Can the current representatives of the right do the work? The future of America hangs in the balance.
Bruce Abramson is the President of Informationism, Inc., Vice President and Director of Policy at the Iron Dome Alliance, and a Senior Fellow at the London Center for Policy Research. Jeff Ballabon is CEO of B2 Strategic, Chairman of the Iron Dome Alliance, and a Senior Fellow at the American Conservative Union's Center for Statesmanship and Diplomacy. To read more of their reports — Click Here Now.
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