Huntsman’s campaign might be moderate, but his economic plan isn’t
By Ezra Klein,
BRENDAN MCDERMID REUTERS
It is perhaps a sad commentary on the state of the modern Republican Party that saying “I believe in science” is considered a radical play for a center that may no longer exist. But whether Huntsman is looking for a purple heart in the science wars, he’s not interested in taking any friendly fire for his economic plan (pdf). it’s about as close to Republican orthodoxy on the issue as you can get.
The core of it is tax reform. Taking his cue from the most radical reform option in the Simpson-Bowles report, Huntsman wants “a revenue-neutral plan that eliminates all deductions and credits in favor of three drastically lower rates of 8%, 14% and 23%.” That’s potentially bold on two levels.
First, it gets rid of popular deductions ranging from the mortgage-interest tax deduction to the Earned Income Tax Credit to the Child Tax Credit to the tax exclusion for employer-based health insurance. Huntsman doesn’t say how he would prop up the mortgage or health-care markets, nor what we would do to help the poor after they’ve lost their main income supports, and an e-mail to his spokesman, Tim Miller, suggested that the campaign has not worked this out. “A simpler tax code gives everyone more predictability and results in much needed growth,” Miller told me. “Once you have cleaned house and dramatically lowered the rate you are in a much better position to navigate any issues than we are now.”
But presumably that position will change, otherwise the housing and health-care markets will freeze and the poor and the working class would see their real incomes plummet. “Predictability” is a popular buzzword these days, but the status quo is much more predictable than the post-reform world Huntsman is envisioning, and his team will have to come up with some way to manage the transition.
Second, the Simpson-Bowles plan raised about $2 trillion from its tax reform proposal: $800 billion came from letting the Bush tax cuts expire and $1.2 trillion came from wiping out the deductions. I asked Miller whether Huntsman’s plan would do the same. Not exactly, he explained. “The plan takes cap gains and dividends from ordinary income to zero, ticks the corporate rate down, and doesn’t have a gas tax hike. So those are the ‘pay-fors’ to get you to neutral.”
In other words, Huntsman’s plan raises trillions in new revenues by cleaning out the income-tax code -- which means it raises income taxes -- and then it plows that money into large tax cuts for corporate profits and income derived from dividends and capital gains. Both of those are taxes that fall disproportionately on the wealthy. So Huntsman’s plan increases taxes on most Americans in order to pay for very large tax cuts for the wealthy and corporations.
The rest of Huntsman’s plan consists of fairly standard promises to repeal “Obamacare” and Dodd-Frank, lift all manner of regulations, and drill for more oil domestically. It’s a plan you could imagine Rick Perry or Mitt Romney or Newt Gingrich even Michele Bachmann championing.
It’s also a plan that doesn’t have anything particular to say about a pretty extraordinary moment in the economy: everything in it, save for the repeal of various Obama-related initiatives, could have been in the Republican platform in 2005, or 2001 or 1996. There’s nothing specific to the aftermath of the worst financial crisis since the Great Depression: nothing specific to household debt, or temporarily boosting demand, or dealing with the long-term unemployed, or even — though I think it would be wrongheaded at this juncture -- dramatically cutting the deficit (though I take the Huntsman camp at their word that a deficit-reduction plan will come). The most interesting part of the plan’s rollout is that Huntsman told Reuters’ James Pethokoukis that housing in Canada was doing so well because they had a more open immigration system, which suggests some interesting policies, but there’s nothing actually about that idea in the plan.
Which is all to say that Huntsman’s plan is textbook now-more-than-everism. A generic GOP insurgent package that could have come from any of a number of candidates in any of a number of campaigns. Call me crazy, but I think we need more than that.