“Now, in seven years under President Obama, the U.S. has added an average of 107,000 jobs a month. Under President Clinton, the economy added about 240,000 jobs a month. Under George W. Bush, it was only 13,000 a month. If you win the nomination, you’ll probably be facing a Democrat named Clinton. How are you going to respond to the claim that Democratic presidents are better at creating jobs than Republicans?”
As Brian Beutler noted afterward, that is exactly what Democrats will be saying next year. So how did Fiorina respond? She told the story of a woman she met who worries about her economic situation, then said, “Yes, problems have gotten much worse under Democrats,” which is the opposite of the truth, then went on to decry how government has been “crushing the engine of economic growth for a very long time.”
In other words, she didn’t answer the question. But its essence is this. The Republican candidates all propose variations on the same theme, which is that the way to boost the economy is to cut taxes and scale back government regulation of business. In other words, here’s the plan all the Republicans agree on:
1) Cut taxes, particularly for the wealthy.
2) Scale back regulations on business.
3) Watch the economy boom.
The trouble is that we’ve been testing their theory for some time now, and it isn’t holding up well. That’s particularly true of its flip side, which is that tax increases and more regulation inevitably strangle the economy. Barack Obama has increased taxes and regulations, and job growth during his presidency has been solid. Unemployment is now at a mere five percent; you may remember that in 2012, Mitt Romney said his economic plan was so great that he could bring unemployment below six percent by the end of 2016. It’s true that wages have been stagnant, but that’s a condition that goes back decades. Even if you grant that the economy isn’t what we’d like it to be right now, the Republican theory predicts that the Obama policies would have produced not an incomplete recovery from the financial collapse, but outright economic disaster. Their theory also says that we should have had a huge economic boom during George W. Bush’s administration, and another economic disaster under Bill Clinton, who also raised taxes and increased regulations. None of those things happened.
And today, there’s simply no meaningful way in which the proposals of the current crop of GOP candidates differ from what George W. Bush did. There are some differences in the details, particularly the more fantastical proposals that no one takes seriously, like bringing income taxes down to a 15 percent rate for everyone. But those are differences of degree, not kind; they’re just about how deeply you want to cut taxes, not whether tax cuts pave the path to economic glory, which all Republicans accept. The essential strategy is the same: Cut taxes and cut regulations, then enjoy unending prosperity for all.
As Paul Krugman recently observed, the Democrats running for president are much more modest in the predictions they make about the effects their economic policies will have than the Republicans are. The Democrats will give you lots of reasons why it’s a good idea to raise the minimum wage, or change overtime rules to include more workers, or invest in infrastructure, but what they don’t do is say, “If we follow this plan, GDP will surge by eleventy zillion percent!”
Republicans, on the other hand, reliably predict that their formula of lower taxes and fewer regulations will produce an economic supernova. Jeb Bush says that he can bring about sustained GDP growth of four percent; the last president to average growth that high was Lyndon Johnson. Mike Huckabee says his plan will bring six percent growth, because why the hell not?
We heard similar things during the debate. Marco Rubio said that if we could reform taxes and regulations, repeal Obamacare, and do a couple of other things like expand vocational training, “we will be able to increase wages for millions of Americans and we will be able to leave everyone better off without making anyone worse off.” Ted Cruz said that if we can cut taxes and regulations and return to the gold standard (seriously), then the result will be “incredible economic growth.” Jeb Bush said that we can get to his four percent growth if we cut taxes and “repeal every rule that Barack Obama has.” And that’s without even getting into Donald Trump’s ideas.
But Republicans still haven’t answered the basic question: Why does the Republican theory about what moves the economy keep failing? Something tells me they never will.