Texas Governor Rick Perry touts himself as the most conservative candidate who is electable. He prays with the fundamentalists, hunts with the Second Amendment gang, decries federal tyranny with the 10th Amendment crowd, and “pokes” around with the birthers. He just released an economic plan that looks like a conservative wish list. And in doing so, he reveals the essential bankruptcy of today’s conservative politics.
Perry’s plan is anchored in the belief that the rich have too little money. He would eliminate taxes on million dollar estates, coddling the heirs to the wealthy. He would tax work but eliminate all taxes on wealth – on capital gains, interest and dividends. Warren Buffett’s tax rate will plummet towards zero. He’d install an optional flat tax at 20%, offering the affluent their choice of the old code or the flat tax, insuring full employment for accountants.
In the US, the richest 1% now make about as much as the bottom 60% combined, and have as much wealth as the bottom 90%. Perry would insure that the rich do even better. Asked about this, Perry said “I don’t care” if my proposals add to inequality. He assumes that if the rich have more money, they will use it to create jobs. But there is no evidence to support that fact. Over the last decade, with the top end Bush tax cuts and the wealthiest 1% capturing all the rewards for growth, we suffered the worst job creation record since the Depression, and wages for the typical US household lost ground for the first time when the economy was growing.
Perry’s plan believes that corporations have too little in profits. So he slashes taxes on corporations. He calls for lowering the corporate tax rate to 20%, offers multinationals the chance to repatriate the trillion in profits they’ve parked abroad at 5.25%, and would establish a “territorial tax” on corporations, ending US taxation on profits earned abroad. This too would generate jobs, he argues.
But corporations are now sitting on over $2 trillion in profits. They don’t lack cash; they lack customers. And multinationals have been shipping good jobs abroad, while perfecting methods to avoid taxes by parking profits in overseas tax havens. Perry’s plan would simply give them greater incentives to move jobs and report profits abroad.
Perry’s plan assumes that Wall Street has too little freedom and corporations have too much accountability. He would repeal the financial reforms passed in the last Congress, removing any guard rails on Wall Street excesses. He would repeal the corporate reforms, passed after Enron, that require company CEOs to certify the accuracy of their audits, freeing companies to go back to cooking their books. He assumes this will help create jobs. But, it is hard to forget, it was Wall Street’s wilding that blew up the economy and caused mass unemployment; and it was the excesses of corporate boardrooms that undermined investor confidence. Removing the cop on the corporate and financial beat only insures a new crime streak.
Perry’s plan assumes that retired Americans have too much security. He would raise the eligibility age for Medicare, turn Medicare into a voucher system and cut Medicaid and turn it over to the states. (While he ducks offering details on this; he embraces Sen. Coburn’s Back to Black plan which follows these lines). He savages Social Security, raising the retirement age and instilling a lower cost of living index - - which would cut retirement support by approximately 30% for retirees in future years. Then he calls for offering a new benefit – private accounts for young workers – which would blow a trillion dollar hole into the Social Security trust fund. He does not say how he would pay for this. In fact, Americans rely increasingly on Social Security for their retirement. Half have no retirement plan at all at work. The few with savings found their hopes dashed as their homes plummeted in value. Retired couples on Medicare who live a normal life will need to spend over $160,000 on health care over the course of their lives.
Perry promises a balanced budget amendment, and a budget balanced by slashing spending. He would limit spending to 18% of GDP, which would require cutting the current budget by about one-fourth. (Far deeper cuts would be needed to cover the decline in tax revenue and the financing of private accounts in Social Security). The federal budget, as Paul Krugman has pointed out, is basically an insurance program with an army. To cut government by one-fourth, you must savage Social Security, Medicare, Medicaid, Veteran’s health care. Perry focuses on cutting the domestic discretionary budget – he boasts about cutting the education budget in half, gutting support for schools in poverty areas. But eliminating all domestic programs won’t come close to covering the cuts required to balance the budget under his tax program.
“There’s nothing wrong with lower revenue,” Parry said, “Americans are ready for Washington DC to quit spending money.” No doubt Americans think their tax dollars are often wasted. They want loopholes closed, an end to corporate subsidies and insider privileges. But they want Social Security, Medicare and Medicaid protected. They want investment in education.
And lost in the Perry cuts would be any hope of rebuilding America. Perry says he wants to make America friendly to business again. But his budget choices will insure that vital public investments in America are starved. Our decrepit and outmoded infrastructure will continue to decline. Our education system will fail to provide the basics, from pre-K to affordable college. Vital investments in research and development will be short changed. We’ll surrender any hope of leading the new green industrial revolution that will be the growth global markets of the future, in a world of global warming that Rick Perry denies. Perry will rail against waste and big government, but his budget leaves no choice but to cut out bone and muscle, not just fat
Perry has plummeted in the polls after abysmal debate performances that suggest he isn’t the brightest light bulb in the closet. But he remains the best funded conservative alternative to Romney, and has the resources to sustain a national campaign.
His candidacy thus reveals the essential bankruptcy of today’s conservatism. In a time of Gilded Age inequality, conservatives want to end taxes on wealth. As good jobs are shipped abroad, they would give corporations added incentives to move jobs and report profits abroad. In the midst of the Great Recession caused by Wall Street’s excesses, they would reopen the financial casino, and remove what limited safeguards were passed. With America’s boomers moving into retirement, they would undermine the basic promises the society made to them for retirement security. With the millennium generation flooding our public schools, they would gut federal support for public education.
Conservative policies – from top end tax cuts, to corporate trade policies, to Wall Street deregulation— blew up the economy, leaving us with mass unemployment, a sinking middle class and spreading poverty. And conservatives have learned nothing and changed nothing. Led by Rick Perry, they argue only for more of the same. They offer a road to more riches for the few and ruin for the many.