Opinion

Elizabeth Warren’s big bad idea: Taxing our way to prosperity

As Democrats peddle unproven economic theories, Republicans have a clear opening

As Democrats like Sen. Elizabeth Warren peddle unproven economic theories, Republicans have a clear opening to tout the free-market principles that are making our economy work, Winston writes. (Caroline Brehman/CQ Roll Call file photo)

OPINION — Last week, a New York Times headline caught my eye. “Could tax increases speed up the economy? Democrats say yes.” The story, written by Jim Tankersley, explained that Elizabeth Warren is “leading a liberal rebellion” against the “long-held economic view that large tax increases slow economic growth.”

Given the miserable track record of redistribution politics as economic theory and the strength of today’s free-market economy, I had to read on. Was this a case of economic illiteracy on the part of Warren and her fellow quasi-socialists who seem to be driving the Democratic debate? Or was this latest fascination with redistribution of wealth a focus group-tested battle cry for the base? Or maybe this was just the latest iteration of Democrats’ failed economic theories last seen in 2010 when Joe Biden promised a recession-weary America a “summer of recovery” that didn’t happen.

The central argument being made by Warren, Bernie Sanders and a band of liberal policy economists goes something like this: “There is something very wrong with the American economy today, something immoral and dangerous, and it’s called inequality. Taking money from big corporations and the wealthy frees money for more productive government spending that will bring growth.”

Have any of them checked their IRAs lately or the latest unemployment and wage growth numbers, especially for minority communities? Despite the fact that the country is benefiting from one of the strongest economies in history, these progressives are peddling unproven economic theories without any credible economic modeling to support their claims or an ability to cite a successful implementation of this kind of redistributive economic policy.

How they got here

The most recent foray into this sort of dubious government reengineering, the Obama-Biden stimulus program of 2009, gave us the slowest economic recovery from a recession since World War II. Thirty straight months of 9 percent or higher unemployment is quite a contrast with today’s 21 consecutive months of 4 percent or less unemployment.

Democratic presidents once understood that tax cuts are better drivers of growth than billion-dollar government stimulus programs. John F. Kennedy in 1963 and Bill Clinton in 1997 both embraced significant tax cuts. Going from 1963 to 1969, IRS revenues increased 48 percent and 13.9 million jobs were created. In 1998, despite Democratic cries that tax cuts would create deficits, Congress balanced the budget. 

[Opinion: Trump’s economy is booming, and Democrats can’t handle it]

But that economic record hasn’t stopped today’s Democratic presidential contenders from a relentless and brutal assault on pro-growth policies and on those who promote them, with a fervor that defies logic. They don’t hesitate to call out free-market supporters on Capitol Hill or in the private sector as corrupt members of an elite ruling class out for themselves.

They portray American business leaders as greedy and heartless corporate autocrats who put “obscene profits” ahead of their own workers. And they offer up “solutions” like higher corporate taxes that make the country less competitive, new tax-the-rich schemes that depress investment, and an end to employer-based health care for millions of working Americans.

Clearly, Democrats have redistribution-of-wealth plans, but what they don’t have is an economic growth plan.

Winning the political argument against this kind of misguided thinking, especially in light of the success of today’s freer-market economy, should be a fairly easy task. But you can’t win a debate if you don’t take the stage; and in 2018, Republicans stuck with a tired anti-Pelosi campaign strategy that cost them the House.

The right message

So why aren’t Republicans and other pro-growth conservatives speaking out more forcefully today about this record-setting economy? Not just touting the positive numbers but explaining free-market principles, why and how they work, and what they deliver for people and communities.

One reason is the efforts of many in the Republican consulting community who tell GOP candidates that their job isn’t to defend center-right economic principles. Their job, they advise them, is to attack their opponents. We all know how well that strategy worked before.

Having worked with congressional Republicans for three decades, I know that most members want to be more positive and get behind an affirmative message on the economy that touts the principles they believe in. It’s time Republicans and their pro-growth supporters in the private sector stepped up to the plate.

There are many companies and corporations with positive stories to tell about how the 2017 Tax Cuts and Jobs Act helped their businesses inject millions of dollars into the economy and create more jobs. The tax cuts also gave business leaders the ability to put more money into capital expenditures and higher wages and better benefits for their employees — exactly what the bill was designed to do.

These are stories that Americans never hear but should. Those who passed the legislation and those who benefited from it have a responsibility to make their case over the next year or risk losing the next generation to the fever dream of wealth redistribution and socialism.

We are the strongest economy in the world not by chance but by design, by free-market principles that created the American economy and keep it moving forward today. Our economic success as a country has nothing to do with redistributing wealth through government intervention and everything to do with creating wealth through entrepreneurship, innovation, risk-taking and aspiration.

No one argued more passionately or persuasively for his economic beliefs and principles than the late Jack Kemp, whom The Wall Street Journal called the “capitalist for the common man.” Kemp, whom I was privileged to work with, was an entrepreneurial capitalist, always ready to talk to anyone who would listen about his ideas for a better, more inclusive American economy.

In 1993, President Clinton proposed tax increases after his stimulus package met defeat at the hands of a Republican Senate.

Kemp wrote in an opinion piece for the Journal on April 27: “The first order of business must be debunking the Democrats’ notion that higher taxes will lead to a more prosperous America.”

Republicans and the business community should consider that a key part of their mission for 2020.

David Winston is the president of The Winston Group and a longtime adviser to congressional Republicans. He previously served as the director of planning for Speaker Newt Gingrich. He advises Fortune 100 companies, foundations, and nonprofit organizations on strategic planning and public policy issues, and is an election analyst for CBS News.

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