Failed Rubio-Lee Amendment a Missed Opportunity
The amendment would have directly helped families that don't earn enough to pay income taxes, and proven that Republicans care about the vulnerable.
Working class voters played a key role in Donald Trump’s victory last year. Trump ran as a champion of the “forgotten people.” He promised to rescind job-killing regulations, make better trade deals, and curb illegal immigration.
Today? Things are looking up, but with his greatest legislative achievement to date — the Tax Cuts and Jobs Act — the President missed an opportunity to directly help lower-income Americans. They’ll benefit indirectly: Reducing the corporate tax rate, along with other pro-business provisions, should boost economic growth, leading to higher wages and more jobs. But if Americans don’t yet earn enough to pay income taxes, they won’t directly benefit from lower income tax rates.
Working Class Communities Need Help
Automation, globalization and disintermediation have brought us a new economy. It’s an economy that’s hammered some of our neighbors. According to economists David Autor and Melanie Wasserman, men with less than a four-year college education have seen their real wages decline by 5-25 percent between 1979 and 2010. Their employment tends to be less stable. And there’s a good chance they’re spending everything they earn. Which means they probably haven’t benefited from the stock market.
The other factor is family formation. Charles Murray has reported that much of working class America is “Coming Apart.” Other scholars have observed that “men are less likely to get and stay married when they are not stably employed in a decent-paying job.” According to the CDC some 40 percent of children today are born out of wedlock. These factors have helped bring working class communities an opioid crisis and many sad stories.
What Would Rubio-Lee Have Done?
The Senate’s Tax Reform bill doubled the child tax credit from $1,000 to $2,000. But you have to pay federal income taxes to get this extra $1,000 benefit. The Rubio-Lee amendment would have made the extra $1,000 per child tax credit refundable against payroll taxes. That would have allowed these workers to keep more of their money. Rubio and Lee would have paid for this by lowering corporate taxes to 20.94 percent instead of 20 percent.
Conservatives Gone Soft?
When Jeb Bush dropped out of the 2016 GOP Presidential race, Wall Street donors flocked to Marco Rubio. Grover Norquist was impressed with Rubio’s tax reform plans, which included cutting the corporate tax rate from 35 percent to 25 percent.
Now? While the National Review’s editors supported Rubio-Lee, the Wall Street Journal blasted it. Somehow, Rubio was now in cahoots with Senator Schumer to “blow up” tax reform. Mr. Rubio was a traitor to the cause because he only wanted to lower the corporate tax rate from 35 percent to 20.94 percent. Are we really to believe that Senators Marco Rubio, Mike Lee, Ted Cruz, Tom Cotton, and Ben Sasse have all suddenly gone soft?
Defeating Rubio-Lee is Bad for the Country
Defeating Rubio-Lee was bad for America, because — as Governor Romney once told us — some 47 percent of Americans don’t pay any federal income taxes. It may not be 47 percent, but it’s high. Yet the basic costs of child-raising are the same for a family making $35,000 as for a family making $70,000. Why shouldn’t they both get the same child tax credit?
A few hundred dollars makes a huge difference for anyone living paycheck to paycheck. Plus, a lower-income family is more likely to spend any extra money by purchasing clothes, school supplies, or other things for their kids. That stimulates economic growth for others. If we care about every life, if we care about the birth rate dipping below the replacement level, we should care about helping struggling families.
Defeating Rubio-Lee is Bad for the GOP
The GOP should remember the lessons of Romney’s 2012 defeat. Obama painted the Governor as an unfeeling plutocrat. Romney lost the “cares about people like me” question by at least 2-1. In a devastating 2013 Wall Street Journal op-ed, Arthur Brooks explained that Romney lost because Republicans “hand an argument with virtually 100 percent public support — care for the vulnerable — to progressives.”
By contrast, Trump won in 2016 because the vulnerable, the “forgotten people” — many of whom voted for Obama — felt Trump cared about them. Test the theory: When’s the last time someone won the White House without people thinking he cared about people like them? From Reagan’s “Are you better off today than you were 4 years ago?” to Clinton’s “I feel your pain” to George W. Bush’s compassionate conservativism, we elect people who we think care about us.
The 2018 election is around the corner. The party controlling the White House typically loses seats in the first midterm election. But Democrats have to defend Senate seats in West Virginia, North Dakota, Montana, Missouri, and Indiana — all of which Trump won by double-digits. None of these at-risk Senators supported the Tax Reform bill. All but one of them supported the Rubio-Lee amendment. That should tell us something.
Dr. Alex Chediak (Ph.D., U.C. Berkeley) is a professor and the author of Thriving at College (Tyndale House, 2011), a roadmap for how students can best navigate the challenges of their college years. His latest book is Beating the College Debt Trap. Learn more about him at www.alexchediak.com or follow him on Twitter (@chediak).