First Steps Out of Denial: Ponnuru

After months of phony self-examination and ersatz “rebranding” and “reform” noise among conservatives who are determined to go for the capillaries and protect their recent conquest of the GOP, there are finally a couple of brief statements from credible conservatives that show the first steps away from denial.

The first is from Ramesh Ponnuru, already a semi-heretic for his persistent criticism of the deflationary monetary policy impulses of Republicans during and after the Great Recession. But in a New York Times op-ed meditating on Reagan Worship, Ponnuru offers a more comprehensive criticism of GOP economic thinking that gets to the root of the problem:

Today’s Republicans are very good at tending the fire of Ronald Reagan’s memory but not nearly as good at learning from his successes. They slavishly adhere to the economic program that Reagan developed to meet the challenges of the late 1970s and early 1980s, ignoring the fact that he largely overcame those challenges, and now we have new ones. It’s because Republicans have not moved on from that time that Senators Marco Rubio and Rand Paul, in their responses to the State of the Union address last week, offered so few new ideas.

I will observe that the complaint about ideologues worshiping the dead letter of past accomplishments instead of emulating the spirit that created them was a very common theme among the international wave of center-left “reformers” who won power in the 1990s, from Bill Clinton to Tony Blair to Gerhardt Schroeder and many others. It’s a less immediately compelling perspective on the Right, where the idea of fixed and permanent “solutions” to every problem is deeply rooted, but it still offers a very different answer to the “What Would Reagan Do?” questions that inevitable arise among conservatives.

When Reagan cut rates for everyone, the top tax rate was 70 percent and the income tax was the biggest tax most people paid. Now neither of those things is true: For most of the last decade the top rate has been 35 percent, and the payroll tax is larger than the income tax for most people. Yet Republicans have treated the income tax as the same impediment to economic growth and middle-class millstone that it was in Reagan’s day. House Republicans have repeatedly voted to bring the top rate down still further, to 25 percent.

A Republican Party attentive to today’s problems rather than yesterday’s would work to lighten the burden of the payroll tax, not just the income tax. An expanded child tax credit that offset the burden of both taxes would be the kind of broad-based middle-class tax relief that Reagan delivered. Republicans should make room for this idea in their budgets, even if it means giving up on the idea of a 25 percent top tax rate….

Conservative views of monetary policy are also stuck in the late 1970s. From 1979 to 1981, inflation hit double digits three years in a row. Tighter money was the answer. To judge from the rhetoric of most Republican politicians, you would think we were again suffering from galloping inflation. The average annual inflation rate over the last five years has been just 2 percent. You would have to go back a long time to find the last period of similarly low inflation. Today nominal spending — the total amount of dollars circulating in the economy both for consumption and investment — has fallen well below its path before the financial crisis and the recession. That’s the reverse of the pattern of the late 1970s.

Both these observations are common among liberals, but it’s refreshing to hear them from a senior editor of National Review. Ponnuru’s op-ed is pretty light on an alternative economics agenda for the GOP–he mentions a focus on lightening the payroll tax burden; a more balanced monetary policy; and attacks on software patents as innovation inhibitors. But it’s a lot more interesting than the warmed-over stuff we’ve been hearing from Republican politicians, who seem to think returning to a pale version of the immigration policies of George W. Bush is enough “rethinking” for now and maybe ever.

Ed Kilgore

Ed Kilgore, a Monthly contributing editor, is a columnist for the Daily Intelligencer, New York magazine’s politics blog, and the managing editor for the Democratic Strategist.