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Ross Douthat Calls for a Conservative Class War
In case after case, Washington’s web of subsidies and tax breaks effectively takes money from the middle class and hands it out to speculators and have-mores. We subsidize drug companies, oil companies, agribusinesses disguised as “family farms” and “clean energy” firms that aren’t energy-efficient at all. We give tax breaks to immensely profitable corporations that don’t need the money and boondoggles that wouldn’t exist without government favoritism.
And we do more of it every day. Take Barack Obama’s initiative to double U.S. exports in the next five years. As The Washington Examiner’s Tim Carney points out, it involves the purest sort of corporate welfare: We’re lending money to foreign governments or companies so that they’ll buy from Boeing and Pfizer and Archer Daniels Midland. That’s good news for those companies’ stockholders and C.E.O.’s. But the money to pay for it ultimately comes out of middle-class pocketbooks.
Douthat wants to end government subsidies to the wealthy and well-connected. I agree wholeheartedly. Indeed, I called for something similar last year, in a piece called “The Palin Persuasion.”
What do you think?
Published in General
I would absolutely favor clearing out all the subsidies but feel obliged to resist the populist rhetoric. Let’s eliminate subsidies because the government is bad at directing economic activity and that way we can reduce the burden on all taxpayers regardless of their socio-economic class. And while we’re at it, why not advocate for simplifying the tax code altogether? But let’s not turn it into a debate about which party is better equipped to redistribute wealth.
Agreed, Trace — though I think the idea is that some of this apparent “wealth” is itself redistributed and not earned. (I heard on the radio that increasing numbers of “the rich” are unable to pay their mortgages…when, of course, in reality, if you are rich you are by definition able to pay your mortgage.) This is the peril of a worldview underpinned by “targeted tax cuts” and other forms of unequal regulatory behavioral modification. It seems radical to say we must move away from the tax power as a policy tool, since both parties have become so reliant upon it, but I don’t see many other principled options, long term.
Be careful with those rocks. More than likely at least one side of your house is made of glass.
Yes corporations “work the system” but that is their responsibility to shareholders — not to make political statements. I wonder tabula if you eschew tax deductions with which you disagree.
As for the quarterly earnings rag — corporations respond to the interests of shareholders who respond to the interests of their investors. When you choose a mutual fund based on its two-year or five-year record rather than its 10-year or 20-year record, you too are complicit in the evil “short-termism” of corporate America.
In the midst of our justifiied outrage, we also need to distinguish between expenditures that we actually make that are net-beneficial and those that are pure bacon fat.
The first TARP release was made by us for our own benefit- to reduce the probability of major bank insolvency. That threat passed reasonably quickly, such that Bush never touched the second tranche. We spend money on some defense capabilities (ammunition plants and some aircraft lines) because the surge capability is needed and it is cheaper than shut-down and re-start. There are other equivalent examples.
At some point, it could make sense to assist Boeing with a sale to counter-balance the EU subsidy of Airbvus, if that assistance involves timing a government order to share overhead/indirect costs, etc.
That’s why you can’t set a blanket prohibition, but need to stay on top of the process, in detail, at all time-, to locate the issues and award the Golden Hog Fleece in real time. Tesla is an easy case of abuse; there are many others despite wide cross-ideology appeal (e.g., ethanol production) of some; not everything is that easy to smoke out.
Trace: you said: “Be careful with those rocks. More than likely at least one side of your house is made of glass. Yes corporations “work the system” but that is their responsibility to shareholders — not to make political statements. I wonder tabula if you eschew tax deductions with which you disagree.”
You missed my point (probably because I wasn’t clear). Yes, I like the home mortgage interest deduction, but come up with a flat tax proposal and I’d give it up, so long as everyone else gives up their pet deductions.
Also, my point is not to ask corporations to become the political voice of the right, but to at least defend the idea of market capitalism. The problem is that when govt. is handing out goodies left and right the corporations will take them (yes, because they have their shareholder’s interests in mind). Shareholder interest should always be the prime mover of corporate management, but when govt. gets involved the corporation can become dependent on goodies instead of actually producing anything competitive in the marketplace (e.g., the “renewable energy” industry, which survives on subsidies and the prayer that govt. will make them price competitive).
What if you were Anybody But Huckabee?
My own candidate is AABH. “Almost Anybody But Huckabee”. And me an old Baptist, too.
One of the benefits of ending redistributions of wealth to corporate entities is that it would force management of large corporations to decide whether they really are for capitalism (with its implied promise that many will fail). Allowing corporations to receive subsidies not only screws up markets and creates crony capitalism, but it turns entities that should be advocating free markets into just someone else in the welfare line.
I worked for 25 years for a large corporation. Corporations, with some exceptions, are primarily interested in next quarter’s earning report and not in the long-term health of the markets in which they operate. When subsidies are available, they take them because it’s in the short-term benefit to do so.
I think this is a great idea. Also, if I were Mike Huckabee, I’d make this the centerpiece of my campaign.
Don’t miss Ross’s followup post: