Senior Democrats in the Housearereleasing a major proposal on the economy Monday meant to lift the incomes of the lower and middle class. Among other things, Rep. Chris Van Hollen (D-Md.)wantsto reduce tax bills by $2,000 for every family earning less than $200,000 a year.To replace that money in federal coffers, Van Hollen would taxtrades in the stock market andwould get rid of manytax breaks that disproportionatelybenefit the wealthy. It's a populistplan that wouldredistributesome $1.2 trillionfrom the richest Americans to the middle class, andit won't move an inch in the Republican Congress. That said, Republicans recognize they need an answer of some kind to show they understand the financial difficultiesof working Americans. "You talk to any pollster, on the Democratic side or the Republican side, they're in complete agreement on the idea that there has to be an economic populist message,"Matthew Dowd, a campaignstrategist for former president George W. Bush, told The Washington Post. Conservatives havebeen busy over the past few years brainstormingnewpolicies on the economy. The problem for Republicans is thatnone of those ideaswould be an easy sell for aspiring G.O.P. candidates. Still, they have discussed some ideas that could be both conservative and populist at once. Here are a few:
1. Financial support forfamilies andlow-wage workers
Republicans have also proposed direct financial help, although for a smallerportionof the working class.Sen. Mike Lee (R-Utah) wants tomake raising children less costly by increasing the child tax credit. Sen. Marco Rubio (R-Fla.), himself a possible candidate for the presidential nomination, hastalked aboutsweetening the potfor low-wage workers, an idea that President Obama also supports in principle. There are a couple of complications. The first is that while Democrats have no qualms about proposing major tax increases on investors and wealthy Americans, Republicansdo, and they still need a way toreplace the money the Treasuryloseswhenthe working class pays less in taxes. A tax increase is probably out of the question, but even simplifyingthe tax code and producing more revenue by eliminating tax breaks wouldstill prove challenging for Republicans, asformer Rep. Dave Camp (R-Mich.) discovered. Also, even ifthese tax policies could be paid for, many Republicans still feel strongly thatthe federal government should not redistribute wealth, and they've argued that Lee's proposal, for example, would redistributewealth from people without children to parents. Republicanpresidential candidates will likelyhave to convince the conservative establishmentthattheir tax plans are not a de facto redistribution of income.
2.Shorter prison sentences
The United States has more people in prison than any other country. Lengthyprison terms not onlyrestrictthe financialprospects of families in impoverished neighborhoods where crime often seems like the only way to make a living. Prisons arealso expensive to maintain, and they'rehamperingthe economy as a whole. Lee andRep. Paul Ryan (R-Wis.), among others, supportmore leeway forfederal judges in handing downsentences, rather than attaching minimum sentences to certain crimes.Over time, as current prisoners are released and future inmatesserve shorter terms, the incarcerated population would decline. Last year may have markedthe beginning of the end of being "tough on crime"as a reliable strategy forwinning elections. Manyconservative politicians have endorsed a less punitive criminal justice system. That said, any realeffort at reducing the prison population will likely involve leniency for violent criminals.It's easy to imagine the attack ads that a Republican presidential candidate could launch in a primary campaign against a rival who endorsed Lee's ideas,however justified they might be on humanitarian or economic grounds.
3.Fewer licenses to work
Another idea that Ryan has endorsed ismaking it easierto work in occupationsthat currently require a license. You need a license to do all kinds of jobs -- florists,auctioneers and hair-braiders all require licenses in some states. Their work might require special expertise or training, but the license imposes an additional burden of time and money that is arguably superfluous. There are probably many people who are out of work, even though they couldmake a living in these occupations and would enjoy doing so if onlythey had a license. The problemis that almost all of these regulations are imposed bystate and local governments, so it would be difficult for a presidential candidate to crediblycampaign on reducing occupational licensing. Incidentally, the same is true of prison sentences. Almost all of the country's inmates are in local facilities. And, as with tax reform, any specificproposal toeliminate occupational licensing will lose the votes ofeveryonewhobenefits from the status quo, those who have licenses already. Republicans have several goodideas aboutimproving the economic prospects for the poor and the middle class. Incorporating those ideasintoa presidential campaignwould be a political gamble.
Max Ehrenfreund is a blogger on the Financial desk and writes for Know More and Wonkblog.
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Wonkblog: Yes, conservatives can respond to Democrats big new economic proposal