Can Biden roll back the Reagan revolution?

Can Biden roll back the Reagan revolution?

Opinion by 

Paul Waldman

Columnist

Today at 1:12 p.m. EDT

While the people who define today’s Republican Party are defending the Jan. 6 insurrection, working to prolong the pandemic and trying to turn America into a Christian republic, another kind of Republican — the old-school plutocrats who have long controlled the party’s policy agenda — are getting very frightened of the reconciliation bill Democrats are negotiating.

They see it as a threat to everything they’ve accomplished over the last 40 years — a view articulated well by former Trump adviser Stephen Moore, who is leading an impromptu effort to stop the bill:

“We’re telling donors and other organizations this is ‘the war of the worlds’ for the conservative movement, because we have to stop this bill,” said Moore, who leads the Committee to Unleash Prosperity along with Art Laffer, the supply-side economist whom Trump awarded the Presidential Medal of Freedom. “This is our pitch to donors: This bill is reversing the 40-year Reagan revolution that has really changed the country.”

Moore may be America’s most buffoonish fake “economist,” but he’s right: The reconciliation bill really does represent an undoing of Reaganism.

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Or, more accurately, Moore is half right: The bill would reverse what Ronald Reagan wrought on government spending, but far less so on the tax side, which is what people such as Moore really care about.

Reagan famously said that “government is not the solution to our problem; government is the problem.” His great achievement was to make that the default assumption of public debate, the paradigm under which the country would operate for decades.

It held sway even during periods of Democratic rule. Bill Clinton embraced the Reagan paradigm (“The era of big government is over,” he said) and Barack Obama struggled against it, but both their tenures were defined by it.

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But today, President Biden says he is determined to change Americans’ relationship to government. He explained in a speech Thursday:

Each inflection point in this nation’s history represents a fundamental choice. I believe that America, at this moment, is facing such a choice. And the choice is this: Are we going to continue with an economy where the overwhelming share of the benefits go to big corporations and the very wealthy? Or are we going to take this moment right now to set this country on a new path — one that invests in this nation; creates real, sustained economic growth; and that benefits everyone, including working people and middle-class folks?

Though he didn’t say Reagan’s name, Biden referred to “the past 40 years” as a period when the country grew less equal and the prospects for ordinary people stagnated. Which is true: By many measures, 1980 was a real inflection point when the fortunes of the richest began shooting up, while everyone else failed to benefit from income gains.

The true cruelty of the Reagan paradigm was that it enhanced the wealth and power of those at the top while not only doing everything possible to undermine working people (for instance, by launching a war on collective bargaining that continues to this day), but simultaneously going after safety net programs that assist people in financial crisis.

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That’s where the Democratic reconciliation bill is most revolutionary. It would reinforce the safety net — largely temporary programs such as unemployment insurance and food stamps, meant to help when you experience a crisis — but it would also create a new system of social infrastructure benefiting everyone in the ordinary course of life.

While it won’t turn America into a European-style social democracy, it would move us closer to universal health coverage (albeit with a system still absurdly complex and full of holes), universal pre-K, free community college, paid family leave and many other things. All of which would go far beyond what was in place before Reagan.

The more new and beefed-up programs that remain in the final bill, the more it represents a rejection of Reaganism — promoting the idea that the default assumption should be not that government is an impediment to human flourishing but that government has an obligation to enable human flourishing.

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But while Republicans most assuredly dislike the social infrastructure in the reconciliation bill, what really has their plutocrat wing up in arms are the parts of the bill that aren’t revolutionary: the tax increases.

The tax provisions are mostly tweaks to a system that still embodies much of what Reagan achieved. When he came into office, the top income tax rate was 70 percent. His first tax cut in 1981 brought it down to 50 percent; later bills reduced it to 38.5 percent, and then to 28 percent.

The Democratic bill won’t raise the top rate back to 70 percent. It would raise it from the current 37 percent to 39.6 percent, as modest a bump as you could imagine.

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Other provisions would increase taxes on the wealthy, but even if they became law, Wall Street titans won’t be trading in their Porsches for Priuses and selling their houses in the Hamptons. They’ll just have to pay a bit more — a hit they’ll hardly notice.

The same is true of corporate taxes. For most of Reagan’s tenure, the top corporate rate was 46 percent. The 2017 Republican tax cut slashed it from 35 percent to 21 percent. Biden proposed increasing it to 28 percent, and it now looks like the highest the reconciliation bill might go is 26.5 percent — if that.

So on neither individual nor corporate taxes will Democrats roll back the clock to the pre-Reagan era.

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There are far more radical tax changes Democrats could make. They could tax all income equally, including income from investments and inheritances. They could shift our system to a European-style value-added tax. They could institute a wealth tax.

But none of that is going to happen.

Some liberals, not unreasonably, will be disappointed with the modesty of the outcome on the tax side. But, on the whole, liberals just don’t think tax policy is a big priority. Unlike conservatives, they don’t believe the fate of the nation depends on whether the top rate goes up or down by a few points.

What do they care about? Social policy, broadly conceived: whether people have health care, child care, education, fair wages, a safe place to live, clean air and water.

That’s where the reconciliation bill does its real work — and where it really is a threat to the legacy of Reaganism.