Thought Theater

Kudlow's America: Some Eat Steak, The Rest Eat Cake genre: Econ-Recon

If there were ever to be a way to demonstrate the unedited and unadulterated mind set of the GOP elite, Larry Kudlow succeeds in presenting it in an article he titles, Put Some Steak On The Plate. Kudlow, while offering his take on yesterdays GOP debate, is kind enough to also insert his not so subtle thesis for a Republican victory in 2008 and therefore the means to insure that he and his cronies have the idyllic "steak" placed squarely upon their plates.

Last night’s GOP debate featured strong, pro-growth, supply-side policies from the four major candidates — Rudy, Romney, McCain, and Thompson. [...]

This is all good. But let me remind folks that yesterday I suggested that Republicans were put on this planet to cut spending and taxes. And the proof of the pudding is in the eating. In other words, we need specifics. In other words, where’s the beef?

OK, I don't begrudge Kudlow his ideology...he's entitled to support whichever economic strategy he prefers. Further, I probably agree with the notion of prudent spending and reasonable taxation. Unfortunately, once Kudlow spells out the details by which he would pursue his stated objectives, our differences become more evident and his self-serving and less than palatable bias begins to emerge.

The Republican party needs to re-brand itself as the fiscal-disciplinarian party. GOP candidates must get specific about which departments and program clusters they’re going to curtail. The sooner the better. The burden is on their backs to reestablish credibility.

And while the Democrats are making hay with middle-class anxieties over taxes, health care, tuition, etc., Republicans need to launch an aggressive middle-class tax offensive.

For example, we don’t need six income-tax brackets. Here’s a thought: Take the 33 percent bracket that starts at $188,450 and get rid of it. Ditto for the 28 percent bracket at $123,700 and the 25 percent bracket at $61,300. Get rid of them. Collapse it all down into one simple 15 percent tax bracket. Then figure out what kind of spending cuts are necessary to finance it.

Let's look at Kudlow's two fundamental objectives. First, the revision of the tax structure advances a disproportionate boon to those making the most money (33 percent to 15 percent)...a goal consistent with his supply-side, pro-growth agenda...albeit one which is premised upon the belief that giving money back to the wealthy will facilitate reinvestment into the economy to better "float the boat". While that is true to a point, it would simultaneously consolidates larger amounts of wealth into the hands of fewer and fewer people...a move which further shrinks the middle class by pushing a small percentage of individuals upward and a much larger number downward.

Second, the reduction of spending immediately calls entitlements into question despite the fact that Kudlow states his own reservation with the cutting of Social Security benefits...a reservation I contend isn't motivated by a concern for those who may be hurt but rather a measured calculation that the same can be achieved with far less repercussions than an open endorsement of such a plan. His motives and his modus operandi are revealed when he contrasts his "recipe" with that of the Democrats. Here's how his strategy works. I contend the formula is little more than the classic carrot on a stick approach whereby the tax cuts must first be offered as the enticement (the means to procure votes) which then delivers the authority to enact the desired spending cuts.

As the bad news is disseminated (we have to pay for these tax cuts), the notion of self-interest leads a majority of voters to oppose cutting essential services while endorsing the reduction of money spent on programs perceived as "government handouts". In other words, the underlying premise is that hard working individuals (defined as those who make enough money to receive the tax cuts) should be rewarded and those who don't carry their own weight (defined as those receiving government assistance) should be penalized.

The end result is more of the same. In order to succeed, both spouses are compelled to work harder in order to make ends meet. Those on the top rung (the powerful) reinforce the merits of their message by offering the reward (a tax cut)...a reward they frame as needing to be extracted from those at the lowest rung on the ladder. As such, the focus is removed from those who benefited the most from the tax cuts (themselves) and they succeed in being portraying as the champions of the hard working middle class while vilifying those who have the least.

The ire of those caught in the hamster wheel has been masterfully directed downward. Thus the dangling vegetable is obediently chased in hopes it will lead to the quintessential prize...steak. Consequently, one either embraces the equation or one tumbles further down the ladder in shame...deserving of little more than reproach...and cake.