RED MEDICINE

You Don’t Have to Be a Hippie to Hate the One Percent

Why it’s a good thing that conservatives like Mitch McConnell and Ted Cruz are talking about income inequality.

01.27.15 10:45 AM ET

Is income inequality the new Republican bête noire, or merely one last stab at attacking an improving Obama economy?

Once a term bandied about by the Left, the income inequality issue is being embraced by more and more Republicans. For example, Senate Majority Leader Mitch McConnell and Speaker John Boehner indicated it was a real problem on 60 Minutes Sunday night—and both suggested President Barack Obama was partly to blame. In case you missed it, here's a quick excerpt:

Mitch McConnell: Look, things are getting better. But the point is who is benefiting from this? This has been a top of the income recovery-- the so-called one percent that the president's always talking about have done quite well. But middle and lower income Americans are about $3,000 a year worse off than they were when he came to office.

Scott Pelley: Is income inequality a problem in this country? Is it a problem that Republicans want to address?

John Boehner: It is. And frankly the president's policies have made income inequality worse. All the regulations that are coming out of Washington make it more difficult for employers to hire more people, chief amongst those, I would argue is Obamacare—which basically puts a penalty or a tax on employers for every new job they create.

It's not just the “establishment” Republican leadership who are talking this way, either. The same day the 60 Minutes segment aired, Senators Ted Cruz, Marco Rubio, and Rand Paul were voicing similar concerns at a forum in California. “I chuckle every time I hear Barack Obama or Hillary Clinton talk about income inequality,” Cruz said, “because it’s increased dramatically under their policies.”

It's unclear whether this is merely a way for Republicans to attack Obama, or a realization that this issue is both real and bipartisan. But, either way, there’s at least one big reason why conservatives should be in favor of reducing income inequality: Social stability requires it. If the great unwashed masses believe the game is rigged—that we can't succeed—then we are no longer invested in the success of this country.

But if—as has been the case throughout most of our nation's history—even the poorest among us believe that, with hard work, we can get ahead, then we have an incentive to play our part. And even if we can't get ahead ourselves, we retain the hope that our sons and daughters might end up being president some day. This sort of efficacy in the American Dream goes a long way toward binding us together. And that strikes me as an utterly conservative end.

To be sure, not everyone will agree this issue is a big deal, or that it is wise for Republicans to adopt this issue. Michael Tomasky, for example, argues this issue inherently favors Democrats, meaning that it skews leftward. He may be right, but the problem with always changing the subject to issues that skew in your favor is that you concede increasingly important areas of political life. This logic of only playing on your home turf helps explain why conservatives never bothered to develop and coalesce around a coherent health care alternative. 

Meanwhile, conservatives might rightly argue that the decline of opportunity equality—that is, economic mobility—is the bigger, if related, problem (this is a legitimate semantics argument, but should not be used to parry a question and then to avoid addressing the problem). What is more, while it's easy to resent the rich, or blame immigration or outsourcing for wage stagnation, a bigger contributor has probably been the fact that businesses have become more efficient. 

There's also another interesting contributor that is hard for politicians to mention, much less attack. While it is easy for Barack Obama and Elizabeth Warren to criticize “big business” and Tea Party conservatives to attack “big government,” you probably won't hear many politicians note that we are partly to blame.

As the Atlantic's Derek Thompson noted back in November, “In the last 30 years, the savings rate of  [the bottom 90 percent of Americans] has fallen from 6 percent to negative-4 percent. It now hovers a whisker away from zero. The rich are different. They save.” This might not account for income inequality (although interest does accrue on savings), but it is a big contributor to wealth inequality.

“If the bottom 90 percent had continued to save 3 percent of its income over the 1986-2012 period,” he continued, “its share of US wealth would be a third higher than it is today.”

And lastly, let's be honest, in America we have a lot of relative poverty (other counties experience starvation, our poor have TV sets). This is indicative of the fact that free market capitalism has created an unprecedented degree of wealth and comfort, but, as a talking point, it rings hallow to the many Americans who are struggling to make ends meet, while others keep getting richer and richer. (We are humans, and the truth is that, psychologically, we will always judge ourselves in comparison to others—especially when they rub our noses in it.)

These are all interesting, if academic, caveats. And having mentioned them, my advice to Republicans is to not casually dismiss the issue of income inequality (or whatever term you prefer).

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So how should Republicans approach this? We know that liberal redistributive populism and class warfare doesn't work politically (let alone, in terms of policy). Aping the left wouldn't just be a brand problem—it would also be a bad idea. 

But there are some pretty clear examples where the tax code seems unfairly rigged to reward the rich. Why is earned income taxed at a higher rate than carried interest? Since we should want to incentivize both work and investing, lowering and flattening both tax rates seems wise. And taking a stand in favor of fairness would go a long way toward removing the image of the GOP as the “party of the rich.”

Mostly, though, instead of stoking envy and anger and engaging in demagoguery about the haves and have nots, conservatives should focus on a positive vision for restoring the American dream where anyone can get ahead if they work hard and play by the rules. So yes, Republicans should take income inequality seriously, acknowledging the harm that it does to our society, and backing populist conservative policies that eschew pandering and demagoguery. And maybe we are seeing the beginnings of that.