The Rich New Yorkers Schooling GOP Hopefuls on Reaganomics
The 2016 race was approaching and Republicans were getting soft.
Stung by Mitt Romney’s loss, which many blamed on his “Yes, you did build that” paeans to the entrepreneurial class and his dismissal of the 47 percent of Americans suckling on the government teat, would-be GOP candidates were injecting a bit of populism into the usual stump speeches.
Ted Cruz said that the party’s message should be: “You can build that.” Scott Walker accused an opponent of outsourcing. Rand Paul railed against “a bunch of rich bankers on Wall Street getting bonuses on the backs of the middle class.” Marco Rubio proposed a child tax credit (gasp!) paid for with a higher tax on upper-income earners, the rough equivalent of inviting Occupy Wall Street to use the showers at the Reagan Library.
Worse, a group of young policy wonks known as the “Reformicons” were gaining traction in elite party circles, championing a message that the party should move away from—as The New York Times put it—“orgiastic tax-cutting, the slashing of government programs, the championing of Wall Street.”
Over dinner at a restaurant on the Upper East Side, Larry Kudlow, the CNBC host and former Reagan administration economist, fretted over how to respond, along with his wife, Judith, Club for Growth founder Stephen Moore, and Alexandra Preate, a PR maven who has been described as “The Peggy Siegal of Republican politics.”
For an answer, they looked back to a time when Western civilization was in danger of being obliterated, and a group of Cold War hawks formed the Committee on Present Danger to ring the alarm on the Soviet threat. They would call themselves “The Committee to Unleash American Prosperity” and would attempt to educate GOP presidential candidates on the benefits of supply-side economics and stiffen their backbones.
The group took their idea to John Catsimatidis, the New York supermarket magnate—and suitor of the New York Daily News—who has single-handedly covered all of the expenses for “The Committee to Unleash American Prosperity” so far. This has included nearly a half-dozen sit-down dinners for upwards of 60 people—including some of the top contenders for the GOP crown—at some of the most expensive restaurants in New York, like the Four Seasons and the 21 Club.
“Right now, we are all concerned that our kids are not going to have as good a life as we did. We have had a good 30 to 40 years. We have liked the last 30 to 40 years, and we are concerned about the next 30 to 40 years,” Catsimatidis told The Daily Beast. “We have made enough money. You did and I did and the friends we are sitting with did. If our kids need an apartment, we pay for the kid’s apartment. Do you think your kids will be able to do that for their kids?”
The Committee’s core group—“a bunch of old Reagan guys,” as Kudlow put it, which grew to include Steve Forbes and supply-side patriarch Art Laffer—believe that since World War II, the American economy has grown by 3½ percent annually, but that over the last 15 years, growth has shrunk to 2 percent annually.
“This growth slump has damaged investment, employment, incomes, poverty, social mobility, family life, and above all, lack of growth has damaged the American dream of opportunity for all,” says a Committee memo that serves as something of a founding document. “The great American idea that you can come from humble background and rise to the top has been undermined…As President Ronald Reagan taught us ‘weakness at home leads to weakness abroad.’ Unfortunately, American international leadership and influence has suffered in recent years proving the President Reagan’s analysis was completely correct.”
The Committee has come up with key principles that would make Uncle Ronnie proud. Among them: “a flat tax; limited government spending; lite regulation; sound money; free trade; and the rule of Constitutional law.”
A strict flat tax aside, this sounds pretty much like the economic platform of every single Republican contender—a point Kudlow concedes.
“Yes, [their] rhetoric is not bad. There is a lack of detail and specifics however,” he told The Daily Beast in a phone interview, after a luncheon honoring David Koch’s charitable work. “You’ve got a bunch of smart guys and most of them want to remain in the Reagan tradition of supply-side economics and tax cuts and deregulation. We get that.”
Club for Growth founder Moore said that the point of the Committee to Unleash American Prosperity was not so much to remind the GOP contenders of core principles as it was to explain the basics to them.
“Many of them have not dealt with these kind of issues before. We are, quite frankly, trying to educate them,” he said.
Economic growth, Moore added, was actually being underplayed on the campaign trail.
“President Obama gave a major speech the other day, and he said that the greatest problem facing the planet is climate change. I am sorry, but if he really believes that he is not putting growth first. No, the biggest problem facing the country right now is not climate change—it is putting every American into a job and making sure they have higher wages.”
Even most Republicans, Moore added, were growing too “spooked” to push for more tax cuts for the rich.
“The liberals are talking about redistribution. I don’t think that the greed and envy agenda is as popular with voters as some of Reformicon friends seem to think it is.”
Moore said that many Republicans think ideas like “the flat tax are non-starters. It’s a good thing they weren’t around in the 1980s or Ronald Reagan would never have done his tax cuts. If you put the Rand Paul flat-tax proposal next to the Marco Rubio Reformicon proposal, 80, 90 percent of Republicans would be with Paul.”
The Committee also thinks Republicans need to stop blaming Wall Street and finance for the economic collapse of 2008. “We know what Hillary Clinton is going to say,” Moore said. “She is going to echo Elizabeth Warren and say these companies and banks didn’t want any regulation and they drove the economy off the cliff. Republicans have to say that that isn’t what happened at all. That Chris Dodd and Barney Frank and the government tried to subsidize all of these mortgages that people couldn’t afford and it led to the biggest housing bust in the history of this country, and this was done by the government, not the private sector. It wasn’t the market that failed. It was the government.”
When presented with the Committee’s tenants, Ramesh Ponnuru, a senior editor at the National Review and an uber-Reformicon, countered that tax cuts for the sake of tax cuts have led to diminishing returns. If the American economy was spurred when the highest rates went from 70 percent to 40 percent, further reductions were naturally going to have less of an effect.
Reagan would agree with him, Ponnuru said. He noted that Ronnie’s tax cuts were centered on middle-class tax relief, and not specifically aimed at growth. Ponnuru also mentioned that George W. Bush not only reduced taxes but that he extended the child tax credit.
“I don’t think that the Republican Party needs much convincing that lower tax rates are better and that growth is good. I think they need some help in finding ways to advance those goals while also offering tax relief to middle-class families,” Ponnuru said.
Meanwhile, Kudlow and Moore are pressing ahead. They say that every Republican running for president has agreed to appear before their group. Invitations are being extended to Hillary Clinton and the Democrats, but they don’t expect a response. Each candidate submits to a private, hour-long session with Kudlow, Moore, Laffer and Forbes, before giving a brief talk to the assembled Committee members and answering questions. The audience is invited exclusively by the organizers, and the guest list is made up mostly of opinion leaders in the conservative world—hosts and correspondents from Fox News and Fox Business, editorialists with the Wall Street Journal and New York Post, think-tankers from Cato and Heritage and the Manhattan Institute.
Despite their star-studded guest list, though, the meetings have been gaining a reputation for going off the rails. It was at a Committee meeting that Rudy Giuliani showed up and announced that Barack Obama didn’t love America. At another Committee meeting, Rick Perry was scheduled as a speaker and fellow 2016 rival George Pataki showed up in the audience. At yet another one, Ohio Governor John Kasich was backed into a corner by a Manhattan Institute scholar who wanted to know why Kasich had expanded Medicaid in his state.
For now, The Committee to Unleash American Prosperity is sticking to swank dining spots in New York, but they have plans to take the show on the road, traveling to key primary and swing states to educate the public on what it takes to spur growth.
A website, a social media campaign, and policy papers are also in the works.
“All we want,” said Kudlow, “is for everybody to get richer.”