GOP, don’t go wob­bly on taxes

The Washington Times Weekly - - Commentary - By Lawrence Kud­low

In the fierce head­line de­bate over the so-called fis­cal cliff, our newly re-elected pres­i­dent ar­gues that “a ma­jor­ity of Amer­i­cans agree with (his) ap­proach.” That ap­proach, ac­cord­ing to the pres­i­dent, is “to com­bine spend­ing cuts with rev­enue — and that means ask­ing the wealth­i­est Amer­i­cans to pay a lit­tle more in taxes.”

Well, that’s not ex­actly what the exit polls said.

To the ques­tion “Should taxes be raised to help cut the bud­get deficit?” only 33 per­cent an­swered “yes,” while 63 per­cent re­sponded “no.” Isn’t that in­ter­est­ing? But no­body’s talk­ing about this exit-poll nugget.

Now, it is true that when the ques­tion is asked only about in­come-tax rates, 13 per­cent are OK with an in­crease for all, 47 per­cent want an in­crease only on in­comes over $250,000, and 35 per­cent don’t want in­creases for any­one. That’s not so sur­pris­ing. Most peo­ple make less than $250,000 a year and would there­fore say, “Well, heck, just tax the rich peo­ple.”

But even on that point, the mar­gin is only 37 to 45. It’s be­low 50 per­cent and not a mas­sive man­date. And when you com­bine that with the ear­lier ques­tion, where nearly twothirds don’t want to raise taxes at all, you have to ask whether the coun­try isn’t a whole lot more di­vided on these and other ques­tions than Pres­i­dent Obama would have us be­lieve.

This is why House Speaker John Boehner’s tax-re­form idea is so good. He’s say­ing don’t raise top-end tax rates, be­cause do­ing so would dam­age eco­nomic growth and in­vest­ment in­cen­tives. That’s ex­actly what you don’t want in a weak 2 per­cent econ­omy.

In­stead, Boehner is propos­ing a com­pro­mise with the pres­i­dent, one that would limit var­i­ous tax loop­holes and de­duc­tions both for in­di­vid­u­als and cor­po­ra­tions, pro­vid­ing more rev­enue at the same low tax rates. The wealthy would pay more rev­enues. That’s the GOP con­ces­sion. But it’s a pro-growth po­si­tion and a sen­si­ble one. It finds com­mon ground on the rev­enue ques­tion with­out dam­ag­ing the econ­omy. And if a deal is made be­fore year-end, it could open the door to a much larger agree­ment on tax, spend­ing and en­ti­tle­ment re­form in 2013.

The stock mar­ket sure wants a deal that won’t crush the econ­omy. Shares fell more than 400 points in the first two post-elec­tion days. I think of it as stock mar­ket vig­i­lantes ham­mer­ing Wash­ing­ton.

But I think there’s an even deeper eco­nomic point here. Af­ter los­ing the pres­i­den­tial elec­tion, what will Republicans stand for?

On the ques­tion of His­panic im­mi­gra­tion, the GOP has to re­dis­cover its soul. It has to re­turn to the party of Ron­ald Rea­gan and Jack Kemp, which is in­clu­sive and full of op­por­tu­ni­ties for ev­ery­body. Worker ID cards and a path to cit­i­zen­ship must be in­cluded in the Repub­li­can think­ing. Oth­er­wise, they’re not go­ing to win an­other pres­i­den­tial elec­tion in my life­time.

Get this: A whop­ping 65 per­cent of exit-poll re­spon­dents be­lieve il­le­gal im­mi­grants work­ing in the U.S. should be of­fered a chance to ap­ply for le­gal sta­tus. Only 28 per­cent fa­vor de­por­ta­tion. Can the Repub­li­can Party get that through its thick skull?

But on the econ­omy in gen­eral, the GOP mustn’t go wob­bly. It should stick with its free-mar­ket eco­nomic prin­ci­ples and push to be the party of con­ser­va­tive re­form on taxes, spend­ing, en­ti­tle­ments and var­i­ous other pro-mar­ket so­lu­tions.

Yes, Mitt Rom­ney lost. But that may have more to do with vot­ers still blam­ing Ge­orge W. Bush. By 53 to 38, vot­ers still blame Bush for our eco­nomic woes. At least Rom­ney gained a split on han­dling the econ­omy, 49 to 48 over Obama, in the ex­its. Rom­ney also had a slight lead on the bud­get deficit, and the two were about even on un­em­ploy­ment. I call this freeen­ter­prise progress. So at least Rom­ney brought the num­bers back to even.

Over time, if the GOP re­mains the party of free mar­kets, pri­vate en­ter­prise, in­di­vid­ual ini­tia­tive and re­ward­ing suc­cess, it will tri­umph over a Demo­cratic Party that fa­vors greater gov­ern­ment wel­fare de­pen­dency and in­come re­dis­tri­bu­tion, and mocks the ben­e­fits of suc­cess­ful busi­ness.

The past elec­tion did not solve this de­bate. And though he lost, I think Rom­ney helped im­prove the GOP’s eco­nomic cred­i­bil­ity. But the bat­tle will still be fought.

Again, I say, Republicans must not go wob­bly on eco­nomic free­dom. Lawrence Kud­low is a na­tion­ally syn­di­cated colum­nist.

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