The most telling line from Marco Rubio’s announcement speech was his purportedly cutting dismissal of a government that is “taxing and borrowing and regulating like it was 1999.” The superficial logic of the year is obvious enough: The Clintons held power in 1999, and they had enacted a major tax increase on the wealthy that conservatives had decried as ruinous class warfare, and there is also a famous song with the lyric “like it’s 1999.”
But Rubio’s choice of year made his point self-refuting. In 1999, the economy was booming, yielding wage gains up and down the income spectrum that the subsequent Bush recovery never produced. The government was not, in fact, borrowing at all, but instead running a large surplus. The best criticism of that era’s economic policies is that both parties giddily acquiesced to deregulation of the financial industry that played a role in the crash eight years later. But that criticism represents the opposite of Rubio’s charge that the government engaged in excessive regulation. The line is perfectly emblematic of Rubio’s worldview, which axiomatically associates prosperity with a reduction in taxes and borrowing and regulation, with no need to reconcile its assumptions with real-world results. He has fashioned himself as a candidate utterly wedded to his party’s economic orthodoxy. The approach seems to be working.
The presidential election is still a year and a half away, but Rubio’s campaign has already gone through three distinct stages. In the immediate wake of their 2012 debacle, Republican elites glommed onto Rubio as the cure for their demographic disease. Days after the election, Republican Über-pundit Charles Krauthammer ostentantiously laid his hands upon the young, telegenic senator as the party’s new avatar. “Marco Rubio. So hot right now,” tweeted John Boehner’s press secretary. By the end of 2013, Rubio had crashed and burned. A conservative revolt forced him to repudiate the immigration reform plan he had carefully built. He desperately glommed on to the anti-Obamacare shutdown, alienating party elites without winning over the activists. But now Rubio has rebuilt his campaign and is showing signs of life, by repositioning himself to the right and eliminating his vulnerabilities.
The first and most dramatic such move was Rubio’s renunciation of immigration reform. Having championed a bipartisan plan for comprehensive reform, Rubio now insists that border security must come first. Fervent restrictionists may not fully trust his sincerity, but Rubio’s maneuver follows almost exactly the same script of apostasy and penance than John McCain used in 2008 to neutralize the issue.
The bigger shift has come on economic policy. Last year, Rubio positioned himself as a “reform conservative” who aspired to aim tax cuts at middle-class families rather than the rich. Instead, when he unveiled the plan, it consisted of a massive, debt-financed tax cut that would give its greatest benefit to the rich, not just in absolute terms, but also as a percentage of their income. Even that plan proved to be too stingy for Republican plutocrats, so Rubio revised his plan to make it far friendlier to the rich. The newest version took his old plan and added complete elimination of all taxes on inherited estates, capital gains, and interest income. Grover Norquist, guardian of the party’s anti-tax absolutism, cooed his approval.
Fortunately for Rubio, much of the political media has covered his ideas as though they represent an important break from his party’s past. “Rubio appears to be hoping his plan will appeal to Republican voters concerned about rising economic inequality and tired of getting beaten up in the general election over plans that Democrats say would hand massive tax cuts to the rich at the expense of the middle class,” reports Politico.
This is not remotely accurate. Rubio’s original plan would have cut taxes by $2.4 trillion over a decade, making it quite similar to George W. Bush’s regressive, debt-financed tax-cut plan. It is true that Rubio would only cut the top tax rate to 35 percent, not as low as the fondest supply-side dreams would have it. But 35 percent would restore the Bush-era tax rate for the highest income earners. What’s more, Rubio’s elimination of the estate, interest, dividends, and capital gains taxes would go far beyond the Bush administration’s most plutocratic dreams. It is also true that Rubio plans to cut taxes for some middle-class families. But obviously that lost revenue has trade-offs, which he has failed to specify. The massive revenue hit would require very large cuts to existing programs. Given his party’s propensity to aim the bulk of its tax-cutting at the programs that direct their biggest benefits to Americans of modest incomes, there is no plausible way to imagine Rubio’s plan would do anything but engineer a massive upward redistribution of resources.
According to Robert McIntyre of Citizens for Tax Justice, the capital gains tax brings in $1.7 trillion over the next decade, and taxation of dividends raises another $650 billion. The estate tax raises another quarter-trillion dollars. So Rubio has approximately doubled the revenue cost of his original tax-cut plan, and the additional measures go to the rich almost exclusively.
McIntyre told me Rubio’s plan is “impossible to model” because it is “incoherent.” Len Burman, director of the Tax Policy Center, likewise told me “there are so many gaps in the plan” that he cannot estimate its cost or distribution. But both of them agreed the general outlines described by Rubio would create a hugely regressive, revenue-draining tax cut. Paradoxically, the incoherence of Rubio’s plan is an asset. Because its effects cannot be precisely measured, reporters and pundits describe it in vague and frequently positive terms that flatly contradict its actual features.
This reality is not a flaw in Rubio’s plan to capture the nomination. It is a feature. His full, unapologetic embrace of tax cuts for the rich has allowed him to surge back into contention. National Review’s Eliana Johnson recently reported that, at the American Enterprise Institute’s donor retreat at Sea Island, Georgia, and at a Koch brothers’ conference in Palm Springs, California, assembled bigwigs fawned all over Rubio. He has nearly regained his post-2012 So Hot status. A party operative tells Johnson, “Everybody’s talking about Rubio.” His political education seems to be complete.