A couple of weeks ago I started a series on the future of the GOP. Here’s the second part, most of which I wrote two weeks ago, but sat on for no particular reason.

The previous part of the series:

I. Intro: The Basic Actors

II. Taxes and the Reaganite Agenda. Much of the debate in the waning days of the campaign between Obama and McCain was over taxation, specifically the income tax and whether what Obama proposed was socialism and redistribution.

Starting with cutting taxes: part of the problem with trying to make tax-cutting a bedrock issue is that the battle is mostly over and the Reagan approach from the 1980s won out. By this I mean we no longer have a large number of brackets that range into high numbers (the top rate in 1980 was 70%). The notion of fewer brackets and lower top brackets came about during the Reagan years and remains the context of the income tax debate (to see the brackets over time, go here).

In short: the basic Reaganite position defines the current debate (and this is true whether one thinks that is a great thing or a disastrous one). First, one will notice that the candidates of both parties promised tax cuts if elected (as, btw, did Clinton—contrast that with Walter Mondale in 1984). This is a direct legacy of the 1980s. The only debate was what to do over the top earners, and in that regard the Democrats are in favor or raising the upper brackets and the Republicans were in factor of across-the-board cuts. This is an important distinction, I will allow. However, it is worth noting that even in the context of income tax increases on top earners, the debate was constrained by the basic Reaganite paradigm: the proposed increase by the Obama campaign was to take the top bracket from 35% to 39.5%. Now, if one is in that bracket, that is not an insignificant increase, but it is not a return to the pre-Reagan era (or even Reagan’s first term), not by a long shot.

In short, part of why McCain’s socialism/”spread the wealth around” attacks didn’t work was because the basic parameters of income tax policy were already set by the GOP and Obama was playing, basically, within those parameters. In other words there is a lot less policy space to work with here than the campaign “debate” (and I use the scare quites quite deliberately) would suggest. Indeed, there is no mainstream more to radically increase taxes, even on the wealthy (it is impossible to objectively characterize a ~9% increase in one bracket as a radical one).

And yes: there is a debate that goes beyond income taxes, such as what to do about payroll taxes, not to mention issues such as what the appropriate capital gains tax rate ought to be. There are certainly economic theories that suggest a number of policy options. Beyond that, there are more dramatic, if not radical, arguments about tax system overhauls, such as going to a pure consumption tax or some sort of flat tax.

It is time to move the debate to these areas and to get beyond simplistic claims about tax cuts. The year is not longer 1980 and there are not longer lots of brackets and the highest brackets are not that high (in historical terms, regardless of one’s views otherwise). The crudity of continuing to pretend like the solution to every policy problem is a tax cut is part of the GOP’s problem. Further, as noted above, since the Democrats have now joined in that chorus for the most part, the political usefulness of the stance has waned. Time for (dare I say it?) some nuance on tax policy. Further, if the Republicans wish to be what they claim to be, i.e., the party of fiscal responsibility, they are going to have to come up with a functional explanation of how they actually plan to be fiscally responsible, and that requires a realistic assessment of taxation vis-à-vis spending. Part of the Republicans’ problem, even with other Republicans, is that they have pretended for some time (certainly over the last 8 years) that one can have low taxes and high levels of spending. That is simply an unsustainable model. Something has to give and if the GOP wishes to fix its current problems, they need a well-thought-out, reasonable and realistic reassessment of fiscal policy.

If one wants a simple lesson, it’s this: talking about tax policy and tax cuts like the contests of today are like Reagan v. Carter or Reagan v. Mondale is ludicrous and anachronistic. After all, we do realize that that was going on three decades ago, yes? To put it in the language of Part I on this essay, the Traditionalists seem to think that just hammering tax cuts will both a) bring people to the party and b) bring money to the treasury. However, neither is true. The backwards orientation of the Traditionalists is part of the problem on this (and other) issues.

In regards to Reagan specifically: while it is true that the basic parameters of income tax policy dates to that era, that does not mean that the party needs to be continually looking to Reagan as the lodestone that will guide them to the promised land–which will take us to the next section of the essay.

Next: WWRD?