What conservatives don't understand about the modern U.S. economy

But if your analytical lens is a simplistic “Barack Obama is Jimmy Carter,” then a different policy path naturally follows. Not surprisingly, the conservative plan calls for a vague lowering of “tax rates for every taxpayer.” Broad, across-the-board tax cuts are straight out of the Reaganomics playbook, and have been a GOP policy staple for three decades. Such tax cuts made terrific sense 30 years ago, when the top rate was 70 percent and inflation kept nudging households into higher and higher tax brackets. But even with the Obama tax hikes, the top-marginal tax rate today is just 39.6 percent. And nearly half of Americans don’t pay any income tax at all. For most of those folks, payroll taxes are what really count.

Moreover, lowering income taxes without offsetting spending cuts or higher taxes elsewhere — the plan offers neither — is unrealistic. And let’s face facts: Coping with America’s rising elderly population will require a higher national tax burden in coming decades even with a reformed entitlement system.

Another blast-from-the past policy proposal: Requiring Congress to pass a balanced budget. As with the tax cut idea, this budget balancing is presented as obviously self-recommending. It ignores the fiscal reality that the current budget deficit is collapsing after temporarily ballooning during the Great Recession. There is no evidence that markets fear a U.S. debt crisis. Of course, rising entitlement spending will soon cause the red ink to start running again. But the plan makes no mention of reforming Medicare or Social Security.

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