Occupy Wall Street vs the GOP leadership contest (Updated)
Oct 23, 2011

Occupy Wall Street vs the GOP leadership contest (Updated)

Since the 2010 midterms, the dominant topic in American domestic politics has been on deficit reduction. The rhetoric built up for a while and then culminated in the twin crises over the potential government shut down and then the raising of the debt ceiling. One might expect this issue to be dominating today because of the enormous significance of the Supercommittee proceedings and the trillions it will slash, or the consequences if it doesn't make an agreement and triggers the automatic cuts. Yet, surprisingly, it has subdued somewhat in place of another issue being hashed out between the diametrically opposed Occupy Wall Street movement and the GOP leadership contest.

Occupy Wall Street Protests
Occupy Wall Street Protests
Namely, the issue has shifted from one of government deficit to a debate over the distribution of wealth in the country. It is a fundamental paradigm shift in the national conversation which has enormous ramifications in terms of electoral politics and the policy consequences thereafter.

The Occupy Wall Street movement takes the progressive side that the super-rich in the country have unfairly taken too much of the wealth to the detriment of the rest of us. This is iconified in the "we are the 99%" slogan and it has fed off proposals like the Buffett Rule which promises higher taxation on the rich. It is a movement that has, perhaps only incrementally, started to shift the national conversation.

As for the GOP debate, it is first worth noting that while it has crept in, debt and deficit have certainly not been the biggest issues in the debates. Perhaps this is simply because they all agree and so it isn't a differentiating thing to get after, but I think the emphasis is certainly less than what as been driven by the House in the last year or so. But more to the point, there has been a decided move to focusing on tax policy and wealth distribution itself.

Nevada GOP Debate
Nevada GOP Debate
This occured in some sense a bit randomly as it was played by the wild card Cain and his 9-9-9 plan which advocates for an essentially flat, three part tax code. However, largely on the back of that plan, he was able to get polling success with it. Most of the field, such as Romney, advocate for policies which flatten out the tax code and make it more regressive. However, Cain certainly took it a step further with this flat tax. Now Perry is looking like he too will advocate for a simpler flat income tax, probably with exemptions beneath some floor. This is a move quite plausibly influenced by the popular support for Cain's 9-9-9. Michele Bachmann said in the last debate that every single person should be contributing something, a move that would be massively regressive from today's standards on income tax.

What is so interesting about Cain's proposal is that it is deficit neutral (if you accept his numbers, which have been heavily challenged). It is completely irrelevent in that case to the larger deficit question in Congress nor the taxation vs spending levels debate which "deficit" has largely been a euphemism for. Instead, it is a fundamental change to the tax structure and, correspondingly, represents a fundamental change in the national conversation.

There has been some influence from the Occupy Wall Street movement in that Cain somewhat belatedly changed 9-9-9 (claiming bizarrely that he always intended to but was waiting for criticism) to exempt the poor from the income tax portion. Given the backlash against wealth inequality, it is just profoundly tone deaf to propose a policy that advocates massive increases in taxation to the poor while giving far more massive decreases to the rich. Unsurprisingly, he was forced to adjust this, yet it remains significant that he has retained support in this climate.

In some ways it is nice to see this shift in the focus of the national conversation from deficits to wealth distributions because it reconfirms that with the influence of the people (in the Occupy movement or in the GOP polling base) is enough to substantially change first the rhetoric and then the policy. However, it is instructive to see that the shift doesn't necessarily occur unilaterally and while the Occupy Wall Street movement shifts the conversation against wealth inequality, the GOP candidates are putting flat taxes back on the table in a way that hasn't been present since Steve Forbes in the 1996 and 2000's Presidential contests. As I previously noted, Obama and his repeated pushing of the wealth disparity issue has been a contributing factor to this shift in focus.

In many ways, I think this is a more honest discussion to have. The fights over "deficits" and "jobs" have both really been superficially hiding a different debate: the contest between spending and taxation. When a Republican says they want to cut the deficit and create jobs they mean they want to cut spending and cut taxes respectively (a contradiction, of course, since cutting spending cuts jobs and cutting taxes raises the deficit). Likewise, Democrats describe creating jobs as creating spending programs, although they have been forced in the last year to accept massive tax cuts and spending cuts but this is due to realpolitik that they are not pushing the more ideologically pure stances of the GOP. With wealth distribution and tax policy in specific, there isn't this bait and switch; the issue is quite clearly exactly what is being talked about. That is an important discussion to have and one that slightly graduates from the inept and hypocritical debates of the last year.

Update: Perry has now released a few more details regarding his tax plan. It will be a 20% flat tax on personal and corporate income, with only a $12,500. In other words, a massive, massive redistribution of the tax burden from the rich to the poor. This plan, I think, is the final step in securing Romney`s nomination as GOP candidate. While it may well serve to bump him up over Cain as the runner-up, such a massive redistribution of wealth is not what a large plurality of American`s want as demonstrated in poll after poll. Even of those who are salivating over this should recognize how devastating this plan would be up against Obama in the general while Romney is going to be very competitive.

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