“Inequality Troubles Americans Across Party Lines, Times/CBS Poll Finds” is a headline that seems to counter the widespread GOP perception that only Democrats and the media care about the wealth and income gap. Among the survey’s key findings:
— 61% think “just a few people at the top have a chance to get ahead”;
— 66% feel the “money and wealth in this country should be more evenly distributed”;
— 67% think “the gap between the rich and the poor in the United States is getting larger”;
— 65% think “the gap between rich and poor in this country is a problem that needs to be addressed now”;
— 57% think government should “do more to reduce the gap between the rich and the poor in this country':
— 68% favor “raising taxes on people earning more than $1 million per year';
Those are big majorities. Time for Republicans to embrace a fat minimum wage hike and top tax rates at pre-Reagan levels? Well, consider this: America has long had a populist streak. While 57% prefer government fight inequality, that number is actually a point lower than in 1990 — though admittedly sharply higher than a year ago. Still, Gallup polling finds Americans more worried about the income gap and more willing to tax the rich than before the recession. Yet those numbers are hardly outside the broad historical range. (It seems like the end of the 1990s marked the bottom for pro-redistributionist leanings.)
Clearly, though, the Great Recession and Not-So-Great Recovery (at least for the non-rich) are having a significant impact on attitudes. And maybe these polling trends will continue, especially if middle incomes grow glacially and upward mobility remains stagnant (or “steady” depending on your view).
So what should be done, if anything? The impulse on the right might be to call for policies that boost GDP growth. Not a bad impulse. Inequality increased in the 1990s, for instance, but most Americans hardly cared since their incomes were rising, too. But what if a rising tide isn’t lifting all boats in the modern economy, as some evidence suggests? Faster growth — especially by increasing the economy’s competitive and innovative intensity — may be necessary but is hardly sufficient. So perhaps we also need supplemental income-support policies like expanding the child and earned income tax credits.
What’s more, Republicans shouldn’t hesitate to attack inequality driven by rent seeking and crony capitalism, be it the Too Big To Fail financial backstop or tax and regulatory policies from farm subsidies to housing. Republicans should talk about the short-termism plaguing Corporate America. Republicans should also favor shifting the tax code “away from spending money on high-income Americans,” as my AEI colleague Michael Strain recently argued. According to CBO, a fifth of benefits from the 10 costliest tax expenditures accrue to the top 1%.
Then there’s the biggie: Even inequality guru Thomas Piketty concedes that “the main policy to reduce inequality is not progressive taxation, is not the minimum wage. It’s really education. It’s really investing in skills, investing in schools.”
Maybe the two biggest economic challenges going forward are (1) getting the US economy to grow as fast in the future as it has in the past, and (2) ensuring that growth is translating into broad prosperity and human flourishing.
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