Rick Santorum, Family Values, and the Economy

According to the Post, Rick Santorum has a "unique message" among this year's Republican contenders:

that the country’s financial problems were inextricably linked to its sagging marriage rates and the number of children born out of wedlock.

As he puts in on his campaign web site, "Healthy families and a strong economy go hand in hand, each reinforcing the other."

Actually Americans have been worrying about this problem for about, oh, 200 years. Worries that Federal welfare programs were contributing to a crisis among poor families go back to the 1960s, and they were a big reason for the bipartisan welfare reform of the 1990s. I think a good bit myself about the part played by marriage, divorce and single parenthood in our culture. But this is certainly a real problem, probably our biggest social problem, and all credit to Santorum for talking about it.

One way Santorum does differ from the rest of the Republican field is that he acknowledges the problem of growing inequality in America:

In this election the American people have an opportunity to restore her greatness and to focus once again on protecting liberty and creating opportunity for all. No longer should it be harder for people to succeed economically than it was for their parents. No longer should upward mobility be better in parts of Europe than in America. We need a renewed focus on creating opportunity, not dividing Americans by class; on creating wealth, not distributing it; and on promoting savings rather than dependency.

But what does Santorum actually propose to do about the problems of poor families? So far as I can find on his web site, his proposals consists of 1) a complete abortion ban, which, if you ask me, would only increase the number of children born out of wedlock; and 2) the standard Republican menu of lower taxes, less spending, and less regulation:

First, I will cut spending by $5 trillion over 5 years, repeal ObamaCare and other onerous regulations and cut non-defense spending to 2008 levels. . . . I will eliminate Fannie Mae and Freddie Mac’s federal housing role, reduce non-defense related federal workers by at least 10 percent and eliminate all energy and most agriculture subsidies.

Second, I will lower personal income and corporate tax rates and dramatically simplify the tax code for families, workers and businesses. To promote marriage, families and the high calling of parenting, I will triple the child deduction and eliminate all marriage tax penalties. The family is the foundation of our country. We need to have an economic policy that supports families and freedom and encourages marriage.

Instead of adding new taxes like President Obama has, I will fight to simplify the tax code by moving from six to two rates and lowering personal income tax rates to 10 percent and 28 percent respectively and eliminating most deductions. This will get us back to Reagan-era pro-growth tax rates. My goal is for the American economy to be growing at least 4 percent to 4.5 percent a year in my first term as president, more than double President Obama’s; by one estimate this would help create 10 million jobs in three years.

In other words, trickle-down economics with a vengeance. And lies — right now income tax rates for most Americans are lower than they were under Reagan, and so far Obama has not raised anybody's. Cutting tax rates for families would help upper middle class people with kids, but half of American households, including all poor families, already pay no income tax. The people we ought to be worried about will get no direct help from this plan, and they would presumably be hurt by cuts in Medicare, housing subsidies, and so on.

I also support two corporate tax rates: 17.5 percent for most businesses — half the current rate — and zero for manufacturers. This will multiply job opportunities for struggling middle-income families and renew communities that have lost critical manufacturing jobs.

Actually many American companies already pay no corporate income tax, and because of the raft of targeted breaks already in place I doubt any manufacturing company pays more than 10%. And if you want simplification, ask yourself how a company that has both manufacturing and non-manufacturing divisions will figure out what its tax rate is.

When it comes to taxes and spending, I used to worry that that these were major problems for our economy, too. Like a lot of Americans who lived through the 1970s, I remember the sense that corporate and government bureaucracies were choking the country, with stagflation and malaise and rage about cheap Japanese cars and all the rest. I used to call myself a moderate, because I thought that maybe cutting regulation and keeping taxes low were essential to making the economy hum.

But now, 30 years later, I think only somebody who ignores reality can think that tax cuts on the rich will somehow automatically help poor people. The economists who told Santorum his massive tax cuts would unleash economic growth are the same ones who said Bush's tax cuts would unleash economic growth. It did not work then and it won't work now. Our economy was much stronger in the 1990s, when tax rates were higher, and in the 1960s, when tax rates were much higher. Ergo, high taxes are not our problem.

Our experiment with free market capitalism over the past 30 years has had the same result as the experiment with free market capitalism between 1890 and 1929: the rich get richer, the super-rich amass astonishing fortunes, and the poor tread water. (And then comes the crash.) Like John Boehner, Santorum seems to long for the 1950s. But the economy of the 1935 to 1980 period was dominated by the government. Inequality in America declined in the years of Big Government, of corporatism, community, bureaucracy and regulation. Since we started rolling back the regulations and unleashing companies to pursue maximum profits, inequality has soared. The life-long, well-paid blue collar job was not a product of free-market capitalism, but of managed oligopoly, government subsidy, strong unions, intense regulation, and exchange rates set by treaty. As David Frum recently wrote,

That society did not spontaneously materialize. People who wanted to live in a world that offered more chances to more people consciously built institutions that extended opportunity and provided security to more Americans than ever before.

The natural state of a manufacturing, trading economy seems to be great instability and great inequality. Only concerted political efforts can make it into something else. Our era of greater equality was created by political action: Social Security, Medicare, subsidies for health care, minimum wages and overtime laws, regulations that limited competition, and so on. As we have moved away from those measures toward freer markets, inequality and instability have increased. Santorum has correctly identified America's biggest social problem but his economic plan will only make it worse.