The reason: the party's captivity to economic libertarians who have oversold income-tax cuts and the free market as a panacea. As drafted by conservative think tanks and broadcast by conservative media, the Republican playbook sends mixed signals to middle- and working-class voters, whose waning prospects predate Obama.
Indeed, what have "marginal" tax-rate cuts and trading with China delivered to these voters, whose families bear and rear most of the country's posterity and whose sons serve in the military and fight our wars? During the GOP primary, former Sen. Rick Santorum noted the irony of this inattention to the denizens of "red-state" America: "When you look at the economic plan that Republicans put forward, it's all about tax breaks for higher-income individuals who live in those blue areas."
As much as they claim to like lower taxes, party leaders remain committed to taxing wages at higher rates than dividends and capital gains. Romney's tax proposal unveiled earlier this month retains this bias, a legacy of income-tax legislation signed by every president, Democrats and Republicans, since George H.W. Bush. Until 2011, when the GOP Congress grudgingly agreed to a payroll-tax cut, this inequity was reinforced by an overreliance on FICA to generate revenues, another hit on workers.
The Wall Street Journal defends this two-tier scheme on the theory that capital investment in property - whether technology, buildings, equipment, or real estate - generates more jobs and prosperity than does human investment in activities ranging from working in the labor market to family spending on child-bearing, child-rearing, and education.
Try selling that song-and-dance to average breadwinners and their families who have struggled under globalization and financial deregulation, effects of which have gutted American industry, off-shored millions of family-wage factory jobs, and created a Frankenstein-like finance-banking-investment complex that triggered the dislocations of 2008.
If that's not damning enough, now comes an otherwise-promising vice presidential pick, whose "Path to Prosperity" fiddles with Medicare, a largely self-financing social-insurance program popular with the middle class, especially less-affluent and older voters. With Social Security, Medicare surely faces major funding shortfalls a decade from now - largely because fertility rates have been underwater since Roe v. Wade - but seniors' health-care outlays are not the source of today's unsustainable deficits. Even without Democratic "Medi-scare" tactics, Ryan's House budget ups middle-class anxiety another notch.
Whatever happens in November, this neglect of middle America is no way to build a winning political coalition. To secure loyalty from the trump card of the electorate, Republicans need to dump the libertarian construct for a proven vision of rebooting the country. That outline, suggests economist Michael Lind, is the "American System" of Henry Clay, the great 19th-century statesman.
As Lind unfolds in Land of Promise: An Economic History of the United States, that American System means an active government strengthening America through policies that are pro-manufacturing and pro-infrastructure. Rooted in sound money and protective tariffs, that system won the American West and delivered the "glorious 30 years" at mid-20th century when the U.S. economy was the envy of world.
By reviving the American System, Republicans could break 20 years of political deadlock. But that would require thinking like working-class fathers seeking good-paying jobs in America rather than hedge-fund managers looking to invest capital overseas. And it demands bold initiatives that rebuild the middle class, with attention to boosting men's wages and labor-force participation rates, indicators that have been declining since the 1970s.
Such proposals might start with "block-granting" at least 25 percent of federal means-tested welfare spending, about $187 billion, to state transportation departments for each of the next 10 years, financing desperately needed infrastructure projects like interstate highways - creating millions of family-wage construction jobs for non-college-educated workers.
Next, the GOP could fight defense sequestration on the premise that a robust Pentagon budget creates middle-class jobs. But to put teeth behind the claim, the party should immediately call for rebuilding our industrial base by returning production of all U.S. war materiel, armaments, and technology to our shores, including computers and smartphones used by the military. That commonsense national-security measure would generate millions of family-wage manufacturing jobs that could be held only by skilled workers who are U.S. citizens.
Finally, the GOP needs to revamp the tax system per Ronald Reagan's Tax Reform Act of 1986, which treated dividends and capital gains as ordinary income, and the GOP-led Revenue Act of 1948, which incentivized indispensable norms like marriage while providing relief for married parents - provisions that enriched the middle class for decades via the marriage and baby booms.
By nailing these pro-family, middle-class planks onto its platform, the GOP convention would make Abraham Lincoln, Theodore Roosevelt, and Ronald Reagan proud. And such policies would bond the party to its natural base, secure Obama's defeat, and realize Karl Rove's dream of a "permanent Republican majority."
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