Donald Trump’s presidency represents a substantive – and long overdue – indictment of Washington’s political and policymaking consensus.
For too long, Democrats and Republicans alike have clung to policy solutions that are no longer relevant to our evolving world and that fail to address the most urgent problems of our generation: economic insecurity, unequal opportunity, political marginalization.
These problems are why Donald Trump ran for president and why he won. Government did not create these problems. They were mostly caused by larger forces – like globalization, technology, and changing social attitudes – that are beyond the realm of public policy. But what government has failed to do is see that for millions of Americans these forces have not been welcomed as exciting innovations of “Progress.” They have been endured as attacks on their lives and livelihoods.
President Trump was elected to help these Forgotten Americans. And conservatives have a duty to help them too. Not by pouring more money into the same dysfunctional government programs that take power away from American workers and give it to government elites, but by changing the fundamental ground rules of our economy so that the American Dream is within the reach of all Americans again.
For generations, the U.S. economy worked by aligning the interests of people who might otherwise be adversaries. In over-simplified terms, it brought together proverbial “rich people” with money to invest and “not-rich people” who have labor to sell. They formed cooperative, profitable partnerships that helped each other, their families, their countries, and the world.
But with globalization a lot of investments that used to flow to places like Michigan or Arkansas now flow to places like India and China. The rich in the United States and the not-rich in other countries are now better off, but the American middle-class is being left behind.
It doesn’t have to be this way. We can make America work again – for all Americans – by bringing more of the global economy here rather than sending more of the American economy abroad.
A simple but powerful two-step federal tax reform would go a long way toward accomplishing this goal: eliminate the federal corporate tax altogether, and then raise the rates on investment income – dividends and capital gains – to treat it like ordinary income.
This would accomplish three things:
First, this would allow U.S. corporations to raise wages. Economists estimate that up to one-half of corporate tax revenue come directly from workers’ paychecks. Second, it would level the playing field between American workers and American investors. Globalization has disproportionately benefitted American investors compared to American workers, and the tax code should not unfairly compound that inequity.
Finally, and perhaps most importantly, this new tax framework would actually tilt the playing field in the global economy in favor of the United States. Rather than competing against foreign tax havens, the United States would become the world’s most attractive tax haven. For foreign investors, this tax reform would be an offer they couldn’t refuse: zero tax on profits produced by American-based companies and jobs.
Our broken immigration system needs a similar fix. While immigration provides real benefits to the immigrants who come here and to those who employ them, workers in the same industries as new arrivals – including foreign-born and naturalized citizens – often face real loss.
There is no silver bullet solution to this problem. No one “comprehensive plan” will balance everyone out. But there are some small things we can do on the margins to begin to level the playing field.
The president has begun work on a border wall and other enforcement measures to help reduce illegal immigration. My colleague Sen. Tom Cotton has suggested limiting legal immigration to nuclear and not extended families. Those policies would help. Reducing low-skilled inflows and recruiting more high-skilled immigrants would help too.
Whether we’re talking about tax policy or immigration reform, the point is that we cannot fix our broken status quo, from the right or left, by giving more power to the same government that has failed at so much for so long. President Trump made this very point in his inaugural address: “[T]oday we are not merely transferring power from one administration to another, or from one party to another – but we are transferring power from Washington, D.C. and giving it back to you, the American People.”
Together, we can forge a new conservatism for the Forgotten Families of our Republic, meet the challenge the American people have put before us, and – as the saying goes - make America greater than ever.