"I'm someone who believes that making things creates wealth," says Rick Santorum. It is primary day in New Hampshire, and the former Pennsylvania senator and current presidential candidate is describing his plan to slash corporate tax rates. To encourage companies to make things, he would completely eliminate the federal income tax on manufacturers. For all other businesses, the rate would be cut in half, to 17.5% from 35%.In other words, point out how Leftist tax policies have *driven* the manufacturing jobs of Joe Sixpack overseas.
Mr. Santorum also believes that making babies creates wealth. It's very difficult to grow an economy with a shrinking population, he says, pointing to the "demographic winter in Europe" as a cause of that region's troubles. To help avoid that fate in the U.S., he wants to triple the per-child tax credit and also cut individual tax rates.The Leftist eco-fiends still harbor fears of a "Population Bomb" but the reality is that the modern industrial world--whether "post-capitalist" like the USA, Europe, Japan, and the little Asian Tigers, or "post-communist" like the former Warsaw Pact and Red China, are having too few babies, not too many:
Mr. Santorum argues that the cost of Europe's massive welfare states made it too expensive for young people to have families. He notes that with plummeting birth rates, many European countries have resorted to "baby bonuses" to try to reverse the tide, but the demographic picture remains bleak, while the costs of entitlement programs have exploded.
In other words, make "supply side economics" work for the working class. This working class, once called "Reagan Democrats", then "Perot-nistas", then "bitter clingers" by President Obama and his minions, is an important, perhaps THE important, piece of the GOP winning coalition. In general, though, the tale of years since has been the refusal of the Republican establishment to seal the deal. As Ross Douthat and Reihan Salam pointed out in their book "Grand New Party":
"Who are benefits promised to, overwhelmingly? Well, they're promised to older people. And if you have a society like Europe that is upside down where there are a lot more older people than younger people, you have economic calamity," he says. Asked if giving generous per-child credits will result in an even larger number of households exempt from the income tax and therefore amenable to more spending, he says his plan will drive growth and that, in turn, will bring more people on to the tax rolls. Elimination of deductions might also keep some people paying income taxes. He aims to balance overall taxes and spending at 18% of GDP. Spending has soared to 24% in the Obama era.
Over the forty years since, this problem – that the working class wants, and needs, more from public policy than simply to be left alone – has prevented the Republican Party from consolidating an enduring majority, despite all the right-wing intellectual victories and all the conservative electoral gains. It defeated Goldwater, it ruined Gingrich, and it crippled the domestic policy of George W. Bush. It was at the heart of a marginal conservatism’s 1964 defeat, and it lies at the heart of conservatism’s present crisis....In a still-crowded field of non-Romneys trying to compete for the Republican nomination, Mr. Santorum could emerge in the Jan. 21 South Carolina primary as the man who can bring together the old Reagan coalition. A champion of cultural conservatives with a blue-collar background, he is also making the case for deep cuts in federal spending. His credibility on this last issue derives from the political price he paid for being an early promoter of Social Security reform, which caused him to lose his Senate seat once.
Nor does he give ground in our discussion. I ask if his corporate tax plan opens him up to criticism that he and President Obama are both favoring particular sectors of the economy, with Mr. Santorum picking manufacturing while Mr. Obama anoints green energy. "Oh, green energy is not a sector, I mean, come on. It's like a half-dozen companies," says Mr. Santorum.We could do worse than that. If Rick Santorum is not the anti-Romney, perhaps he *is* the Working Man's Capitalist.
Does this mean the Obama policy would be more legitimate if the president were favoring a larger group of Solyndras?
"He's talking about handing out tax-free grants and loans," says Mr. Santorum, who adds that his own plan "is a conservative approach. It's supply-side. It's cutting rates. Why are we cutting the corporate rate to 17.5% and making it simple? . . . Because we think it's what's necessary to grow the economy. . . . So if what's necessary to grow the economy in one sector of the economy is different from another, then why should we have the same tax rate?" He argues that manufacturing has been hit particularly hard by the costs of regulation and litigation.
To avoid a lobbying festival, Mr. Santorum says, the existing IRS definition of manufacturing, which includes companies that make and process goods, will remain in place.
"No, we're not going to have a free-for-all over who is a manufacturer. It's pretty clear if you're making products you're making products and if you're processing products like if you're an oil refiner, you're a processor. . . . You're making things, as opposed to a lawyer who is not a manufacturer." And while only a small percentage of Americans still work in manufacturing, Mr. Santorum says that such businesses have a powerful "multiplier effect" as they support various other enterprises.