Rick Scott Just Gave a Huge Gift to Democrats
The GOP Senate campaign chair wants to revive an unpopular economic agenda — including a tax increase on over 100 million Americans
When we talk about popularism, we usually talk about Democrats and whether they’re working hard enough at being popular. But this week’s big popularism story is a Republican one, with Florida Senator Rick Scott taking a hammer to his party’s pretty successful efforts to do popularism on economic issues in recent years.
As I’ve written before, Senate Minority Leader Mitch McConnell isn’t stupid. To win back the Senate, he wants a midterm election that’s a referendum on the Biden administration, so he’s not planning to release a Republican governing agenda. After all, if Republicans win back Congress, they’ll mainly be working to obstruct President Biden. Why talk about a conservative agenda they won’t be able to enact, especially if it contains unpopular items, when attacking the incumbent party looks like a good enough strategy to win?
Enter Scott, the head of the National Republican Senatorial Committee, which works to elect Republican senators. Today he released “An 11-point plan to rescue America,” with dozens of pages of specific things he says Republicans will do if they run the government again.
“Hopefully, by doing this, we’ll have more of a conversation about what Republicans are going to get done,” Scott told Politico. “Because when we get the majority, I want to get something done.”
Liberals on Twitter will mostly notice the culture-war content of the document, and they may underestimate the strength of the political ground that Republicans stand on with many of those issues. But the big opportunity for Democrats — and the potential wrench in McConnell’s campaign strategy — lies in a short statement about taxes: “All Americans should pay income tax to have skin in the game, even if a small amount.”
In a typical year, nearly half1 of American tax filers have no federal income tax liability. A promise to make all Americans pay federal income tax is a promise to raise taxes on well over one hundred million people.
Historically, one of the best things Democrats had going for them was that Republicans were associated with unpopular ideas about the economy. When Mitt Romney ran for president in 2012, his platform included raising the retirement age for Social Security and benefit cuts for higher earners. For Medicare, he proposed a “premium support” structure that would have forced some seniors to either pay more for their traditional health plan or switch to a private one.
Romney had a tax plan that was sort of vaporware: He simultaneously promised to cut income tax rates 20%, safeguard various tax deductions, not grow the budget deficit, and not raise taxes on households making less than $200,000, even though it was mathematically impossible to do all four. The Obama campaign exploited that contradiction and the Romney campaign’s “makers and takers” focus to stoke fear that Republicans would raise taxes on low- and middle-income earners. And of course, Romney reinforced that fear with his infamous “47%” remark, which was about the (in his view, excessive) fraction of Americans who didn’t pay federal income tax, never mind all the other taxes those people do pay.2
With all this ammunition (plus Romney’s image as a private-equity tycoon), Barack Obama was able to beat the crap out of the Republican ticket on economic issues, doing quite well with working-class white voters in states like Iowa.
Donald Trump won four years later for a variety of reasons, but his supporters and detractors haven’t focused enough on one of them: Even as he adopted an extreme personal style and a more hardline position on immigration, he moderated relative to prior Republican nominees on key economic issues, in both style and substance.
“Every Republican wants to do a big number on Social Security, they want to do it on Medicare, they want to do it on Medicaid,” Trump said in 2015. “And we can’t do that.”
Trump’s promise to protect Medicaid was inconsistent with his stated intention to repeal Obamacare, which would necessarily entail a huge cut to Medicaid. But on Medicare, Trump stuck by his campaign line and didn't seek cuts; he did the same for the retirement benefit component of Social Security.3 On economics, Trump was doing the sort of popularism that centrists like me usually urge on Democratic candidates — dropping an unpopular part of his party’s agenda like a hot rock, and at least not talking too much about the unpopular parts he remained inclined to pursue.
While you may hear a lot of people in Washington say they are “fiscally conservative and socially liberal,” it’s much more common for voters to be the opposite, so Trump’s move toward the rhetorical center on the economy was especially wise. Voters perceived Trump as more moderate than prior Republican presidential nominees, and he made big inroads with demographics that had cultural affinity with Republicans but had been skeptical of the party for having a plutocratic economic agenda.
In his new platform document, Sen. Scott remains studiously vague on entitlements — he would “force Congress to issue a report every year telling the public what they plan to do when Social Security and Medicare go bankrupt,” which I’ll get back to in a moment — but his promise to make all Americans pay income tax is a huge breach with Trump-era Republican rhetoric and policy.
Shortly after the Republican tax reform law’s enactment in 2017, the research firm Evercore ISI estimated it was set to raise the percentage of filers not paying federal income tax to 47.5%, compared to 44% if the law hadn’t changed. And this wasn’t incidental — the law expanded the standard deduction and increased the child tax credit, reflecting a Republican philosophical shift on taxes that was focused more on providing tax relief to families with children and less on ensuring people have what Scott calls “skin in the game.”
Still, the tax law was unpopular, in part because a lot of people had the impression (usually a misimpression4) that it was going to raise their taxes. One of the key lessons of the tax fight was about the importance of reassuring people that you are not going to raise their taxes, personally, as you change the tax code overall.
But now, Scott is promising to rip up the Trump tax law — “We will drastically simplify the tax code,” he says — and the only real detail he provides about the replacement is that nearly half of tax filers would pay more than they do under current law. Why would he do that?
One possibility is that he’s stupid, although I don’t really think he is. Another possibility is that he wants to bring the GOP back toward some of the less-popular economic ideas that used to be ideologically central for conservatives.
I hate being the guy who makes everything about interest rates,5 but one of the factors that made it possible for Trump to move the Republican Party toward economic populism was that low interest rates made large government budget deficits not just sustainable but desirable. There was no need to make hard choices about raising taxes and cutting spending, so he didn’t. But now inflation is high, interest rates are rising, and a more normal deficit politics is likely to assert itself, where officials face political and economic pressure to shrink the deficit through tax increases and spending cuts.
Some of the available ways to reduce deficits, like cutting military spending or raising taxes on corporations and high earners, are not congenial to Republicans. So here’s Scott putting one on the table for when that conversation is had: Higher taxes on nearly half of American households, including millions and millions of retirees.
Speaking of retirees, one wonders what will be in those mandatory annual congressional reports about Social Security and Medicare solvency that Scott wants. In theory, the reports could say Congress intends to balance those programs’ books by raising taxes or borrowing money to pay benefits. But historically, the blue-ribbon bodies that Congress gets together to examine entitlement programs end up recommending a combination of policies that includes benefit cuts.
Of course, Rick Scott is just one man. But he’s framed this agenda as one for his whole party, not just for himself, and he leads the Republican Senate campaign effort to regain the majority that would be needed to pursue any policy agenda.
A public impression that Republicans are going to mess with old-age entitlement programs or shift the tax burden toward the middle class can be powerful weapon for Democrats. On taxes, at least, Scott is pushing the party back into Romney-Ryan-era “47%” territory, offering Democrats an attack line that will both unite their party and be popular with marginal voters — something Democrats desperately need right now.
Temporary pandemic-related conditions and policies, including stimulus checks that were legally counted as tax credits, boosted this figure to 61% in 2020, but it is expected to renormalize at a level below 50%, absent policy change.
The percentage of federal income tax “non-payers” has always been kind of a nonsense statistic, because it ignores all taxes except the federal personal income tax, which accounted for only 31% of all US government tax revenue in 2019. Almost everybody who works pays payroll taxes, and almost everybody period pays various state and local taxes, like sales tax.
Trump’s presidential budget proposals did contain plans to tighten eligibility for Social Security Disability benefits, though these plans did not advance in Congress.
According to the Tax Policy Center, the 2017 tax law was expected to raise taxes on 5% of households in 2018, rising to 9% in 2025. 80% of households would get a tax cut in 2018, according to TPC, but Gallup found majorities of Americans said the tax law hadn’t increased their take-home pay or improved their families’ financial position. Republicans griped that unfair media coverage created a public misimpression about what the tax law did. Frankly, they have a point, though another big culprit was their use of budget gimmicks (similar to those in various drafts of Build Back Better) that would have raised taxes on 53% of Americans in 2027 and thereafter unless Congress acted in the future to extend the tax cuts.
I don’t actually hate being the guy who makes everything about interest rates.