Much has been made of “fact checking” this election cycle. Not enough focus has been put on “idea checking.” Unfortunately for free-market conservatives and libertarians, we can’t count on the Republican nominee to articulate why progressive economic ideas are so often so wrong. There were many frustrating examples in the first debate of Donald Trump failing even to challenge Hillary Clinton’s obvious conceptual whoppers. Worse, when Trump did attempt a defense, he often cast free enterprise and business in a negative light. Trump simply can’t—or won’t, because it’s not what he truly believes—combat the falsehoods of progressivism, or honestly and skillfully defend free enterprise and business in general.
Let’s start with Clinton’s claim that she’s going to pay for her laundry list of Bernie-Sanders-inspired new benefits by simply, in her words, “having the wealthy pay their fair share and close the corporate loopholes.” We certainly can debate what everyone’s “fair share” really should be. But Trump missed the chance to demonstrate the multiple mendacities, direct and implied, in her statement. Most important, he didn’t point out that the countries Clinton and Sanders admire pay for the “life of Denmark” (reminiscent of the Obama administration’s famous “life of Julia”) with far more regressive taxes, looking at the relevant total share of taxes paid, not just marginal tax rates on the “rich,” than here in the U.S.A. Honest liberal pundits have pointed out that to achieve the state with the size and scope desired by progressives, they will have to tax everyone much more, particularly the middle class. No matter what you think about the “fair share” that the rich should pay, no serious person thinks taxing the wealthy alone will pay for a Scandinavian-style welfare state. Purely adding to the tax burden of the rich has never worked at this scale, mainly because there aren’t enough rich people to tax (there’s a reason we call them the 1 percent or even the 0.01 percent). The middle class, on the other hand, are legion and easily taxed.
To fund her goals—and I admit it can be done even if I don’t think it should be done—Clinton would need to tap the middle class in a big way through increased payroll taxes, higher marginal income-tax rates applied to median incomes, and a hefty, regressive, value-added tax or other consumption tax. In other words, the middle class must pay for its own benefits. That may in fact be what most Americans desire, but Clinton doesn’t frame the choice honestly. Rather, she perpetuates the fantasy that a far larger state with far more benefits can be obtained simply by taxing the “rich” a bit more. Trump could’ve done a great service to the American people by explaining that this free lunch (free except to the “rich”) doesn’t exist.
The next Clinton statement was truly bizarre. “Trickle down did not work,” she said. “It got us into the mess we were in 2008-2009.” We can all debate “trickle down” economics—including my view that it’s a good marketing line for statists but doesn’t represent what small-government advocates actually propose, or what they think happens when taxes are lowered on everyone, not just the “rich.” But, few think that a main cause of the global financial crisis was the Bush tax cuts. The Left thinks that it was Wall Street and deregulation (mostly they blame Bill Clinton’s deregulation, by the way). The Right thinks that it was too-loose monetary policy and misguided federal housing incentives warping the real-estate market. Let the debate rage on. But few, other than Clinton, seem to believe that the only cause worth citing is “trickle-down economics.” Again, Trump didn’t say a word to clarify (or make her clarify) this bizarre and intentionally divisive political accusation.
Trump also failed to explain or to defend business when he was accused of paying no taxes himself. He mostly conceded the point and said, “That makes me smart.” That’s not necessarily false, but he had the chance to say that most everyone in America attempts, hopefully (though not always) within the law, to minimize their taxes. And, in fact, the complex—often arbitrary—tax code we currently labor under encourages this, and is itself a large economic drain. His only nod to this was a reference to “carried interest,” a tiny symbolic side issue he’s tried to appropriate from the Left. He could’ve admitted that, just like the Clintons and everyone else in America, he looks to minimize his taxes legally. He could’ve pointed out that when Warren Buffett crusades for higher taxes on the wealthy, he usually admits that he takes full advantage of the tax code as it is now. Instead, Trump left people with a bad taste in their mouths regarding “smart” businessmen paying little or nothing in tax. As a separate matter, he failed to point out that the “rich” and business actually do pay a ton of taxes in this country, and tales of their super-low rates—while not total fiction—are the tiny exception and not the rule. But perhaps that’s asking too much from one of the possible exceptions to the rule himself.
When Clinton said “I think my husband did a pretty good job in the 1990s,” Trump responded only with accusations about Nafta. He didn’t ask how Bill Clinton’s record during the 1990s—a time when a famous Democrat could and did say “the era of big government is over”—applies in 2016. He didn’t ask why Hillary is running far to the left of her husband’s governing style. You can’t cite a track record you implicitly repudiate; but you wouldn’t have learned that from Trump.
When Trump was accused of rooting for the “collapse” that became the global financial crisis, he said, “That’s called business, by the way.” Every business person in America cringed at that moment. He might’ve pointed out that leaders who see things coming are preferable to those who are caught by surprise. He might’ve said that it’s a businessperson’s job to make the best possible forecast, and to act on it. We lionize the heroes of Michael Lewis’s book The Big Short for foreseeing and profiting from the crisis. Trump might’ve specifically said: “What’s the difference here, Mrs. Clinton? Why didn’t you see it coming while you were the senator from New York State—home of Wall Street—and act to prevent it? You didn’t even warn us about it.” He might’ve even pointed out that in “rooting” for the real-estate collapse, he was actually rooting for a normal bear market—yes, to profit, but also to bleed off speculative excess quickly and prepare the economy for the next leap forward (for instance, I proudly admit that I was “rooting” for the tech bubble to collapse in 1999-2000 when my firm was betting against some insane valuations). Trump should have clearly stated that he certainly wasn’t “rooting” for the devastating recession caused by the financial system seizing up. He might’ve pointed out that if more business people had seen what was happening and moved to profit from it earlier, the real-estate bubble would’ve been pricked, or at least caused less devastation. But, no, he left us with an even stronger version of the false narrative that Clinton intended—that what we call “business” is really just preying on regular people’s misery.
Throughout the debate, Clinton advanced numerous “four Pinocchio” economic stories. Trump repeatedly failed to call her on them, or to represent the free market, or even the business community, remotely well. Every time this type of chance is missed, more voters are lost to the falsehoods of ever-bigger government, anti-business hysteria, and class warfare. That we have a Democratic nominee who is overtly hostile to economic liberty is, sadly, not surprising. That we have a Republican nominee who is incapable or unwilling to argue for freedom and the prosperity it brings is something worse.
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