Answering the Charge That Conservatives Only Care About the Rich

Fine. Let's assume it's true. Let's assume, for the next twenty minutes, that conservatives are the party of country clubs, yacht brokers and men who have never seen the inside of a bus. Let's take the charge seriously, build it up to its full height, and then walk around it and see whether it still stands.

I want to do this because the line is so familiar that nobody examines it anymore. Conservatives only care about the rich. You hear it on the news, from the comedians and at the family reunion, and it works precisely because it is an accusation about motive, not about policy. A motive cannot be checked with a calculator. So let us do what the accusation almost never allows, and put it next to the record.

This is a rebuttal, and it follows the rules of one. I will state the case against us at its strongest. Then I will answer in numbered points, with names and dates. Then I will tell you where I think the case against us has a point, because a rebuttal that concedes nothing is a press release.

The charge, at its strongest

Here is the version a smart critic would give.

First, look at the tax cuts. Conservatives push cuts in income-tax rates, in the taxes on capital gains and dividends, and in the estate tax. Whatever the stated goal, the largest dollar amounts go to people who earn and invest the most. Second, look at the rhetoric. For decades Republican candidates have talked about welfare cheats and dependency, which many poor families hear as contempt. Third, look at the budget proposals that target programs for the poor, such as food assistance and Medicaid, while sparing programs that the middle class and the wealthy use. Fourth, the economic theory behind it all, that benefits at the top will "trickle down," is contested by many economists, and the promised wage gains for ordinary workers, the critic says, never quite arrive. Put these together, and the conclusion follows: the party's real constituency is the donor class.

That is a coherent charge, and parts of it land. Let me now respond.

Answer one: separate the dollars from the percentages

Start with the arithmetic of a tax cut, because it is where the charge gets most of its force and where it is most often misunderstood.

Take a hypothetical across-the-board cut of 10 percent in income tax owed. Household A owes $2,000 in federal income tax, and the cut saves it $200. Household B owes $200,000, and the cut saves it $20,000. The dollar savings differ by a factor of one hundred. A headline that says "the family earning a million dollars got a bigger tax cut than the family earning forty thousand" is true in that sense, and it would be true of any cut that is applied equally to everyone.

But look at the percentages. Each household got the same 10 percent cut in its bill. The dollars differ because the bills differ, and the bills differ because the federal income tax is progressive: higher earners pay a much larger share of the income tax than their share of income. You can verify this in the published data of the Internal Revenue Service and the Congressional Budget Office. A tax cut that is the same percentage for everyone is not a gift to the rich. It is a refund to everyone in proportion to what they paid.

Reasonable people can argue about whether the right design is equal percentages, bigger cuts for the middle, or credits aimed at families. That is a legitimate debate. But the claim that a proportional cut "only helps the rich" mixes up bigger numbers with a bigger share.

Answer two: the biggest antipoverty tool is a job

The first thing that moves a family out of poverty is not a program. It is a paycheck, then a better paycheck. The conservative argument is that the most important policy for the poor is the one that creates more jobs, more business starts and more upward mobility, and the least visible failures of the opposite approach are the ones where someone never gets hired in the first place. Economic growth is the part of the antipoverty effort that does not depend on the goodwill of a bureaucrat.

That argument is easy to caricature as "trickle-down." A better version is "the opportunity economy": a country that lets people trade, start businesses, build, hire and move, produces the conditions in which the poor have somewhere to go. We explore the case for free exchange in The Best Antipoverty Program Ever Tried Was Letting People Trade, and the economics of keeping more of what you earn in Republican tax cuts side by side, from Harding all the way to Trump.

Answer three: the Earned Income Tax Credit

Now to the record, starting with a program that deserves to be better known on the right. The Earned Income Tax Credit, or EITC, is a refundable credit for low-income workers. It began in the Tax Reduction Act of 1975, which President Gerald Ford signed, and Congress later made it permanent. It pays only to people who work, and it supplements low earnings.

The intellectual ancestor was Milton Friedman, who proposed a "negative income tax" in his 1962 book Capitalism and Freedom: instead of a thicket of programs, a single system that tops up the earnings of the poor. President Ronald Reagan expanded the credit in the Tax Reform Act of 1986, and he praised it as a way to help working families. It has been expanded by presidents of both parties since.

Here is how the incentive works, in a hypothetical with made-up numbers, not the real schedule. Suppose a credit pays 20 cents for every dollar a person earns, up to $10,000 of earnings. That makes a maximum credit of $2,000, because 0.20 times $10,000 is $2,000. A parent who earns an extra $1,000 gets an extra $200, so work pays more than it did. That is the opposite of a program that rewards staying out of the labor force.

An honest account admits the design problem. Credits phase out as income rises. In the same hypothetical, suppose the credit shrinks by 10 cents for every dollar earned above $15,000. A worker who earns an extra $1,000 loses $100 of credit, a hidden penalty on top of the taxes he already pays. That is a real issue, and policy experts of both parties know it. But the point is that a program built on rewarding work was signed by Ford and expanded by Reagan, and that is hard to square with the idea that conservatives do not care about the poor.

Answer four: welfare reform

The next piece of the record is the Personal Responsibility and Work Opportunity Reconciliation Act, signed by President Bill Clinton on August 22, 1996. It replaced the old Aid to Families with Dependent Children program with a block grant to the states called Temporary Assistance for Needy Families, added work requirements, and set a five-year federal limit on benefits for most recipients, with state flexibility.

The history matters. A Republican Congress, elected in 1994 on the Contract with America, sent welfare reform to Clinton, who vetoed two earlier bills before signing a third. The reform was a political compromise between a Democratic president and a Republican Congress, and its central idea, that assistance should be tied to work and that the states should have room to experiment, was a conservative one. The full story is in two vetoes, one signature and the 1996 welfare law that put marriage in statute. The details of the politics, and why divided government produced it, are in divided government gave us welfare reform and a balanced budget.

The argument for it was moral as much as financial. Work gives a person dignity, structure and a place in the community. A system that traps a mother in a benefit cliff, where a raise costs her more in lost aid than it brings in, does her no kindness.

Answer five: school choice

A child's school is the first rung on the ladder, and conservatives have spent decades arguing that low-income families should have the same options that wealthy families have always had, which is the freedom to leave a school that is failing. The modern movement owes a debt to Friedman, who proposed vouchers in a 1955 essay, and to a Democrat, State Representative Polly Williams of Milwaukee, who helped pass the Milwaukee Parental Choice Program in 1990 for low-income families. The Supreme Court upheld a voucher program in Cleveland in Zelman v. Simmons-Harris in 2002.

The beneficiaries of choice programs have mostly been families without the money to move to a better school district. Whether you think the programs work, which is a matter I address below, the intent is a policy aimed squarely at the families the charge says we ignore. For the specific claims, see Seven School Choice Myths Your Neighbor Believes and What the Record Shows.

Answer six: the family tax credit

Another example is the child tax credit. A per-child credit first appeared in federal law in 1997. In the Tax Cuts and Jobs Act, signed in December 2017, the credit was doubled to $2,000 per child. A credit like that is worth more to a family with children than a rate cut is, and it is aimed at the people who are raising the next generation. The bill-by-bill history is in the child tax credit from $400 to $2,000, told bill by bill, and for a fair look at how a credit differs from a deduction, see four families, one tax change, and how a deduction differs from a credit.

Where the charge has a point

I promised honesty. Here it is.

Tax cuts do not pay for themselves. Some conservatives have claimed that they do. The nonpartisan scorekeepers at the Joint Committee on Taxation and the Congressional Budget Office have generally found that tax cuts add to deficits even after accounting for faster growth, though they disagree with each other and with conservative economists about how large the growth effect is. A conservative who says that a tax cut is self-financing is making a claim the evidence does not support. The honest argument for tax cuts is that people should keep more of what they earn and that lower rates encourage work and investment, not that the Treasury comes out ahead.

The evidence on school choice is mixed. Some studies of voucher programs have found gains in graduation or parental satisfaction. Others have found no gains in test scores or even losses in the early years. Anyone who tells you the research is settled on either side has not read it.

Welfare reform's results are argued about. Employment among single mothers rose after 1996, which supporters count as a success. Critics point to families who fell through the new safety net, and to the question of deep poverty. Both observations have some support, and a fair account says so.

Rhetoric matters. When candidates talk about the poor as cheats, many poor families hear contempt, and some of what has been said deserved that hearing. A conservative who wants to be believed should talk about low-income families the way he would want to be spoken about if he were in their shoes.

Some proposals have fallen short. Plans to cut programs for the poor without offering a path to work or a replacement are hard to defend as compassion. The test is whether a proposal gives people a way up, not whether it merely lowers a number in a budget.

The test I would apply

Here is a simple way to judge any policy proposed in the name of the poor, from either party. Ask four questions.

1. Does it reward work, or does it penalize it?
2. Does it give families more options, or fewer?
3. Does it help build something, such as a skill, a business or an asset, or only manage a condition?
4. Can it be paid for without borrowing from the people it is meant to help?

By that test, the EITC, welfare reform, school choice and the child credit make a better record than the caricature allows, and a few proposals on our own side fail. Thomas Sowell's habit of asking what happens after the policy passes is the best companion to this exercise; see Thomas Sowell Asks What Happens After the Policy Passes.

The bottom line

• The charge that conservatives care only about the rich confuses dollars with percentages and motive with record. A tax cut that is the same percentage for everyone is a refund in proportion to what was paid.
• The record includes the Earned Income Tax Credit (signed by Ford in 1975, expanded by Reagan in 1986), the 1996 welfare reform and the doubling of the child tax credit in 2017. Check each one at Congress.gov.
• Admit what is true. Tax cuts do not pay for themselves, the research on school choice is mixed, and careless rhetoric has hurt the cause.
• Judge any program by whether it rewards work, widens options, builds something and can be paid for. Hold your own side to it.
• When someone says it at the family table, ask him to name the policy he means. The conversation usually gets better after that.