What is Conservatism?

Shannon Bohrer

(7/2021) The conservative party has strong beliefs in small government, lower taxes, and fewer regulations, what many call the Republican three-legged stool. The Republican Party has held the presidency for 24 or the last 40 years, and they have been successful, but they have also experienced some problems. However, one issue in particular where they have prevailed, lowering taxes, has had long term unintended consequences.

Our current president says he wants to work with the Republicans. The Democratic proposals include pandemic relief, infrastructure, voting rights, and criminal justice reform. Republicans have complained that the pandemic relief gave away too much money to the unemployed, and the infrastructure bill encompasses too many programs that are not actual infrastructure, and it cost too much. Too much from the conservative perspective.

While the democratic president has said he is open to ideas, the few ideas put forth by the Republicans seem woefully inadequate from the democratic perspective. They keep repeating that their fiscal conservative values will not allow them to spend too much. The problem, at least one problem, with their protestations of being fiscally conservative, is that under the previous administration, the budget deficits exploded. The national debt increased by $7.8 trillion. That was a 40 percent increase in our debt, in just four years, under a "conservative" Republican president.

How did the party of conservatism spend so much in a short period? Part of the problem has been their success with reducing taxes and enacting rules that allow companies and individuals, to avoid paying taxes. The tax reduction act, passed in December of 2017, was supposed to add $1.8 trillion in new revenue, which would pay for the $1.5 trillion in tax reductions. It did not. Additionally, Trump asked for $1.15 trillion for discretionary spending. Congress approved $1.3 trillion. What discretionary spending cost $1.15 Trillion?

When the tax bill passed, the nonpartisan Tax Foundation predicted the act would "add almost $448 Billion to the deficit over the next ten years." And we are going in that direction.

The real issue is that the excessive debt increases by the Trump administration is not new in Republican administrations. In 2007, the late Senator John McCain, said: "Congress spends money like a drunken sailor." Senator McCain also said it was not his intention to disparage drunken sailors by comparing them to members of congress. What happens when a party of small government, lower taxes, and fewer regulations keep creating more significant deficits? How we got here helps to explain our current predicament.

Many credit the beginning of the modern conservative movement to Barry Goldwater’s campaign for president in 1964. However, President Nixon was more liberal than conservative, he wanted to expand many of our social programs. After Nixon, the republicans turned back to conservatism. Many ascribe President Reagan their popularization of the three-legged republican stool, small government, lower taxes, and fewer regulations. Reagan famously said that with less corporate tax, business would prosper. This was attached to the famous trickledown economics theory, that with free enterprise, everyone would thrive. It never worked and, at the time, Vice President Bush called the trickledown theory - voodoo economics. He was correct.

Since President Reagan, the republicans have espoused conservative values as the parties’ beliefs. They have been successful in their accomplishments; in that, they have reduced regulations and taxes. The conundrum is that when in office, they have not reduced government spending. While they have held the presidency 24 years, of the last 40 years, their record of deficits is inconsistent with what they say. Under every Republican president, including Reagan, our national debt has grown - a lot.

Conversely, under the only two democratic presidents, the national debt has been reduced. During the last two years under President Clinton, we had a balanced budget and were paying down the national debt. Under President Obama, the national debt he inherited was skyrocketing, but before he left, it was in decline. "The tax and spend liberals" have held the presidency for 16 years, and they decreased the deficits they inherited, while the "Conservative Republicans" have increased the deficits.

While the Republicans did increase the debt, they were successful in lowering taxes, one of their strongest beliefs. Of course, their success is also the problem. In 2018, the first year of the Trump tax reduction act, almost one hundred of the Fortune 500 companies "effectively paid no federal taxes." Additionally, sixty of the same companies earned $79 billion in the same year. How do you make $79 billion in profits and have no tax liability?

In 2018, with the new corporate tax rate, Amazon, and Netflix, because of their profits, should have paid $16.4 billion (21 percent) in taxes, but they paid nothing. While not paying taxes, they received $4.3 billion in tax rebates. To make this clear, Fortune 500 companies that are profitable – pay no taxes and are given tax rebates. I would guess that the more you do not pay, the higher the rebate; at least, it seems that way.

In addition to their success of reducing the corporate tax rate or eliminating the taxes altogether, the conservatives, and others, added corporate welfare, otherwise known as corporate subsidies. Corporate subsidies have been around for years. General Motors, Boeing, and Intel have all been recipients of billions of dollars of subsidies. The fossil fuel industry receives around $20 billion in subsidies each year. The CATO Institute, a very conservative organization, estimates that "the US Government spends around $100 Billion annually on corporate welfare."

The question should be, how tax breaks result in no taxes for billionaires and corporations, and at the same time, the corporations are entitled to subsidies. The answer is simple, tax breaks for friends and family, called wealthy people and corporations, that result in contributions to campaigns. The conservatives are willing to compromise on spending with the democrats, providing the tax rates do not change. Compromising tax rates might reduce contributions to their campaigns.

Recently, conservatives complained that an additional $300 per week for unemployment was making people lazy. One hundred billion in corporate welfare is not on the table, corporate tax rates are not on the table, but your $300 unemployment check is on the table. There is a difference between the 100 billion and the $300; the difference being that you will pay taxes on the unemployment check.