Jeb’s plan to jump-start growth — and his stalled campaign (Updated)

(Luke Sharrett / Bloomberg)

(Luke Sharrett / Bloomberg)

UPDATE: A lot of additional details are now available at Bush’s campaign site. There’s too much to try to summarize here, so I encourage you to check it out to find whatever might pique your interest most. Note that there still is no estimate of the aggregate size of the tax cut, though there are estimates for certain individual filers.

ORIGINAL POST:

Jeb Bush’s campaign has not been going according to plan, to put it mildly. The man who was presumed the front-runner just by entering the race has watched as political novices Donald Trump and now Ben Carson have soared past him. While Mitt Romney often trailed during the run-up to his primary victory in 2012, it’s also worth noting that Romney:

a) never fell below second in the Real Clear Politics average of national polls;
b) never fell below 15 percent in that average; and
c) maintained a generally upward movement even as other candidates rose above him and later fell below him.

With Carson’s sudden rise, Bush has now fallen afoul of all three of those guidelines (though it’s only fair to point out that Bush faces a significantly more crowded field than Romney did).

If Bush is going to return to the top, he won’t do it by trying to out-Trump The Donald. He’ll do it by persuading Republican voters he’s their best chance to win and govern as a conservative. And he is taking a stab at that today by unveiling his tax plan, first in an op-ed in the Wall Street Journal.

Consistent with his campaign so far, Bush frames the issue in terms of getting the economy to grow more quickly. So many of the problems we face — from mediocre job growth to stagnant wages to food-stamp dependency to deficits and debt — stem from the subpar economic growth of the past several years, which has been closer to 2 percent annually than the 3-plus percent of the previous half-century. Over time, that means trillions of dollars in lost sales for companies, wages for workers and tax revenues for government.

Bush has talked about the need to hit growth of 4 percent annually, and he says his tax plan will help us get there. You can read the whole thing, but here are the highlights:

  • Unlike some tax reformers who only talk about making the tax code simpler in a revenue-neutral way, Bush makes it clear he wants to cut taxes: “I want to lower taxes,” he writes, later noting that as governor of Florida he “cut taxes every single year — returning a total of $19 billion to Floridians.” He does not specify how large a tax cut his plan would yield nationally.
  • Unlike Romney, whose campaign was severely damaged by a video showing him talking about the “47 percent” of Americans who don’t pay income taxes, Bush sees fewer taxpayers as a feature of his plan, not a bug. “With this reform in place, roughly 15 million Americans will no longer bear any income-tax liability,” he writes.
  • Individual income taxes would be reduced to three brackets: 10 percent, 25 percent and 28 percent. He does not identify the cut-off for each.
  • It also sounds like he is adopting the ground already staked out by Trump of eliminating the carried-interest loophole, though he doesn’t put it in those exact words. “(W)e will treat all noninvestment income the same,” he writes, “so unless you stake capital in an investment, you won’t be able to claim the capital-gains tax rate on your market gains.” That tax treatment has always been fair game in a comprehensive tax reform — Democrats tend only to want to close it on its own, and the context in which Trump might do it is unclear — but few Republicans have actually said they’d include it in such a reform before now.
  • That’s not the only element of Bush’s plan with a populist tint: “I want to eliminate the convoluted, lobbyist-created loopholes in the code. For years, wealthy individuals have deducted a much greater share of their income than everyone else. We will retain the deductibility of charitable contributions but cap the deductions used by the wealthy and Washington special interests, enabling tax-rate cuts across the board for everyone.”
  • All that said, the plan retains many elements of traditional GOP tax-reform plans. “It eliminates the marriage penalty, expands the Earned Income Tax Credit, ends the death tax, retires the Alternative Minimum Tax and ends the employee’s share of the Social Security tax on earnings for workers older than 67,” Bush writes.
  • Elsewhere, he describes about significantly overhauling business taxes: lowering the corporate income tax rate “from 35 percent — the highest in the industrial world — to 20 percent, which is five percentage points below China’s”; ending the practice, uncommon elsewhere in the industrialized world, of taxing overseas profits of U.S. companies; levying a one-time, 8.75 percent tax on corporate profits already earned overseas and legally taxable if repatriated; and “allow(ing) businesses to fully and immediately deduct new capital investments — a critical step to increase worker productivity and wages.” The latter move would be paid for by eliminating “most corporate tax deductions,” including one for borrowing costs that, he writes, encourages companies to take on debt.

This kind of stuff doesn’t grab headlines in the same way that threats to deport 11 million people do, but it’s more realistic and would be much better for the economy. Whether this plan and others help boost Bush’s sagging poll numbers or not, it’s the kind of tax plan the eventual Republican nominee needs to promote.

Reader Comments 0

58 comments
LDH2O
LDH2O

MANY studies show that cutting taxes stimulates the economy but not enough to offset the cuts. Overall tax cuts cause a drop in revenue.

heezback
heezback

Later today, or maybe not until after tomorrow's talking point faxes go out; Bobby Jindal will be the media darling.  It won't last very long,  but will be his reward for publicly whacking Trump this morning.  Wait for it...

LilBarryBailout
LilBarryBailout

The Obama voters didn't read far enough to see that there IS something in Bush's tax plan for them--an expanded EITC.

TheRealJDW
TheRealJDW

Wow...those are even deeper than the Bush tax cuts...wonder how much they would add to the deficit?  $2 trillion? $3? $4?


Then again if candidate polling less than 10% speaks does it really make any sound?


So back to the real world where Republican primary polling is dominated by Donald Trump and the march down the road to oblivion continues apace

Dusty2
Dusty2

Wellllll, yippee!  Kyle has written a nice ,lukewarm piece on Jeb Bush.  Too bad tax cuts are not exciting.  I like them myself.  And illegal aliens, we might as well realize that most of them have been here too long to do a massive removal..  Besides, Europe will soon load  poor, penniless, suffering people upon us. We have always been good with the broken and mistreated and we will do it again.  So we might as well adjust our own non-citizens.  (Read Dr. Thomas Sowell's column today with his accurate vision of the future here with a rush of  tragic immigrants from the Middle East.)


Anyway, Jeb still stands out as the level headed, experienced, ethical & learned American man who is fit to lead. 


//**//#bang#//***!!!  Firecrackers are fun with their minnie explosions but there's nothing left after that but bits of paper and a whiff of smoke.


Trump is a firecracker. .      

heezback
heezback

@Dusty2

Aw, come on now; he is at least a M-80.  At the minimum he is a whole string of Black Cats.

RafeHollister
RafeHollister

@Dusty2 If Trump is a firecracker, Jeb is a dud firecracker, just some smoke and nothing.  Neither are electable.

lvg
lvg

Daddy Bush calls Jeb's  plan "voodoo economics"

Claver
Claver

@332-206 The mortgage interest deduction seems like the one thing in the tax code that really gives the middle class a break.  So, of course he'll limit it.

LilBarryBailout
LilBarryBailout

WHEEEEEEERRRE'S THE DEEEEEEEEEEMOCRAT PLAAAAAAAAAAAANNN????

RafeHollister
RafeHollister

@LilBarryBailout They have one- more redistribution of your earnings!  If you can't make the economy grow, and they are too inept to do so, so they will divide it up into ever smaller pieces.  Equal misery for all!

Finn-McCool
Finn-McCool

He'll jump start the economy through a tax overhaul? Riiiiiiight.


4% growth? LOL

LilBarryBailout
LilBarryBailout

@Finn-McCool

Democrats tried doing it with higher taxes, more regulations, more mandates, and constant business bashing.  How's that working out?

straker
straker

Kyle - "you're going to blame them"


Get real Kyle.


You know a Republican Congress will NEVER vote against the financial interests of their rich sponsors.

steveatl
steveatl

So, starving government (cutting taxes even more than their record low levels now), is going to raise revenue to build our infrastructure, create jobs, and lower the debt? In what fantasy world does that happen? How well did that work for GWB and Reagan?

LilBarryBailout
LilBarryBailout

@steveatl

The federal government takes in more revenue now than the last time the budget was balanced, and spends a trillion dollars more than when Obama took office.  Rather than lower the debt, Obama's increased it more than any previous president.

An extra trillion in spending every year--where's the infrastructure?

LogicalDude
LogicalDude

"We will retain the deductibility of charitable contributions but cap the deductions used by the wealthy and Washington special interests,"


If Republicans can come up with a bill to remove or cap the deductions for the wealthy and force Obama to sign it, then I know they are serious.  If not, and I do not see that they will, then it will be business as usual, blaming Obama for their own lack of motivation to actually govern. 

Kyle_Wingfield
Kyle_Wingfield moderator

@LogicalDude You're going to blame them for not doing what a presidential candidate proposes before he becomes president?

stogiefogey
stogiefogey

Jeb's performance on the Late Show last night was underwhelming. He blew a great opportunity to define his candidacy when asked how he differed from GWMDB and he responded with some lame comment about Congressional spending - important for sure but not the kind of thing that lights a fire under low information voters. 

Likewise
Likewise

Today's GOP to the angry white crowd - "You have no one to blame but everyone else."  Richard Nixon was the Creator and Ronald Regan was the Emperor of today's GOP. Now it's Donald Trump who understands this better than anyone and deploys it masterfully.  While the rest of the GOP denies what has been artfully crafted over the decades, Trump has taken it to the bank.

Astropig
Astropig

Bush is not the front runner because he never was the front runner with anybody but the media and the GOP establishment. Calling for tax cuts is deeeeeeep desperation to somehow connect with the real Republican base.It won't work. The GOP has been burned twice before by the Bush family and they're sick of them.I'll stay home and bark at the moon before I'll vote for another Bush.

bu2
bu2

@Astropig

Jeb, unlike almost anyone else in the race (like a bunch of 1st term senators and the failed CEO of HP), was very successful in government, administering a big state.


Trump is sucking up all the attention, but Jeb isn't in a bad spot.  He needs to stay ahead of Walker, Rubio and Kasich and outlast them.  And have the field down to no more than 5 serious candidates by the time the winner take all primaries kick in March 15th.  There are a lot of Republicans who would never vote for Trump.  The only way Trump wins is if it stays a huge field into May.  But people will start running out of money.

LilBarryBailout
LilBarryBailout

"So many of the problems we face...stem from the subpar economic growth of the past several years, which has been closer to 2 percent annually than the 3-plus percent of the previous half-century."

-------

It's worse than that.  Growth is typically well above the long run average coming out of a recession, and not only does Obama's growth rate fall pathetically below the long-run average, it is disastrous as compared to, say, Our President Reagan's growth following the Carter recession.

PJ25
PJ25

@Jefferson1776   While there are plenty of people and companies making money, much of the middle class is eating out and buying new cars and toys again because they have access to consumer credit that they didn't when this recession started.  All it would take is a 2% rise in interest rates and the middle class is a has been. 

Jefferson1776
Jefferson1776

@LilBarryBailout  Funny I see folks and companies making money left and right,  go down to Barrett Pkwy Friday night -- all the eating places and the HIGH dollar eating places are packed.


You are just out of the loop, I guess.

LilBarryBailout
LilBarryBailout

@Jefferson1776 @LilBarryBailout

There are no "high dollar" eating places on Barrett Parkway.

And I'm glad to learn from you that we won't be hearing any more about falling median family incomes or rising inequality now that everything is so peachy.

LilBarryBailout
LilBarryBailout

@MANGLER @LilBarryBailout

The growth under Reagan after He fixed Carter's economy is significantly higher than Obama's.  Obama inherited a recovery, Reagan did not.  Compare apples and apples.

bu2
bu2

@MANGLER @LilBarryBailout


Got any data for that?  I remember Carter's 18% interest rates, 8% unemployment and mile long gas lines.  Carter's economy was a perpetual stagflation, something unheard of before the 70s.

RafeHollister
RafeHollister

I think Jeb is toast.  He had a good record in FL, but comes across as "more of the same", when folks want to try something different.  He is out of step with primary voters on immigration and common core.  His strategy of lose the primary to win the general never made a lick of sense.  I guess  he assumed he would have enough money to buy the election by deceiving the conservatives, while campaigning as a moderate.  It is not working, folks see Jeb for what he is, just another politician who will abandon his promises, the first time his donors give him an ultimatum.


The voters are tired of not having their voices heard.  Here we go again, with an Iran capitulation deal that only 21% of the voters approve of,  about to be approved.


Jeb's low energy campaign style just doesn't give much indication that he can do much to turn around things, so the government is once again for the people and by the people.

bu2
bu2

@RafeHollister

I think you grossly overestimate the anti-common core sentiment and somewhat overestimate the anti-immigrant movement.  Jeb has a common sense immigrant plan, not Trump's kick 'em all out plan which would make the "great recession" look like a picnic.

M H Smith
M H Smith

Yeah, those old political novices. ;)

heezback
heezback

I feel that Jeb is not an electable option, primarily due to "Bush" fatigue.  While judging someone solely on the basis of their family name is both ignorant and shallow, that is his problem as I see things.  I also feel he takes some positions, which are at odds with the "mood" of the electorate right now. 


Clinton is also facing a similar challenge, regarding the family name and trustworthiness, but in a much smaller pool.  Her advantage is having a much more fawning media, although that seems to be slipping slightly.

Jefferson1776
Jefferson1776

He is a waste of donor money and to compare him to a Romney run is a low bar to cross.


Tax cuts, now that's funny.

JeffreyEav
JeffreyEav

I was surprised by the populist tint when I read it this morning but it looks like too much of the same in other places. Only conservatives say, "death tax". Other folks call it by its real name.

SwamiDave
SwamiDave

So @JeffreyEav, would you prefer "Additional-Tax-On-Property-Already-Taxed-At-Time-Of-Death"?  


What about "Supposed-Societal-Share-Of-Already-Taxed-Earnings-And-Property"?


-D 

Claver
Claver

@SwamiDave @JeffreyEav Running a country does cost money.  I'd rather more come from estates over $5 million and less from working people making $50K per year.  So, I'll call it the "We-Don't-Need-An-Aristocratic-Class-Tax" or the "I-Prefer People-Who-Work-For-A-Living- Over-The-Idle-Rich-Tax."

JFMcNamara
JFMcNamara

"Unlike some tax reformers who only talk about making the tax code simpler in a revenue-neutral way, Bush makes it clear he wants to cut taxes "


So he is going to debt finance growth?  That can only work until you max out the credit card, then you get disaster.  Tax cuts drive debt.  I thought we were trying to reduce our debt and deficit, not drive it through the roof.


http://www.reuters.com/article/2015/08/25/us-usa-tax-cuts-idUSKCN0QU2FB20150825

Kyle_Wingfield
Kyle_Wingfield moderator

@SwamiDave @JFMcNamara There was nothing in the op-ed about spending cuts. Of course, he also didn't specify how large the tax cuts would be, so it's impossible at this point to know if it would be difficult or easy to balance them with spending cuts.

SwamiDave
SwamiDave

Kyle didnt mention any cuts to spending from his plan @JFMcNamara, but that would be how you avoid spending more than you have.  Tax cuts only drive debt under the assumption that Government is spending at a level that it should.  


The taxpayers of American have and continue to do their part.  Having Government operate within its means is how you avoid additional debt.    


-SD

JFMcNamara
JFMcNamara

@Kyle_Wingfield @SwamiDave @JFMcNamara  , You can't cut enough to justify the size of the cuts.  We can't even cover lowering the top rate to 28%.


73% of our tax dollars go to social security, defense, medicare, Medicaid and interest payments. 16% goes to veteran and federal workers pension, NASA, education and other things not easily cut.


11% ($370B) is the "safety net programs". We couldn't even cut that and balance the current deficit of $474B.  Unless something drastically changes in American politics, then this is debt financing.  

Kyle_Wingfield
Kyle_Wingfield moderator

@JFMcNamara He's cutting deductions as well, so neither you nor I have no idea how much spending would have to be cut to balance the tax cuts.

JFMcNamara
JFMcNamara

@Kyle_Wingfield @JFMcNamara  , its only a tax cut if he lowers taxes more than he increases taxes via cutting deductions.  Otherwise, its a tax increase.  At best, its a tax cut for some and a tax increase for others.  That clearly can't be the case given that the number of non tax payers is going from 47% to 51%.  There are enough details there to piece together the plan if you use logic.


Also, he said that he is cutting taxes.  That is the genesis of my comment.


"Unlike some tax reformers who only talk about making the tax code simpler in a revenue-neutral way, Bush makes it clear he wants to cut taxes "


If that is true, then we know its not revenue neutral. 


Either way, you are right that we don't have the complete details, but its reasonable enough to assume that it can't work without more debt given our current obligations and political structure.

Kyle_Wingfield
Kyle_Wingfield moderator

@JFMcNamara I already pointed out it's not revenue-neutral. We simply don't know the magnitude, even with those clues you point out. There's a big difference between a $100B tax cut and a $500B tax cut, no?

Kyle_Wingfield
Kyle_Wingfield moderator

@JFMcNamara And, of course, it depends on whether he's right about the plan producing 4% growth. If it does, much of the difference will disappear (which is different from saying "tax cuts pay for themselves"; they just often aren't as costly in forgone revenue as projected).

Remember, for all George W. Bush's fiscal flaws, the deficit was down to $160B, or 1.1% of GDP, in 2007 before the crash came.

JFMcNamara
JFMcNamara

@Kyle_Wingfield @JFMcNamara  , There's a difference in the debt, but not a big difference.  I thought we were fiscal conservatives here?  I am on a conservative blog, right? I'm a fiscal conservative, and any new debt is debt I don't want.  I don't care if its Obama or Bush giving it to me.  Yes, I'm socially very liberal, but I'm about as fiscally conservative as they come.


The crash came under Bush, and that is the bigger problem.  When you grow the economy faster than natural, there are negative consequences. Its either going to be through a debt bubble or through a market bubble. 


Growth is a political football where everyone claims they can grow better, but America is better off with slow controlled growth. In that environment, you can have bounded capitalism with low inflation (like now).  We aren't at risk of a crash and inflation isn't driving the prices of goods up. If you are business man, this is what you want because you can compete in a stable environment.  With too much government stimulus (which is what tax cuts are, government stimulus), it allows the economy to grow faster creating the issues that we have seen in the past.


As far as I'm concerned, its a money giveaway that is no different than the stimulus the fed is providing.

Kyle_Wingfield
Kyle_Wingfield moderator

@JFMcNamara "I thought we were fiscal conservatives here?  I am on a conservative blog, right? I'm a fiscal conservative, and any new debt is debt I don't want."

I don't want new debt, either. We are disagreeing about whether this plan gives us any. You're saying it necessarily does. I'm saying it depends on how large a tax cut it is and whether it can be offset by a spending cut, which we don't yet know.

"America is better off with slow controlled growth."

Yeah, we just don't need that extra $160B a year in economic activity -- compounded over time -- that the missing percentage point of growth would bring, do we? Ask Europe how swell it is to forgo the extra percentage point of growth; it's not as if they never have recessions as a consequence. They just don't capture as much of an upswing.