I do a fairly regular debate on CNBC with Lawrence Kudlow, an economic conservative for whom I have a great deal of respect and with whom I find myself in agreement on a number of issues. For example, we have agreed to do a joint article opposing the expenditure of public money for expensive athletic stadiums, which constitute a transfer of tax revenues from average citizens to much wealthier recipients.

But in a recent debate I realized that there is one great inconsistency on the part of many of the conservative commentators on the important question of how to deal with excessive economic inequality.

They denigrate liberal advocacy of public policies to see that the growth in our national wealth is more widely shared rather than going overwhelmingly to a very small percentage of Americans at the top as “class warfare.” In their arguments, focusing on how income is distributed is “divisive,” pitting one group of Americans against another.

Instead, they say we should all work simply to improve overall economic growth, thus benefiting everybody. The problem with this reasoning is that it conflicts with the facts. Over the past few years in particular, with America’s economy growing faster than any other country in the developed world, the benefits have almost entirely gone to a very small number of the very wealthy. This insistence that growth is the way to alleviate the problems of middle and working class Americans who have seen no significant benefit from that expansion is an impressive example of the ideologically driven will to believe, facts to the contrary notwithstanding. And their argument is wrong even on the issue of how to encourage economic growth.

Concern for increasing the share of our prosperity that goes to the non-wealthy is not only a matter of fairness and of alleviating the real distress that many Americans face because their incomes have not risen adequately. Consumption is the largest part of American economic activity, and with most Americans seeing their incomes essentially frozen in real terms, consumption is not what it could be, holding down economic expansion.

For example, as part of the package that gave us sequestration in 2012, taxes were raised on the very wealthy, thanks to President Obama’s insistence on returning the top tax rate for people whose income is over $400,000 to where it was when George Bush got the Congress to lower it. But there was also an increase in taxation for people at the low end – the suspension of the 2 percent of the Social Security tax that had been part of the economic stimulus package expired.

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The results were very clear. In the aftermath, there was a drop in economic activity at the lower end. But sellers of luxury goods saw no negative impact at all. In other words, raising the tax rate on people making over $400,000 from 36 percent to 40 percent had no discernible retarding effect in the economy. Raising the tax rate by 2 percent on people making $90,000 or below did.

In that debate with Kudlow, I realized he displayed a fundamental inconsistency in this conservative objection to our efforts to see that prosperity is more widely shared. He simultaneously criticized liberals for “dividing people” by talking about inequality, but then highly praised Gov. Scott Walker of Wisconsin for his continuing attack on unions. Walker began by taking most bargaining rights away from public employees and has now signed a law to will weaken unions in the private sector.

There is a great logical and moral inconsistency between denouncing efforts to improve the economic position of middle- and working-class people vis-a-vis the very wealthy as “divisive” and then celebrating a governor whose major appeal to his fellow Republicans in his quest for the presidency is his attack on the effort of unions to raise the wages of working people.

In this conservative world view, trying to increase the share of America’s increased economic activity that goes to wage earners is “divisive,” but attacking them because their wages are too high is sound economic doctrine.

I have added to my collection of credibility-straining Republican arguments, a further defense of Walker’s crusade to prevent the people who collect the garbage, clean the streets, put out fires and maintain the parks from getting too rich. It is his claim that by showing toughness in assailing employee unions he will be impressing America’s enemies so that if he becomes president they will be afraid. The notion that Vladimir Putin will moderate his brutal assault on Ukraine or that murderous Islamic fanatics will stop their assaults on innocent people because they will be dealing with an American president who held down the pay of public workers in Wisconsin competes with Sen. Mitch McConnell’s claim that America’s great job growth over the last year was due to employers’ anticipation of a Republican congressional victory for the stupid prize.

Barney Frank is a retired congressman and the author of landmark legislation. He divides his time between Maine and Massachusetts.

 


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