Commentary

Christensen: Sen. Berger drinks from GOP's grail on economic solutions

rchristensen@newsobserver.comJuly 20, 2013 

TAX01-NE-071613-RTW

State Senate President Pro Temp Phil Berger speaks on House Bill 998, the Tax Simplification and Reduction Act, during the Senate session on Tuesday, July 16, 2013, at the North Carolina General Assembly in Raleigh. The bill passed 32-17 following its second reading and debate on the Senate floor.

ROBERT WILLETT — rwillett@newsobserver.com

Editor's note: This column incorrectly said that former Republican U.S. Sen. Bob Dole called trickle down economics a riverboat gamble. Republican Howard Baker Jr., a former Senate majority leader from Tennessee, made the comparison.

Senate leader Phil Berger and I have gotten above our upbringin’.

Both of us are sons of the great American working class – the people who built this country and fought its wars, but who have seen hard times in recent years as plants were shuttered.

Our fathers worked for the same saw manufacturer and came home with the same steel splinters in their hands. My father was a saw smith who never wore a tie to work until he “retired” and went to work as a bank security guard.

Berger wrote movingly of his father and his growing-up experiences in a column published earlier this year.

Both Berger and I also had to paddle our own canoes. He lists stacking particleboards on assembly lines among his many jobs. I worked in a textile mill, many other manufacturing plants, flipped burgers and so forth.

Needless to say, I admire Berger for what he has accomplished in his life: He has become an attorney and a respected leader in North Carolina. I like the way he carries himself. In my experience, he is a straight-shooter, smart, accessible and a first-class gentleman. And I don’t say that about every politician.

People often draw different lessons when they rise through the American class system. For some, their success is proof that through hard work and discipline anybody can better themselves, and they want to pull the ladder up behind them. Others see all the help they got along the way – the public schools, the public universities, the student loans – and want to make sure that other people have the same opportunities. I can’t speak for Berger, but I fall into the latter category.

How to help?

So how do we best help the people that Berger and I grew up with, many of whom are struggling to find work – or at least the kind of decent jobs that their fathers held? It is one of the great divides of American politics, and it was one of the great debates conducted in the N.C. Legislature last week.

Berger, as much as anyone, is the intellectual and political leader of the conservative revolution in the Legislature.

I know he is worried about the people we grew up with. He writes about his own struggles to obtain the American dream and notes North Carolina’s high unemployment rate.

“Sadly,” Berger writes, “today that opportunity is slipping for many. Hopes and dreams for a better tomorrow are fading.”

Berger is dead on.

And a big reason why this is happening? Berger continues: “Our broken tax system.”

Here is where the two of us part.

I would bet if you got 10 reputable economists in a room and asked what the biggest reason for North Carolina’s persistent unemployment problem is, none of them would say, “Our broken tax system,” – unless they were in the tank with some conservative group.

His solution? Trickle-down economics. Yes, the same warmed-over philosophy that the elder George Bush once called “voodoo economics” and Howard Baker called “a riverboat gamble.” But since then, it has become the holy grail of the Republican Party. This philosophy is now so politically correct that no one in the GOP would dare to utter the slightest question about it for fearing being labeled “a squish.” It seems that one might more easily defend Islamic law than question Reaganomics.

A form of trickle-down economics is what passed in the Legislature last week: Cuts in corporate taxes from 6.9 percent to 5 percent, cuts in personal income tax rate ranging from 6 percent to 7.75 percent, to a flat 5.75 percent. And the elimination of the estate tax prevailed; it now only applies to estates valued at $3.5 million or more.

The late John Medlin, the wise former CEO of Wachovia who I admired, used to call occasionally and urge me to write about how the top income rates should come down. He said we were losing too many rich people to Florida and elsewhere; I was not convinced.

Trickle-down issues

Every study has shown if there is one group in society that has done well during the past decade, it is the wealthy. I am happy for them and hope they enjoy their wealth in good health. I am not an envious person.

But there is little empirical evidence that shifting tax policy to make the rich richer would jump-start the economy and result in more jobs. It’s just as likely that the tax cuts will end up in offshore accounts.

Of course, nearly all taxpayers get a tax cut under the tax plan, but the big boys – like those who bankroll legislative campaigns – get the biggest ones.

And, in order to pay for all these tax cuts, public services will have to be cut. The State of North Carolina, unlike the federal government, cannot print money and go into debt. We are already beginning to see the hollowing out of public services. North Carolina is now ranked 46th in per capita spending on secondary and elementary education.

My father was not an educated man, but he was always skeptical of trickle-down economics. He never thought it would trickle down to working people.

“Expect liberal elitists and their media cheerleaders to wage class warfare,” Berger wrote in his column about his tax proposals. “They will fight to protect the unfair status quo that take their fruits of your labor and gives it to someone else.”

Berger led the successful effort to replace the progressive state income tax with a flat tax, to lower the corporate tax and to end the inheritance tax for people with estates of $3.5 million. So if anybody criticizes that, they are engaging in “class warfare”?

I don’t know what Berger’s dad would have said about that. But my dad would have said: “You’ve got to be kidding.”

Christensen: 919-829-4532

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