GOP Sens. Rubio, Lee Propose Economic Plan To Drag U.S. Policy Into 21st Century

Marco Rubio, R-Fla., left, accompanied by Sen. Mike Lee, R-Utah, speaks during a news conference on Capitol Hill in Washington. (Photo: AP/Scott Applewhite)

Despite dramatic changes in the U.S. economy since the passage of Progressive Era reforms, D.C. power-brokers have refused to reform unsustainable programs. Republican Senators Marco Rubio (R-FL) and Mike Lee (R-UT) proposed to do just that this week, marking the second time this year a bold Republican plan to preserve America’s social safety net and increase economic mobility has been put on the table.

“Too many Americans believe the American dream is slipping away for them and their children,” the two Republican senators wrote in an op-ed in The Wall Street Journal. “They see an economy that benefits stockbrokers but not stock clerks. They see the ladder of economic opportunity being pulled farther up and out of their reach.”

As the stock market hits new highs fueled by cheap money, the investor class has profited enormously as average Americans continue “to see their cost of living rise, while their paychecks remain stagnant.”

From June to August, a period the administration touted as experiencing stronger-than-expected economic growth, reports from the Bureau of Labor Statistics show an economy driven by part-time job creation, as well as anemic payroll-to-population and labor force participation rates.

First taking aim at the crony and outdated tax system, the two senators contend that “the policies and practices of Washington remain stuck in the 20th century, leaving too many Americans unable to access the enormous potential of this new era.”

The plan consists of simplifying existing income tax brackets into just two — 15 and 35 percent — and “eliminating or reforming” deductions that disproportionately benefit the politically connected few. As D.C.’s friends buy a legilative workaround, a growing number of aspiring working American families have just two choices — welfare or working class poverty.

“The current tax code taxes too much, taxes unfairly, and conspires with our outmoded welfare system to trap poor families in poverty, rather than facilitate their climb into the middle class,” Rubio and Lee write. “Our reforms seek to simplify the structure and lower rates.”

But the proposal will likely receive criticism from several members of their own party, as well as the usual big government Democrats. This is a political reality even they admit, but the GOP senators argue that “the end goal of economic policy isn’t simply growth, but freedom — clearing the obstacles from each American’s unique pursuit of happiness.”

A fundamental plank of their plan addresses the penalties imposed by the current “progressive” tax code on working families. The plan would eliminate the dreaded marriage penalty, a statute that imposes higher taxes on married couples than if they weren’t married at all or file as individuals.

It would also abolish the parent tax penalty, a burden shared by more filers than the marriage penalty, but far more obscure.

“Today, parents are, in effect, double charged for the federal senior entitlement programs. They of course pay payroll taxes, like everyone else,” they stated. “But unlike adults without children, they also shoulder the financial burden of raising the next generation of taxpayers, who will grow up to fund the Social Security and Medicare benefits of all future seniors.”

The proposal would offset this double charge by allowing working parents to augment the current child tax credit of $1,000 with an additional $2,500 credit, a credit that would be applicable against income taxes and payroll taxes. These taxes disproportionately burden lower- and middle-income families, thus it would not phase out, but rather would be refundable against income tax and employer and employee payroll tax liability.

“Children aren’t consumer goods — they are investments parents make in their futures, and in the future of America, and therefore deserve to be treated as such in our tax code.”

In July, Rep. Paul Ryan (R-WI), the 2012 vice presidential nominee and Chairman of the House Budget Committee, delivered a speech at the American Enterprise Institute, a D.C.-based policy think-tank outlining his plans for “expanding opportunity in America.”

When comparing the two plans, there is a common theme that emerges.

Paul also argued that now is the time to reform the nation’s antiquated entitlements programs, social safety nets and rebuild a “healthy economy.” Unlike many proponents of the unsustainable status quo, the Republican proposals clearly understand that without a strong economy there is no social safety net.

That’s true for “both for those who can’t help themselves and for those who just need a helping hand,” Paul said. For the Republican senators, there can be no new American Century if government institutions and programs are not updated, reformed or replaced to reflect a 21st Century economy.

Of course, congressional Republicans understand that any “Grand Bargain” proposal would stand little chance of passing a Democrat-controlled Senate and, even if it did, Harry Reid would never allow it to make it to the floor for a vote.

“If Republicans win the Senate this fall, passing pro-family, pro-growth tax reform should be a cornerstone of our agenda next year,” they argue. “The plan we have outlined won’t only help revive the American dream, but also make it more attainable for more Americans than ever before.”