Why Jeb Bush is Talking About Income Inequality

It’s a new frame for his conservative economic plan.

Former Florida governor Jeb Bush speaks at the 42nd annual Conservative Political Action Conference (CPAC) February 27, 2015 in National Harbor, Maryland.
National Journal
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April 30, 2015, 4:05 p.m.

Jeb Bush, the great-grand­son of a man who made the fam­ily for­tune in in­vest­ment bank­ing, is mak­ing in­come in­equal­ity an is­sue in his not-quite cam­paign for the pres­id­ency.

It’s a new line of at­tack—and one that Bush hasn’t yet sup­por­ted with any policy pro­pos­als. In­deed, so far, he’s ad­voc­at­ing the samee­co­nom­ic policies he pushed as gov­ernor of Flor­ida: cut­ting taxes and rolling back reg­u­la­tions on in­dustry. 

“I did my best. We had rising in­come for sure,” Bush told Na­tion­al Journ­al about his time in the state­house. “And if you’re not grow­ing the eco­nomy, you’re not go­ing to deal with in­come in­equal­ity.”

Speak­ing Thursday at the con­ser­vat­ive Na­tion­al Re­view In­sti­tute sum­mit in Wash­ing­ton, Bush once again hit his in­equal­ity agenda. “If you’re born poor today, you’re more likely to stay poor,” Bush said. “We need to deal with this.”

(RE­LATED: Jeb Bush to Na­tion­al Re­view: “I Love You.” But “You’re Wrong on Im­mig­ra­tion.”)

Bush prom­ised that he would make those ideas a center­piece of his cam­paign, should he form­ally be­come a can­did­ate. The theme also plays prom­in­ently on Bush’s Right to Rise polit­ic­al ac­tion com­mit­tee’s web­site:

“While the last eight years have been pretty good ones for top earners, they’ve been a lost dec­ade for the rest of Amer­ica,” reads a state­ment on the site’s “What We Be­lieve” page. “We be­lieve the in­come gap is real, but that only con­ser­vat­ive prin­ciples can solve it by re­mov­ing the bar­ri­ers to up­ward mo­bil­ity.”

But Bush already has offered hints about his eco­nom­ic plan—and so far, they mir­ror his ap­proach as Flor­ida gov­ernor.

“The lack of people mov­ing up, and the fact that people in the middle are dis­af­fected and they don’t see the sys­tem work­ing for them is what we need to fix,” Bush said at the Na­tion­al Auto­mot­ive Deal­ers As­so­ci­ation con­ven­tion in San Fran­cisco this year. “And we can do that by tax re­form, en­ti­tle­ment re­form, reg­u­lat­ory re­form.”

(RE­LATED: Jeb Bush Backs Hike in So­cial Se­cur­ity Re­tire­ment Age)

With large Re­pub­lic­an ma­jor­it­ies in both le­gis­lat­ive cham­bers, Bush pushed through tax cuts for cor­por­a­tions and wealthy in­vestors—a group that made up, with rare ex­cep­tions, the richest 5 per­cent of Flor­idi­ans.

At the same time, Bush’s cuts to the state’s tax base shif­ted much of the bur­den of pay­ing for schools to loc­ally col­lec­ted prop­erty taxes, which crit­ics say dis­pro­por­tion­ately hurt middle-class homeown­ers and renters.

So what of Bush’s new em­phas­is on the “in­come gap?”

“That’s out­rageous,” said Ed Montanaro, who dur­ing Bush’s ten­ure was Flor­ida’s chief eco­nom­ist, a non-par­tis­an po­s­i­tion that answered to the GOP-con­trolled state le­gis­lature.

(RE­LATED: Marco Ru­bio’s Biggest Prob­lem Isn’t Jeb Bush)

Dan Gel­ber, one of the top rank­ing Demo­crats in the le­gis­lature in that peri­od and a fre­quent Bush spar­ring part­ner, could only man­age a chortle. “You can quote the laugh,” he said.

“He was very sens­it­ive to in­come in­equal­ity. He cre­ated more of it,” Gel­ber said.

In Au­gust 1998, dur­ing his first suc­cess­ful run for gov­ernor (he ran in 1994 but lost), Bush told alumni of his­tor­ic­ally black Flor­ida A&M Uni­versity: “The Amer­ic­an dream is shattered for far too many people “¦ Too few people have con­fid­ence in cap­it­al­ism.”

Upon tak­ing of­fice, Bush dir­ec­ted agen­cies un­der his con­trol to re­peal or re­duce reg­u­la­tions. This in­cluded an ef­fort to stream­line the state’s land­mark Growth Man­age­ment Act that passed un­der Demo­crat Bob Gra­ham in the 1980s. Bush’s goal was to make it easi­er for de­velopers to pur­sue large pro­jects. Bush also pushed through the le­gis­lature ma­jor tort re­form bills, mak­ing it harder to sue cor­por­a­tions.

(RE­LATED: Re­pub­lic­an 2016 Hope­fuls Court Iowa’s “Su­per Vo­lun­teers”)

Speak­ing to the car deal­ers, Bush cited the high costs of lit­ig­a­tion as one reas­on that large-scale in­vest­ments are dif­fi­cult in today’s cli­mate.

“The stand­ing that people have is way too broad,” he said, a ref­er­ence to law­suits that can slow down or block de­vel­op­ment pro­jects. “The costs are way too high. The un­cer­tainty is all too clear. And it stifles the in­vest­ment that cre­ates in­come in­creases for the middle class.”

But the is­sue that most dir­ectly af­fected Flor­idi­ans’ in­come was Bush’s tax policy, and in that area, the richest slice of Flor­idi­ans be­nefited the most. Bush ul­ti­mately suc­ceeded in elim­in­at­ing a tax on stocks, bonds and oth­er fin­an­cial in­stru­ments. But be­cause sav­ings and check­ing ac­counts, re­tire­ment ac­counts, and in­vest­ment hold­ings total­ing less than $60,000 for a mar­ried couple were ex­empt, the tax was ac­tu­ally borne by the wealth­i­est 4.6 per­cent of res­id­ents—those rich enough to have sub­stan­tial in­vest­ments out­side of their 401(k)s and IR­As. In a state without an in­come tax, it was the only pro­gress­ive levy Flor­ida had.

By the end of Bush’s time in of­fice, the av­er­age an­nu­al sav­ings for the pay­ers of this “in­tan­gibles” tax was $1,523 per house­hold. The av­er­age an­nu­al sav­ings for the typ­ic­al Palm Beach County mil­lion­aire was nearly $8,000 per house­hold. Nearly half of the $14 bil­lion cu­mu­lat­ively slashed from Flor­ida’s budgets dur­ing Bush’s ten­ure came from the elim­in­a­tion of this one tax.

(RE­LATED: How Flor­ida’s Later, Win­ner-Take-All Primary Is Both Risky and Re­ward­ing for Jeb Bush)

Montanaro was head of the Flor­ida le­gis­lature’s Eco­nom­ic and Demo­graph­ic Re­search of­fice and chaired the pan­el of state eco­nom­ists who es­tim­ated how much tax rev­en­ue Flor­ida could ex­pect each year. He said there were a num­ber of taxes Bush could have tar­geted that did dis­pro­por­tion­ately af­fect poorer Flor­idi­ans—taxes on util­ity bills, for ex­ample, or the sales tax.

“There were oth­er taxes he could have gone after. He just grav­it­ated to the big wealth tax,” said Montanaro, who now teaches eco­nom­ics and Span­ish lit­er­at­ure at Carthage Col­lege in Wis­con­sin.

Gel­ber, who en­joyed long email de­bates with Bush on is­sues ran­ging from edu­ca­tion to car boost­er seats, said Bush’s policies re­flec­ted his be­lief in the sup­ply-side eco­nom­ic philo­sophy that help­ing the rich—or “risk takers” and “job cre­at­ors,” as Bush calls them—ul­ti­mately helps every­one.

But that world­view, Gel­ber said, would do noth­ing to ad­dress in­come in­equal­ity in the United States, just as it did noth­ing to ad­dress in­come in­equal­ity in Flor­ida. “He didn’t help that as gov­ernor. He ex­acer­bated that as gov­ernor,” Gel­ber said. “Maybe we’re just not pay­ing our low-wage work­ers suf­fi­ciently. How about that?”

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