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The least interesting thing Marco Rubio said on Tuesday was about Hillary Clinton.
In a speech detailing his jobs plan, Rubio took a quick dig at the Democratic frontrunner. "The race for the future will never be won by going backward," he said. "It will never be won by hopping in Hillary Clinton’s time machine to yesterday."
Because presidential campaigns are finely tuned to make Americans hate politics, this was the bit of Rubio's speech that got amplified — including by Democrats. "Let’s be real," replied Holly Shulman, press secretary for the Democratic National Committee, in a statement emailed to reporters. "Retro Rubio is the only one here who is attempting to master time travel. Rubio continues to peddle the same failed Republican policies that cripple the economy and squeeze the middle class."
"Hillary Clinton’s time machine to yesterday." "Retro Rubio."
Kill me now.
Rubio's theory of the economy: It's not about Obama
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But the rest of Rubio's speech was worth reading. It laid out, in detail, Rubio's theory of the economy — and, in somewhat less detail, his vision of how to fix it.
And make no mistake: Rubio does have a theory of our economic problems. Better yet, it's an apolitical theory of our economic problems. Of late, Republicans have fallen into the trap of believing, or pretending to believe, that the central driver of America's economic problems is Barack Obama. These lazy, partisan analyses have led to lazy, partisan, policy proposals.
But Rubio's diagnosis has nothing to do with Obama — indeed, he doesn't even mention Obama. Nor is it about Democrats. Hell, it's not even about recent decisions made by American policymakers. It's about technology and globalization.
"The path to the middle class is narrower today than it has been for generations, and the American dream so many achieved in the last century is in peril," he says.
There are two primary forces behind this transformation. The first is radical technological progress – including the development of the internet, information technologies, wireless and mobile capabilities, robotics, and more. The second has risen partly from the first, and that is globalization. From where you sit, you can sell a product to someone on the other side of the world almost as easily as to the person on your left or right. This has pulled us into competition with dozens of other nations for businesses, jobs, talent, and innovation.
Rubio goes on to say that the task is "to ensure the rise of the machines will not be the fall of the worker."
His solutions, for the most part, fall into two groups: massive corporate cuts and some pretty sweeping reforms to how higher education works.
But what's as interesting as the solutions Rubio includes is the solution he doesn't: deficit reduction. And there's a good reason Rubio doesn't mention deficit reduction: His policies, at least as currently composed, will blow a huge hole in the deficit.
Rubio vs. Harvard
Let's take Rubio's higher ed reforms first, as they're by far the most interesting, and unusual, part of Rubio's agenda:
The problems with higher education are many, but the ideas from Hillary Clinton and other outdated leaders are narrow and shortsighted. We do not need timid tweaks to the old system; we need a holistic overhaul – we need to change how we provide degrees, how those degrees are accessed, how much that access costs, how those costs are paid, and even how those payments are determined.
As president, I will begin with a powerful but simple reform. Our higher education system is controlled by what amounts to a cartel of existing colleges and universities, which use their power over the accreditation process to block innovative, low-cost competitors from entering the market.
Within my first 100 days, I will bust this cartel by establishing a new accreditation process that welcomes low-cost, innovative providers. This would expose higher education to the market forces of choice and competition, which would prompt a revolution driven by the needs of students – just as the needs of consumers drive the progress of every other industry in our economy.
The technical term here, I believe, is #shotsfired. But the shots being fired aren't really at Hillary Clinton. They're at the higher ed system, full stop. Rubio is basically going full-on MOOC: he's trying to rebuild accreditation in a way that makes it much easier for radical new forms of college to qualify as, well, college.
There's danger here. Many of the low-cost, for-profit "innovations" we've seen in recent years have proven to be huge scams. The needs of consumers often come second to the needs of salesmen trying to sign up new consumers. The result is a lot of excitement, a lot of eager applicants, a lot of student debt, and a lot of disaster. In June, for instance, the federal government forgave hundreds of millions of dollars in loans to students who went to Corinthian Colleges, because Corinthian Colleges turned out to be a rip-off.
Rubio doesn't say much about how to separate the wheat from the chaff, or what to do for students who end up being part of the innovations that fail.
But a hint comes in some of his other higher ed proposals, which seek to arm students with more knowledge and, in some cases, more protection from the consequences of student debt. He touts his "Student Right to Know Before You Go Act," which is legislation co-sponsored with Democratic Sen. Ron Wyden and "requires institutions to tell students how much they can expect to earn with a given degree before they take out the loans to pay for it."
He also proposes to "make student loans more manageable by making Income-Based Repayment automatic for all graduates, so the more they make, the faster they pay back their loans; and the less they make, the less strain their loans cause."
In sum, then, Rubio wants to sharply deregulate the higher education system, making way for new, low-cost, probably digital competitors to flood the space. He wants students to have more information on higher ed outcomes, and more protection if their loans don't lead to a high-paying job.
An interesting note on Rubio's higher ed plan: As the New York Times points out, much of it "sounded strikingly similar to policies that President Obama has called for during his time in office." It's a reminder that higher ed policy is, for now, much less polarized than most policy areas. The blockage here isn't partisanship so much as it is the power of the higher ed lobby and the difficulty of actually making these ideas work.
Corporate tax cuts and more corporate tax cuts
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In a bizarre bit of hyperbole, Rubio warns that "to build the most innovation-friendly economy in the world, we must build the most business-friendly economy in the world. Right now we have, quite nearly, the exact opposite."
Erm, sure. For a slightly more reality-based perspective, the World Bank ranks the United States as seventh in the world for ease of doing business.
Rubio's rhetoric is really about America's statutory corporate tax rate, which, at 39.1 percent, is the highest among developed nations. What he doesn't mention is that few corporations pay it. America's effective corporate tax rate — the tax rate corporations, on average, actually pay — is quite a bit lower. A Congressional Research Service study put it at about 27 percent in 2008. A more recent study from the World Bank and the International Finance Commission pegged it at 27.9 percent. The Obama administration itself estimates the effective marginal tax rate on new investments is 29.2 percent.
Rubio wants to bring the statutory rate down to 25 percent (which would, presumably, bring the effective rate yet lower than that). In addition, he wants to move to a territorial tax system, which would mean American corporations wouldn't pay US taxes on oversea profits. Finally, he suggests "immediate, 100 percent expensing for businesses."
In short, Rubio is proposing a huge tax cut for corporations. This follows another Rubio proposal — oddly unmentioned in this speech — to deliver a huge tax cut to individuals. In a biting assessment of that plan, Jim Pethokoukis, an economic policy scholar at the right-of-center American Enterprise Institute, called Rubio's approach "the Oprah Winfrey theory of tax cuts. She was like ‘You get a car, you get a car.’ Well this is ‘You get a tax cut, you get a tax cut.’"
Together, these tax proposals would adds trillions to the deficit over the next decades. Notably, there's nothing anywhere in Rubio's speech about paying for all this. The only times he mentions debt is around student debt.
Elsewhere on Rubio's website, you can find some vague promises to balance the budget. You just won't find any details about how to balance the budget. And the fact that he doesn't mention deficits in his jobs speech is telling evidence that Rubio's looking to run on a very different message than his recent predecessors.
The anti-deficit hawk
For the first time in a long time, the economic problems Republicans are beginning to obsess over are the right ones.
Rubio is presenting himself as something of a Republican Party modernizer. And one thing it's increasingly clear that he's trying to modernize is his party's economic argument. After eight years in which Republicans had trouble talking about anything but Obama and debt, Rubio's big jobs speech never mentions Obama or debt. Compare that with Mitt Romney's 2008 jobs plan, where the first paragraph of the introduction blasted Obama's decision "to borrow nearly a trillion dollars for his 'stimulus.'"
Which isn't to say Rubio is offering particularly new ideas. His tax cuts are standard in everything but their irresponsible size. His higher-ed proposals echo similar policies that the Obama administration has been pushing.
Rubio's larger dilemma is shared by candidates on both the left and the right. If the problem is Obama, then the answer is to elect someone who isn't Obama. But no one really knows what to do about the twin forces of technology and globalization. If there was a simple fix to software eating jobs, someone would have come up with it already. If there were an easy answer to jobs being shipped all over the world, someone would have passed it into law. These are hard problems, but presidential campaigns rarely reward rhetoric that admits their difficulty.
Even Rubio's best ideas are untested, and could possibly backfire. Reforming higher education is great in theory, but tough in practice — so far, there's little evidence that online learning is much good for anyone but the people so motivated they didn't really need it in the first place, and there's plenty of evidence that sharp deregulation will lead to a profusion of scam colleges and failed experiments. That isn't to say it shouldn't be done — I'm probably on Rubio's side of the debate here — but there's little reason to be confident it'll solve the economy's problems.
It's one thing to modernize the Republican Party's message. It's another thing to modernize the economy itself.
But for now, Rubio's task is to win the Republican primary. So perhaps modernizing the party's message will be enough. While Rubio's digs at Clinton were ridiculous, the speech was evidence that he's the Republican the Clinton camp should fear most: He's working his way toward a message that wraps his campaign in the problems and solutions of the future — and that's notably unrestrained by the mistakes of the GOP's recent past. That's exactly the kind of candidate an establishment figure like Clinton should worry about.
