For swing voters, Gallego ain't no Sinema
Whether through conviction or political calculation, Sinema valued and protected the role of private sector investment capital.
In 2018, roughly 225,000 Arizonans voted for Democrat Kyrsten Sinema for U.S. Senate and Republican Doug Ducey for governor.
Sinema ran as a centrist Democrat committed to bipartisan governance. Her opponent, Martha McSally, wasn’t really a MAGA Republican, but she failed to create a political persona for herself independent of Donald Trump.
Ducey had governed as a pragmatic conservative. The campaign of his opponent, David Garcia, was a mystery. Four years earlier, Garcia had come within an eyelash of winning the Superintendent of Public Instruction position, running as centrist Democrat who had served, competently and laudably, under a Republican superintendent. In the governor’s race, however, Garcia ran as an ardent progressive, echoing Bernie Sanders’s critique of the political economy.
The Sinema-Ducey voters, whose ranks are probably notably larger given the drift of the two political parties since the 2018 election, hold the balance of power in Arizona statewide elections. Their taste in candidates runs from centrist Democrat to pragmatic Republican conservative. They reject MAGA Republicans and ardent Democratic progressives.
In this year’s U.S. Senate race, the likely Republican nominee, Kari Lake, is MAGA incarnate. She is a Trump acolyte. She can wow a MAGA crowd, which is where her appeal as a political candidate begins and ends.
Since 2016, the Arizona electorate has consistently rejected MAGA Republican candidates in statewide elections. Since Trump remade the Republican Party in his image, the GOP has gone from holding all 13 political offices elected statewide to occupying just seven. And none of the most important ones: U.S. Senate, governor, secretary of state, or attorney general.
I believe that anti-MAGA sentiment is currently the principal political influence for the Sinema-Ducey voters. That should give Democrats the advantage in retaining the seat being vacated by Sinema, after she was hounded out of the party.
That said, Ruben Gallego, inevitably the Democratic nominee, will be a lot for the Sinema-Ducey voters to swallow.
It appears that Gallego plans to at least partially borrow Sinema’s electoral playbook and attempt to depict himself as something other than the kind of ardent progressive that is outside the comfort zone for Sinema-Ducey voters. He can somewhat credibly do that on military and foreign policy. On domestic policy, not so much.
Gallego’s recent attempt to pander to seniors on Social Security benefits offers an illustration.
Gallego has introduced a bill to change the inflation index for Social Security benefits. The Bureau of Labor Statistics produces a variety of inflation measures. The most common one, and the one currently used to adjust Social Security benefits, tracks a basket of goods a typical wage earner might purchase. The BLS also publishes an index that tracks a basket of goods a typical senior might purchase. Gallego’s bill would adjust Social Security benefits by whichever index would give the bigger boost.
That’s an obvious pander, not a principled policy judgment. The senior index is either a more appropriate measure for this purpose than the wage index, or it is not. It is not better if it is higher and inferior if it is lower. If it is the superior measurement, it should be used always, even if it results in a lower adjustment. Many economists think the Consumer Price Index overstates inflation generally.
Gallego wanted some attention for his pander bill, issuing a press release regarding it. The Arizona Republic ran a story about it. But the Republic’s industrious business reporter, Russ Wiles, provided important missing context.
Gallego’s bill doesn’t say how the higher benefits would be paid for. That’s not a trivial question, since the Social Security trust fund is projected to be depleted by 2033, just nine years from now, after which dedicated payroll taxes are expected to be sufficient only to cover 77% of owed benefits. Absent congressional action, benefits will be cut to the level payroll taxes will support.
Wiles points out that Gallego is also a cosponsor of the Social Security 2100 Act. That measure would increase benefits more expansively than Gallego’s indexing pander. The expansion would be partially paid for by applying the Social Security 12.4% tax to wage and investment income for those making $400,000 a year or more.
Currently, the Social Security payroll tax only applies to wage income and tops out at $168,600, a figure that is also inflation adjusted annually. The argument that capping the wages subject to the Social Security tax is unfair is hard to follow, since the wages on which benefits are calculated are similarly capped. Removing the cap on the tax while leaving it in place for benefits fundamentally alters the nature of the program, from being a pension program to being a welfare program for seniors.
Given how deep of a hole the federal budget is in, and the pendency of a depleted trust fund for both Social Security and Medicare, measures that increase federal revenues can’t be ruled off the table entirely.
That said, Democrats generally have a blind spot about the importance of investment capital in powering the private sector economy and broadly expanding economic opportunity. The Social Security 2100 Act offers a stark example.
The top marginal individual income tax rate is 37%. Investment income is already subject to a 3.8% surtax for Medicare. With a 12.4% Social Security tax on top of that, the federal government would be confiscating more than half of each additional dollar earned. For those right at the $400,000 threshold, the tax take would be slightly less, but still about half. And that is without whatever state income tax is owed.
Democrats incessantly bellow about the rich not paying their fair share. But how can government confiscating more than half of each additional dollar earned be described as fair, for anyone?
The portfolio of tax increases on the affluent proposed by Democrats would reduce the pool of private sector investment capital significantly and sharply reduce the incentives to deploy it. And it won’t come close to funding all the government they want.
Sinema, by way of contrast, prevented increases in the top income tax rates for individuals and corporations as a condition of her vote for the Inflation Reduction Act. She may have saved the country from a recession, or at a minimum a sustained period of stagflation, the 1970s combination of a sluggish economy and high inflation.
We’ve suffered an inflation bout, due to incontinent monetary and fiscal policy. But, post-Covid, the private sector economy has chugged along pretty steadily. Private sector investment capital is the fuel.
Now, Lake is no supply-side, economic-growth Republican. She’s a populist, grievance politician. And it is arguably better to have someone with bad ideas about shoring up Social Security than someone pretending there’s no need to bother.
The Sinema-Ducey voters won’t know the details of these policy matters. Some of them probably even have a general notion that rich people aren’t paying their fair share, and that higher taxes are probably needed to get the federal government’s finances out of the ditch.
However, during the course of the campaign they are likely to become aware that Gallego isn’t the centrist Democrat they have been comfortable voting for over a MAGA Republican.
Gallego has the tougher campaign strategy choice. Lake is pure MAGA and will say all the MAGA stuff. Trump being at the top of the GOP ticket really gives her no other choice, even if she was inclined otherwise, which doesn’t seem to be the case.
Gallego is less bound by whatever Biden is saying on the campaign trail at the top of his ticket. But does he blunt his progressive edge to increase his appeal to Sinema-Ducey voters, and run the risk of seeming inauthentic? Or does he stay true to what he’s been – progressive on domestic policy, somewhat hawkish on military and foreign policy – and count on the Sinema-Ducey voters’s antipathy toward MAGA Republicans being greater than their distrust of ardent progressives?
My general observation is that appearing inauthentic is the largest risk a candidate runs.
Reach Robb at robtrobb@gmail.com.