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How Raleigh’s Republicans Forgot the Working Class

The GOP squanders an opportunity to govern conservatively and help its people.
Raleigh desolate small

At the beginning of North Carolina’s latest General Assembly, Republican lawmakers began pushing a legislative agenda that sparked months of “Moral Monday” demonstrations and heated attacks. The protests’ leader Reverend William Barber wrote to the Wall Street Journal to call GOP policies “cruel, morally indefensible and economically insane.” Republicans have countered with incessant appeals to “fiscal responsibility” and “small government.”

Elected with a super-majority, Republicans have decisively lost that advantage in public opinion after implementing their agenda. The latest Civitas Institute and Public Policy Polling (conservative and Democratic pollsters, respectively) surveys show North Carolinians losing confidence in newly-elected Governor Pat McCrory and his GOP. This fall from grace was inevitable given policy choices that hurt working-class families combined with an inability to defend their reforms without relying on stale conservative rhetoric. To get back on track, the North Carolina GOP, and the national party, should recalibrate policy and rhetoric to focus on the needs of working-class families through the reform conservative framework.

Given the state’s bipartisan tradition of striking a balance between economic growth and maintaining a social safety net, North Carolina is simply not well suited for libertarian governance. Education is a prime example: the right to a K-12 education is enshrined in the state constitution, and public education is broadly seen as a public good. After a century of almost uninterrupted Democratic governance, however, the state government became sclerotic with the worst tax burden in the Southeast, a growing divide between rural and urban counties, and deteriorating schools. Republicans were given an opportunity to govern conservatively and solidify their electoral gains for a generation. Instead, they squandered it.

Consider the GOP’s deeply unpopular refusal to postpone reforms to the state’s unemployment benefits by six months. Six months may not sound like much, but because they chose to implement the reforms on July 1st instead of January 1, 2014, 70,000 unemployed North Carolinians were stripped of their federal unemployment benefits in July, with another 100,000 set to lose their benefits by the end of the year. Proponents correctly argued that this move will save employers money, but they ignored the deeper problem: many communities are still grappling with the housing bust and the departure of manufacturing. North Carolina’s unemployment is largely structural, not cyclical; there are simply no jobs to be found. On net, the slight per-worker savings that employers will enjoy probably were not worth the trade-off—especially when the cuts to community colleges in this year’s budget will make retraining opportunities less accessible to the very people hurt by cutting unemployment benefits.

Cuts to public education were another missed opportunity for the GOP. McCrory and the General Assembly were right to phase out teacher tenure and incentives for obtaining graduate degrees, as well as to introduce merit pay, even if their proposed $500 merit incentive is inadequate. Instead of framing this decision as a cost-saving, however, Republicans could have articulated a positive vision for teacher pay by pushing a plan by Duke economist Jacob Vigdor. He proposes front-loading teacher pay to compensate early gains in expertise and expedite the amount of time it takes for teachers to reach their “peak pay” (which currently lags one to two decades behind doctors and lawyers). Higher pay today would mean less pay tomorrow (i.e., the end of defined-benefit pensions), but moving to defined-contribution plans and lowering the opportunity cost of teaching in the early years would both make the profession more flexible and expand the pool of prospective teachers. Improved education and better pay for teachers would affirm the role that education plays in social mobility for working-class families. Instead, public school teachers felt disrespected, and Republicans were tagged as the anti-education party.

Tax reform, on the other hand, was a victory for the GOP. North Carolina will jump from 44th to 17th in the Tax Foundation’s Business Tax Climate Index by shifting the tax portfolio from income to consumption. Although more regressive than the previous system, the package reflected a consensus among economists (including center-left economist Karl Smith of UNC-Chapel Hill) who were eager to avoid a repeat of the Great Recession’s fiscal crisis. When the recession hit, North Carolina’s tax receipts plummeted by over $1.5 billion from 2008 to 2009 alone. Given the evidence, this reform is growth-friendly and should spur job creation, while trading a little regressivity for less volatility.

But even this victory was marred by the repeal of the Earned Income Tax Credit. Not only is the EITC a conservative anti-poverty measure, but making the EITC permanent would have more than offset the increased burden on the working-class families in the bottom 40 percent of taxpayers under the new tax regime—and deprived protesters of their most effective rhetorical weapon.

The abortion controversy offers a broader instructive lesson for Republicans going forward. In the last month of the session, state senators decided to add new abortion regulations as a late-night amendment to a bill banning Sharia law. After the ensuing public outcry, the House modified a motorcycle safety bill to incorporate some of the proposed reforms, which was finally passed and signed into law. In a socially conservative state like North Carolina—where last year’s gay marriage ban was approved with 61 percent of the statewide vote—abortion should be a winning issue for the GOP. But in the end, 80 percent of North Carolinians opposed the manner in which the law was passed, and a strong plurality opposed the regulations. Even with memories of Kermit Gosnell lingering, the ham handed manner in which they tried to sneak the abortion regulations through deprived Republicans of the support needed to pass all their desired reforms, and further prevented them from deriving any benefit from what they could pass.

Building a consensus should precede action—this requires persuasion and, most importantly, credibility. Only by tailoring its policies and rhetoric to the needs of working-class families will the GOP claw its way back out of the hole it keeps digging for itself. Adopting a reform conservative mindset is a very good place to start.