Tax Refund

Former South Carolina Governor Nikki Haley, who appears to be winning increasing support among Republicans in the race for her party’s 2024 presidential nomination, is running on a fairly standard GOP tax and budget platform. But it includes important twists and some inconsistencies with her record as governor.

She backs big tax cuts for individuals and small businesses but opposes what she calls “corporate welfare.” She says she wants to balance the federal budget and lays out some general ideas for reducing Social Security benefits but has described few other specific spending cuts. And her unspecified tax cuts would make balancing the budget much more difficult.

Haley remains far behind former President Donald Trump, who she served as ambassador to the United Nations. But she appears to be catching up with Florida Governor Ron DeSantis for second place. And given her past strong performances, she may pick up additional support following the next GOP debate on Nov. 8.

Haley’s “Secret Weapon”

When it comes to economic policy, Haley focuses on tax cuts, less regulation, and a balanced budget—all standard Republican fare. But she also nods to the GOP’s current populist mood by bashing big business subsidies, even though she offered hundreds of millions of dollars to big corporations as South Carolina’s governor.

Haley laid out her economic manifesto in a September speech she titled “America’s Secret Weapon.”  To her the enemy is China. And her weapon is freedom.

She criticizes President Biden, who she hopes to challenge a year from now. She focuses on his support for Medicaid and food stamps which, she says, make poverty permanent. Most Medicaid recipients who are not older adults or disabled do work, however. And often children are eligible if their working parents do not have insurance.

Haley also rips the Biden Administration for excessive corporate welfare, including “taxpayer bailouts, handouts, and carveouts for special interests.” She calls out the use of subsidies to promote green energy and what she calls the “bailout” of Silicon Valley Bank. Regulators actually shuttered the bank but did protect its depositors.

Her Agenda

OK, so Haley doesn’t like Biden’s agenda, but what would she do?

  • Repeal the federal gas tax.
  • Lower individual income tax rates and reduce tax brackets for unspecified “working families.”
  • Make permanent the 2017 Tax Cuts and Jobs Act’s (TCJA) 20 percent tax deduction for pass-through business.
  • Repeal the state and local (SALT) deduction.
  • Repeal the green energy tax subsidies included in the 2022 Inflation Reduction Act.
  • Balance the federal budget over an unspecified period of time.
  • Veto any spending that exceeds 2019 levels.
  • Cap federal spending as a share of the economy.
  • Require zero-based budgeting where all programs are reviewed each year. “No more autopilot programs.”
  • Apparently exempt Social Security and Medicare from her zero-based budgeting promise.
  • Turn more of Medicare into Medicare Advantage managed care and “limit benefits for wealthy people” in unspecified ways for both Medicare and Social Security.
  • Protect Social Security and Medicare benefits for people over age 40 but raise the retirement age for others.  

Haley’s economic platform includes a number of critical gaps and raises some important questions. For example, it is not clear how her proposed income tax rate cuts would mesh with the scheduled 2025 expiration of the TCJA’s individual income tax cuts. Would they be in addition to them or replace some provisions?

And while her Social Security proposals might help address the program’s long-term problems, reducing benefits in three or four decades won’t forestall Social Security’s projected insolvency in less than 10 years.

Haley’s History

In addition, key elements of her presidential campaign agenda are inconsistent with her record as South Carolina’s governor.

While she would repeal the federal gas tax, as governor she twice proposed raising her state’s gas tax and reducing personal income taxes. But her gas tax hikes died in the GOP-controlled legislature.

Haley also brags about her role in modernizing South Carolina’s manufacturing economy. But she doesn’t say a key tool was her lavish use of tax breaks and other subsidies, the same corporate welfare she now denounces.  

The State newspaper estimated (paywall) that as governor Haley offered $800 million in economic development subsidies to just four companies, Volvo, BMW, Bridgestone, and Boeing.  The Wall Street Journal reports (paywall) she supported more than $1 billion in subsidies for Boeing alone as a state legislator and governor.

After leaving the Trump Administration, Haley joined Boeing’s board but then resigned after objecting to its requests for federal government aid.

As governor, Haley carefully chose her business largess. For example, in 2016, even as she was subsidizing foreign-owned automakers, Haley vetoed $40 million in disaster aid to local farmers she decried as “an unprecedented bailout for a single industry.”

Haley’s economic agenda is a mix of the prosaic and the provocative. But, like nearly all campaign platforms, it leaves many critical questions unanswered.

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