Strengthening Constitutional Self-Government

No Left Turns



Say you are a Republican governor (like Bob McDonnell or Bobby Jindal) or a recently elected Republican Senator (like Marco Rubio, Pat Toomey or Kelly Ayotte.)  You are able to get some bookings for the cable news networks, conservative talk radio and even the dreaded NPR.  To the extent that you can steer the conversation, what issues do you talk about and what  policies do you propose and emphasize in the coming year?

Categories > Politics

Discussions - 4 Comments

1. Raise taxes, cut spending, and eliminate the deficit over a period of 4 or 5 years.

2. Measures to fix demographically-driven entitlement spending to a specified ratio to gross domestic product (e.g. placing the retirement age on an appropriate escalator and an putting an escalating deductible on public medical insurance).

3. Revisions to financial regulation which might include the following: requiring exchange trading of swaps and derivative or banning credit default swaps or both; separation of deposits-and-loans banking from securities underwriting, proprietary trading, prime brokerage, and private equity; separation of securities underwriting from proprietary trading, vending of mutual funds and such, and any sort of business that involves investment counseling; separation of the vending of mutual funds and such from the provision of investment counseling; separation of proprietary trading from any other sort of business; abolition of insurance on financial products; excision of regulations which promote the disaggregation of mortgage lending; eventual liquidation of Fannie Mae, Freddie Mac, and Ginnie Mae; requirements that hedge funds and investment accounts be levered no more than 1:3; institutional provision for an authority which can (if possible) rapid roll up insolvent securities firms; provision for re-capitalizing banks and securities firms via debt-for-equity swaps; and provision for dismantling of the megabanks.

4. Income Tax reform. Eliminate all deductions and exemptions and have a single rate qualified by a dollar value credit for each dependent. Properly structured, this could allow you to eliminate open-ended doles for those neither disabled nor old and all programs which subsidize the mundane expenditures of the impecunious.

5. A program to heal the labor market. The most salient measures to do this (shifting the finance of medical care to a combination of public insurance, co-operative and union insurance, and out-of-pocket expenditure or phasing out defined-benefit pensions) likely cannot be enacted on a time-scale of two years. Try three measures: cut the minimum wage to a value which provides a pro forma demarcation of the boundary between volunteer labor and work (say, about $1.40 an hour); promote, in law, the adoption of 'Japanese' compensation systems whereby workers are paid a base wage or salary supplemented with a bonus derived from last quarter's corporate earnings; replace payroll taxes with a flat general income levy.

6. A high cement wall, razor wire, and armed guards along the Mexican border; replacing the mess of preference categories in the realm of legal immigration with a first-come-first-served queue of those who have passed an English proficiency test.

Or, alternatively, they can 'bite the bullet', and realize and publicly admit that the Tweedle-Dum and Tweedle-Dee approach of Socialism-heavy and Socialism-lite that the Republicrats have been offering up since the '30's, when Roosevelt and his pet Congress coerced the SCOTUS to allow the grossly unConstitutional SocSec to be passed, will only vary the speed with which we hit the wall. 70 or 90 mph, machs nix. Publicly admit that SocSec and a wide variety of Fed programs/institutions are grossly unConstitutional. Explain, from the Constitution, why they are, and why whatever SCOTUS rulings that declared they were OK are grossly wrong. Tell the citizenry that they have a choice: read, understand, and enforce the Constitution, cut the onerous and unConstitutional regulations that strangle business, remove the unConstitutional and anti-reproductive institutions that encourage childlessness, and the Republic may survive. We'll still have a hefty bill to pay for the idiocy of the last 80 years, which our grandchildren will curse us for. Or continue robbing grandchild Peter to pay for grandfather Paul, and taking money from some waitress in Dubuque to pay for the 'disability' of the alcoholic patient I see in Eastern KY, and let the Republic continue to circle the drain remorselessly. As the working population continues to dwindle, since one of the prime incentives for human beings to have children is (supposedly) 'covered' by SocSec/Medicare, and businesses, crushed by unpredictable and unaffordable regulations, continue to close or flee, tax revenues will drop, and the Feds will eventually be forced to do one or all of three very unpleasant things: 1. Raise taxes brutally; 2. Print more money, causing rampant inflation; 3. Drastically cut benefits to the 'entitlement' programs, and cut spending on gov't programs that are actually appropriate(military/FBI). I'd rather have a debate as to how to appropriately manage crunch time and get thru it, rather than a debate as to which flavor the crunch will be.

Austerity. Personal responsibility. Empowerment of State governments. Republican-brand health care reform (ie tort reform, allow insurers to sell across state lines, etc). Lower taxes, lower taxes, lower taxes (look at the Texan economy).

If you have the numbers to back the "raise taxes, lower spending, eliminate the deficit in 6 years", I'd be inclined to agree with you. However, even if we weren't in a recession, it seems to be the prevailing wisdom on the Right that raising taxes will quickly lower revenues. Do you know something I dont?

I have never taken Arthur Laffer seriously and it is the bane of discourse within the Republican Party that most people talking either do or fancy they have to pretend to do so. What David Stockman said 25 years ago I believe still holds: there is some theoretical validity to his notions, but not at marginal tax rates seen at any time after the 2d World War.

'Lower taxes' full stop is not a program properly stated. Tax rates should be such that the budget is balanced over the business cycle with a small surplus to retire debt incurred under extraordinary circumstances (e.g. banking crises and wars of national mobilization). Tax rates should be derived from your plans for public spending, and in planning public spending you balance the utility of the program against the cost to economic dynamism to be found in adding to the public sector.

A great way to rapidly decentralize would be for the federal government to assume responsibility for administering (rather than merely funding) a few programs (e.g. unemployment compensation and the maintenance of the 40 odd interstate highways which actually cross state lines) and then replace categorical grants and bloc grants with unrestricted grants calculated according to formulae. You could shut down a wide swath of agencies which devote themselves to housing pork, social work pork, and education pork stewed through state and local government. Cut Michigan and Mississippi a check and leave them to figure out how to fix their systems of financing medical care without conditions or interference.

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