Wednesday, December 1, 2010

It's Simply Common Sense

-from my Townhall blog

There are some serious changes that need to be applied to the way our government works. We have gotten into the mess we’re in because we have allowed a socialist progressive agenda to weave its way into the fabric of our political structure and its institutions. Now that many are putting forth commonsense Constitutional solutions, those who fight to keep the status quo are demeaning those on the right as being shallow, backwards or out of touch. Yet, the things that are being put forth really are what they are at face value. The ideas are simple, but based on time tested truths and economic theory.

If anyone has been watching Brit Hume’s series, The Right, All Along: The Rise, Fall & Future of Conservatism on Fox News Channel on Sundays at 9pm and 12 midnight ET, you are getting an education in the history of the conservative movement in America. During the 1900’s communists and progressives infiltrated our government disguising themselves as classical liberals. They worked toward creating a hybrid system whereby government would ultimately be the rule maker because, in their eyes, the government had to look out for the people.

During the industrial revolution as the waves of immigrants who came here in the early and mid 1900’s, workers were becoming more and more concerned about exploitation, harsh working conditions and unfair pay. Unionization began as a response to business owners and corporations who put their bottom line ahead of safety, fair wages and the well-being of their workers.

The Left played on this sentiment, and as they always have, used the emotional argument that since people were being wronged, the government would have to step in and insure that there was social justice. Good people who were not affiliated with the progressive movement saw this and simply went along thinking it was the right thing to do. Who wouldn’t want the government to protect people from wrongdoing if they weren’t aware of a hidden agenda?

But the conservative movement saw how these sentiments were being usurped by communists, socialists and progressives whose real agendas went far beyond that of just looking out for the worker or the consumer. Many today demean conservatives as backwoods simpletons who cling to guns and religion. But the fact is, conservatism is an intellectual movement conducted by those who are seen as non-traditionally intellectual. Conservatism has been able to go a level deeper in order to get to the real nature of man only to discover that it is the left’s complication of things that needs to be undone with an even greater amount of intellectual thought and tact.

The policies that need to be carried out to save our country are truly simple. It’s the articulation of these policies and the education of masses of people who need to understand why conservatives are in such a state of urgency that requires the real brain power here. All of this groundwork must be done if these policies are ever to be implemented.

When a potential political candidate does a reality television show or has her daughter dance in a nationally televised contest, the gravitas lies in the why one would use these methods to capture the attention of a public that lives in an American Idol society and which is fed conflicting political information 24-7. By capturing the attention of non-political junkies and those who don’t follow this stuff like we do, the conservative movement can get their consent and understanding when, in the past, they've usually left these areas of communication wide open to liberals uncontested.

It’s not that the American people are stupid. It’s just that they are busy working and raising their families. They merely want to sit down for an hour or two and get away from things. But it is during that time that the liberals have been able to infiltrate their minds by monopolizing the pop culture. This is now changing. That change is necessary if the conservative movement is ever going to get its message through.

In their studies, conservatives like William F. Buckley, Ayn Rand, Barry Goldwater, Russell Kirk and Ronald Reagan saw that many of the things that the government was trying to do to correct the so called wrongs or ills of the society were actually harming the very people they were seeking to help. The private sector economy thrived long before the imposition of government regulations, the progressive tax structure and unionization. Suddenly, millions of people were subjected to the heavy hand of a government that was supposed to be there to help them.

People will argue that if the government didn’t step in and allow unions to form and set up agencies like OSHA and others specific to certain industries so as to regulate what could and could not take place in the workplace or in their relationships with the consumer, that businesses would continue to exploit their workers and line their pockets off the sweat of their brows and by ripping off the consumer.

But the government overstepped its Constitutional boundaries and got into the business of micro-managing industries and corporations. Instead of passing commonsense laws that could be enforced through our court system, they created government bureaucracies and began telling businesses how to run as opposed to how not to run. You can see the results of the Leftist infiltration today in the burdensome regulations that force people to forego going into business and the fact that our government now owns car companies, banks and mortgage companies along with traditionally government owned entities like railroads and the postal service.

This massive intrusion into the private sector has been accompanied by a crony capitalism whereby those who are on the right (or should I say left) side of unions, industries that look to capitalize on fears of global warming, research and development companies that are more about social engineering than they are about capitalistic innovation, food production and airport scanner companies can benefit more from a cozy relationship with lobbyists and the government than they can by actually selling their products in a real free market.

The collapse of the carbon credit trading industry is an example of how Leftists, in advance of what they thought would be cap and trade legislation, began to set up infrastructures for companies that would profit off the sales of these carbon credits. These so called “capitalistic ventures” could not survive without the government creating a false market. So when the global warming science was debunked and cap and trade died out as a result, these so called “capitalists” could not survive having not been conditioned in a truly free market. Their business models were dependent on the government forcing people to do something against their will.

But they had a back-up plan. The Food Safety bill will all but eliminate our ability to grow our own food without governmental restrictions down to the very seed a farmer plants. People who sell products that are in compliance with this law have been preparing in much the same way carbon trading companies have. Traditional food production companies and particularly small farmers that don’t comply with this law are not losers in the free market, they are losers chosen by government which once again has stuck its ugly head into the only system man has ever know that can most equitably distribute goods and services.

True innovation in the energy sector is bottled up by EPA regulations and moratoriums on drilling and energy production. The financial industry is now being micro-managed in such a way that capital is harder to get. Yet, it is being micro-managed by the same government that gave us the housing market and home mortgage crash. It is as if the government is holding back the horse while pushing the mule.

Lenders should be given more leeway in how they extend credit and what risks they are willing to take, not less. This should be accompanied by a warning label that says “participate in the free market system at your own risk: if you don’t succeed, don’t ask for a bailout. “ The caveat to that, of course, is that if businesses walk the wire more carefully knowing there is no safety net, they will be run more efficiently which will cause capital to be better spent and greater returns on investment will be less likely eaten up by government bureaucracy.

The government’s only role in the free enterprise system should be to moderate disputes in civil court and to make sure people aren’t committing fraud. You don’t need layers of bureaucracy to stop fraud. You simply need an attorney general and clear concise law. Don’t mistake this conservative’s view that we don’t need regulation as meaning we don’t need oversight. Regulation is rule of man. Oversight is rule of law.

Unleashing the industrial giant in America is going to take one simple idea. It’s so simple that whenever people put it forth, they are criticized for not being substantial or for not delving into the minutiae of policy. What the elites fail to understand is that the deepest policy fact of a simple slogan like drill, baby, drill is just that: drill. The rest of what will happen comes later. That’s the good part.

Manufacturing and resource development along with changing the tax code are the obvious commonsense keys to what it will take to awaken this country’s economic engine. Not only will our national security interests be well served by developing more sources of energy here at home, but collateral businesses will develop. You will need to build and maintain machinery to do oil and gas exploration. You will need to have the construction industry reawakened so they can build homes for the workers who will have to live near these projects. Collaterally, the service and financial sectors will grow way faster from this real type of activity than it could ever hope to do so under a redistributive stimulus program based on after tax dollars. Food stores, restaurants, delis and so on will open to cater to everything from a worker getting a cup of coffee in the morning to employing electricians, plumbers and landscapers to help with home projects.

The answer to solving the deficit lies in our resources. We are sitting on trillions of dollars in wealth that can be generated from this type of an undertaking. By reawakening the industrial giant, we can create the type of money flow that brought prosperity to us in the 1980’s. Only this time, we can learn from the government spending side as well. Revenues doubled under Ronald Reagan, but spending tripled. This was a waste bi-product of a materialistic society that thought the party would never end combined with a Democratic Congress that Reagan had no choice but to bargain with in order to get his economic packages through.

If the Tea Party achieves its objectives, we could continue to fill the halls of Congress with deficit spending cutting hawks and reunite them with supply side economic experts just in time to have a true conservative elected president in 2012. To that end, I see no one other than Sarah Palin who can motivate the country to take the measures needed to achieve this and the kind of policy that must be enacted in order to save this country from insolvency, loss of status in the world and the type of decline we are witnessing in European socialist style democracies.

The real engine that will drive this thing will ultimately come from the energy sector. Sarah Palin wrote:
Building an energy-independent Amer­ica will mean a real economic stimulus. It will mean American jobs that can never be shipped overseas. Think about how much of our trade deficit is fueled by the oil we import — sometimes as much as half of the total. Through this massive transfer of wealth, we lose hundreds of billions of dollars a year that could be invested in our economy. Instead it goes to foreign countries, including some repressive regimes that use it to fund activities that threaten our security.
Instead of creating false markets with Cap and Trade or a Food Bill, why not tap into real markets where real money can be generated? Combine this with a revamped tax structure and you have the makings of a financial behemoth the world has yet to see. This will encourage investment instead of the fleeing of capital that we see now.

By instituting a flat tax of 18% on all income over the poverty limit and by implementing a 5% VAT to all non-essential consumer items, the government can light up this industrial monster in ways we have not seen since Reagan dropped the top tax rate from 90% to 29%. Add a private option to social security and medicare and the children of tomorrow could be looking at having at least $200,000 in their accounts by retirement if they simply took $25.00 out of their paychecks every week starting at age 18.

Economists have figured that we have a finite ability to raise revenue regardless of what the tax rates are. When taxes are at a certain low point on the Laffer Curve we can collect the same tax revenue from a larger base as we an when taxes are at a certain high point from a smaller base. Since we look to grow our economy and want to involve more people in the wealth generation process, we obviously would look to find the lowest possible tax rate which would create the largest base possible before we reach diminishing returns.

It makes sense that lowering taxes to a certain point helps the economy grow. And, given that no matter how high (90%) or how low (28%) we tax the rich, we historically have collected no less than 14.4 to 20.9 percent of GDP over the past five decades, averaging 18.2 percent. So, it would make more sense to set a flat tax rate of 18.2%, pass a balanced budget amendment and restrict federal government spending to only the necessities of running the government. Some entitlements, ear marks and regulatory agencies would have to be reviewed and eliminated based on certain guidelines.

A 5% VAT tax would be based on consumption. Thus, more revenue would come into the coffers based on how much we produce and buy. This money could be used to pay down the national debt. Since it will take decades to do that, and since social security and medicare reforms would be working efficiently by then, once the debt was paid off. we could adjust the VAT down and eventually use it as a way to cover gaps in entitlements in a limited capacity.

While clean in theory, the idea of doing away with home mortgage interest and charitable donation deductions is a much harder rock to move in reality. A better way to approach this would be to allow these deductions to come out of the amount of money that is earned up to the poverty level. For example, if the poverty level is $22,050, you could theoretically cap the deductions there whether you made $22,050 or $22 million. In the end, you may end up settling on a flat tax rate of about 20% to make up for this, but still given the fact that with that and the 5% VAT, it would be guaranteed that no more than 25% of every American's income would go to the federal government even as the national debt is paid off. If states controlled their taxation,in a a decade or two, we could live in a country where less than 33% of our income is taken from us by the government.

Some may look at this and think the poor couldn't afford to pay a flat tax. There are adjustments that could be made. On one hand, you want want to give poor and middle income people more skin in the game. On the other you don't want to make it too burdensome. Currently, the rich make all the rules because they pay all the taxes. If you didn't want to be too rigid and still felt a little liberal about it, you could try eliminating taxes on those below the poverty limit and adding a millionaire tax surcharge to make up the difference. It would still be far less progressive than today's tax structure, but you would then have to eliminate deductions for mortgage interest and charitable contributions. Or you could go to a two tax tier structure that still averages out to 18.2% per person and keep the deductions.

By reducing the corporate income tax to the same level as the individual rate, you could ignite an influx of capital into this country that now goes elsewhere into less regulated and less taxed environments. How do you call it social justice when the regulatory environment that liberals love so much chases capital away from us and into markets that have no environmental standards and pay their workers next to nothing?

Corporate payroll tax (the taxes your company pays on their side that you don’t see) could still fund the entitlement portions of medicare and social security as we are weaned off the current versions of them. Safety nets would remain in place of course, and we would still keep our commitments to the people who have paid into the system up until now. Yet, the demands on the corporate side through the taxes they pay for each worker could steadily decline as younger workers opted into private ownership of their retirement vehicles.

Unlike the Health Care mandate, which is a newly created mandate that requires everyone to purchase health insurance from a governmentally damaged system where health insurance companies become nothing but quasi-governmental agencies after complying with all the regulations and are barred from competing in a truly fair marketplace across state lines, the retirement fund mandate would not be a new mandate placed on a severely disrupted and poorly overhauled system. Instead, the mandate already exists where we are required to give the government money out of our earnings so that they can put it into a ponzi scheme that is now running in the red. We would simply change the investment vehicles into which this money would go.

As for the Health Care Law that will destroy 1/7th of our economy, it must be repealed and replaced with a more commonsense private sector approach. This means tort reform and the selling of insurance across state lines. It means devising sensible ways of covering people with pre-existing conditions. And it means devising sensible ways of using the Medicaid system along with a voucher system to help those who truly can’t afford health care coverage.

Unlike the original proposal for health care reform which offered a public option, social security and medicare could offer private options. A smorgasbord of both government and private sector insurance and investment programs could be offered as part of a package that creates a “bubble” or an entity that you would own. The only restriction on this would be that you could not access or borrow against this bubble unless you were disabled or reached the retirement age. The investment portions of this bubble could be passed down to your estate should you die prematurely or still have money in the system having lived out your retirement years. It would go to your estate as any other ordinary income or wealth would. Therefore, future generations could be bolstered by the remains of these new types of “social security” funds.

A traditional safety net system could be maintained out of the employer’s matching portion of what they currently put into social security now. Those retiring without a large bubble or those who could not accumulate a large enough bubble due to disability could still receive the equivalent of what social security recipients would receive under the old system, but the percentage of the population receiving this benefit would be about 20% the size it is now. This would be what the creators of the original social security system had intended to begin with.

If we could convince the people that the government can move from playing the role of social engineer back to the original role that was intended by our Founders – that of the referee – than we can begin the revive and renew America again.

The social services issues that confront our country can still be addressed by state and local governments in partnership with charities and religious organizations where the rules could be set locally, not in Washington.

The idea that the states give the federal government so much money and then it goes back to the states, or even worse is redistributed amongst the states is an appalling, wasteful strategy. Money should go directly to the source. If it is to run the federal government, it should go to the federal government as should money to run state and local governments should.

This would surely take a lot of power out of the federal government’s hands as well. Federal money comes with mandates. Many of the laws as they apply to driving and commerce circumvent the Constitution because they are passed by states that would lose federal funding otherwise. These mandates not only erode our freedoms, but cause money to be passed through too many hands where it is watered down by the time it gets back to us.

This type of federalism will enable each state to run according to the nature of their industries and the will of their people instead of as part of a “one size fits all” federal policy.

In summary, removing the regulatory burdens (that stifles our economic growth and which bars us from tapping into our abundant resources), replacing the progressive income tax structure with flat and fair taxes, reforming social security and medicare, repealing Obamacare, returning the focus of the federal government back to what it is only Constitutionally mandated to do, cutting spending, enacting a balanced budget amendment and returning to the type of federalism envisioned by our Founders whereby the people and the states takes back responsibility for providing services that are not the Constitutional responsibilities of the federal government are simple ideas that elites and naysayers might dismiss as unrealistic or unreasonable. But the fact of the matter is, what they offer now is pure disaster not only in its complexities but in its underlying philosophy which assumes that individuals and states are incapable of acting freely to secure their general welfare.

It is up to conservatives to learn how to effectively communicate the underlying reasons why it is imperative that we adopt these policies as well as to explain how they will benefit our society as a whole. We live in dangerous times. We can dismiss the words of Sarah Palin and conservative thinkers at our own peril or we can embrace them and have faith in God and our abilities as citizens of the greatest and last stand on Earth. We can take our future in both hands and manifest the prosperity and success of a nation that is still at the very beginnings of its adulthood in relation to other nations which have been around for thousands of years or we can go into our next thousand years in darkness.

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