Monthly Archives: December 2011

It’s the Wrong Fight

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Republicans say that any tax cuts must be paid for with spending cuts elsewhere, and this is certainly true.  But what they’re talking about in the present case is payroll tax cuts.  Certainly, these cuts also must be paid for with spending cuts from somewhere else, but the logic ends there.

Senator Dick Durbin (D, IL) even calls out the Republicans on the matter, as I’ve written elsewhere.  But why are the Republicans letting themselves be drawn into this at all?  They’re ceding the terms of the debate and the entire debate to the Progressives.

On what basis do the Republicans—or anyone—agree that funding for Social Security should be cut?  This is a program that is already widely acknowledged to be desperately in need of reform or it’s destined for failure, yet the Progressives refuse to allow any reform.  Cutting funding by cutting payroll taxes that are intended for the Social Security Trust Fund only hastens that collapse.  Instead, we get Senator Jon Kyl’s (R, AZ) lame answer that “The payroll tax doesn’t go into general revenue. It supports Social Security.”  While true, it misses the whole point.  What is the Republican’s plan for reforming Social Security (and Medicare)?  Congressman Paul Ryan (R, WI) put forward ideas for both programs in the budget the House passed in 2010 that are worth serious discussion.  Yet Republicans have barely mentioned those ideas since: were they not serious about these reforms?

More to the point, why didn’t Kyl turn the argument back on Durbin and ask him why he’s opposed to really leaving money in the hands of Americans and our businesses by supporting income tax cuts for everyone?

Senator Durbin has agreed that tax cuts are good for Americans (he said so with the payroll tax cuts); Republicans should be arguing for income tax cuts, and permanent ones, not just via the annual argument over extending the Bush tax cuts, or some subset of them.  Republicans should be challenging the Progressives to offer legislation that provides for permanent income tax cuts for individuals and for businesses; they have a willing ally in Senator Durbin.  Or he’ll be shown by the debate to be disingenuous.  Republican candidates for President have offered real, broad tax reform; Republicans should be discussing these ideas more—in town hall meetings, on the floor of the House and Senate, on the radio and TV talk shows, at every chance they get—and they should make chances to talk about them.  Since they don’t do any of that, I have to ask: of what are they afraid?

The US already has the most progressive individual income tax structure in the developed world.  The President is openly engaging in class warfare as he campaigns for reelection and for his More Taxes More Spending ideology.  The Progressives in the Senate have not allowed the Senate to satisfy its statutory duty to propose an actual budget—of any sort—for nearly three years.  The Progressives nearly blew up the debt ceiling negotiations over their refusal to cut spending and their demand to raise taxes.  The Progressives did succeed in blowing up the Super Committee with their nonnegotiable demand to raise taxes by $1 trillion dollars.  The Republicans need to be calling out the Progressives on all of this.

Instead, Republicans let the Democrats control the argument and limit it to a narrow, doomed to fail path.

On top of this, the only jobs program that gets debated is the Progressives’ tax and spend Jobs Bill, while the Republicans don’t even have a coherent jobs message of their own, much less an actual plan.  Oh, yeah, there’s that Ryan bill from nearly two years ago.  About which they’re absolutely silent.

By letting the Progressives have the debates on their terms—again—and by having no coherent message of their own, the Republicans are in danger of giving control of the House right back to the Progressives in 2012 and of leaving control of the Senate and of the White House in their hands, too.  We’ve seen how well that’s worked for our country.  Four more years will only extend the damage to national disaster proportions.

It Isn’t Just Our Own Progressives….

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In an interview with Spiegel Online International, ex-Greek Prime Minister Giorgios Papandreou had this to say in response to Spiegel‘s question of where fault lies for the present crisis:

…we need strict budgetary discipline, and we have to reduce expenditures, but we also need growth strategies. And we cannot lose sight of the markets, either. It is unacceptable that they are the ones driving the countries…not giving their governments the time that democratic institutions need. This undermines our democratic foundation. That’s why we need strict regulation of the markets and more transparency, and why we have to contain the rating agencies. We, as socialists, have demanded this again and again, because we cannot do this alone as a single country. This is a mistake being made by the global political class and, in particular, by conservative Europe.

And this brief exchange:

SPIEGEL: They have dictated the strategies for some time now. The primacy of the political class seems to have been suspended.

Papandreou: That’s true, unfortunately. If we decide at 2 a.m. that we have to make a decision because the stock market in Japan is about to open, it’s an acknowledgement of the superior power of the markets.

What a breathtaking lack of understanding of economics, of free markets, even of democratic principles.  With Europe as their role model, it’s no wonder our own Progressives have so damaged our economy and our government.

Papandreou wants growth strategies.  What more powerful growth strategy can there be than to get government out of people’s and business’ way, to let labor go back to being mobile, to let citizens and businesses make their own decisions?  How much more stimulative (to coin a phrase) can government be than to reduce the cost of doing business by reducing taxes on businesses, on citizens, on exchanges between citizens along with that “budget discipline” and those “reduced expenditures?”

A concern, expressed in complete seriousness, is that markets are driving the nations, and not the governments.  Are not the people sovereign in Europe?  Is government truly the Sovereign in the land of John Locke and Jean-Jacques Rousseau?  People, in a free environment, are free to express their will over their government politically, but that’s not all.  To have a truly free environment, they must be free, as well, to instruct their government economically in a free market.  Every citizen in a free country gets two votes: one at the ballot box and one in his economic exchanges with his fellow citizens.

Another concern, expressed with the same lack of understanding, is that people, with their economic decisions, are not giving their governments the time that democratic institutions need in which to act.  But this is to assume that governments must be in the business of governing citizens’ economic decisions in the first place.  Since legitimate government has no such role, legitimate government needs much less time.

As if that’s not enough—or perhaps it’s deliberate (this would be consistent with the European attitude that government must decide for the people)—Papandreou wants to censor the information that people and businesses use in making their economic decisions: “contain the rating agencies.”  Government will make better decisions with its information base than can the citizens for themselves.  Hmm….  How’s that working out today in Greece and in the EU generally?  Do the people or the government, even in Europe, have the better record over the last several decades?

“We cannot do this alone as a single country.”  No closed economy—no economy that has no access to exogenous funding—can “do this alone,” since “this” is government making the decisions, government taxing everyone to pay for the welfare of everyone.  However, expanding this to the euro zone, or all across Europe, begs the question.  The expansion just expands the bounds on what is still a closed economy whose policies depend on outside financing to pay the difference between what the taxes can provide and what the government has promised.  An expansion only ensures that everyone else is dragged into the pit, also.  Making the thing be global changes the situation not a bit.

But in a huge misunderstanding that’s entirely consistent with the European view of “democracy,” of “freedom,” of “markets,” European government Progressives have completely missed the fact that their markets, at bottom, have very little freedom in economies so heavily laden with regulations and government “oversight.”  The polities have only limited freedom in government-controlled societies that limit labor mobility, that limit business choice, and that discourage entrepreneurship (which is entirely consistent with the lack of market freedom).  The Progressives have no understanding whatsoever of the concept of democracy and of individual liberty.  Papandreou’s own government was brought down by the other governments of the EU for the unpardonable sin of asking the Greek people for their opinion of the latest round of bailouts.  The wills of the French and Dutch citizens, when they rejected the European Union Constitution in their plebiscites, were blithely overruled by their governments signing the Treaty of Lisbon, which enacted that Constitution in all but name.  But this failure to understand is not all on the elitists.  In societies where tax evasion is a sport, where the rule of law is a thing of ridicule—this is not the stuff of freedom and democracy, either.

The failure of understanding can be summed up in Papandreou’s own lament: the superior power of the markets.  How terrible it is that government should be subordinate to the will of its people as expressed in a truly free market.

Democracy, free markets, individual liberty demand that the sovereign people make their own decisions, and live with the outcomes and prosper from those outcomes, or recover from the outcomes and then prosper.  These three—free markets, democracy, and individual freedom—are bound up tightly among each other.  None can exist without the others also existing.  Governments must accord citizens the respect of being responsible for their own actions, and the citizens must reassert this right for themselves.