Following last week’s essay, “The American Dream: Is It Dying a Death of a Thousand Cuts?” a loyal reader of long standing urged, in a thoughtful comment, that we spend more time focusing on the solutions we would propose to the problems about which we write. We have done exactly that on numerous occasions (see our essay of October 17, 2010 which presented 12 key policy suggestions for improving the efficiency of government at both the state and federal levels, as well as our essay of July 19, 2010 which presented an alternative to the President’s stimulus bill, or our essay of December 17 2009 which was devoted to education in America and ideas for improving it).
Nonetheless, the reader’s prodding suggests that it would be appropriate to reiterate suggestions we have made in many of the nearly 100 weekly essays we have published for resetting the nation’s GPS to an alternate course from the current road to nowhere.
We suggested, that President Obama’s stimulus program would provide little or no stimulus and, in an extensive and detailed proposal, urged as an alternative a three-year 50% consumer tax credit that would offset half the cost of certified retail purchases up to a limit of $7500 in the first year, $5000 in the second year and $2500 in the third year. The advantage of our proposal, we opined, would be that every dollar of tax break accorded to the taxpayer would have been the result of a prior dollar of “investment” by the taxpayer directly into the American economy. We wrote that we believed this would efficiently provide the jolt that the economy needed by stimulating immediate capital investment in industrial plant and inventory.
While our proposal may have been ignored by the Administration, it wasn’t because we had it hidden under a basket. It was widely covered by other public affairs blogs and on-line journals such as “The American”, the on-line journal of the American Enterprise Institute.
We also strongly have supported in our essays many of the recommendations of the Simpson-Bowles Deficit and Debt Reduction Commission. That would be the Commission President Obama turned to, and, subsequently, ran from. It seems the President’s own Commission threw him a curve ball. They recommended a strong pro-growth policy predicated on simplifying our absurd tax code and reducing the number of tax brackets to three with the highest bracket being 26% (or 28% if the commission’s suggested elimination of most tax carve-outs was not adopted). The Simpson-Bowles Commission recommendations were dead-on-arrival at the White House because they would have gutted the class-warfare strategy of the Administration. You know, the one that defines millionaire and billionaire villains as any person earning $200,000 a year and any family earning $250,000 annually.
We concurred in our essay of January 31, with the Debt and Deficit Reduction Commission’s recommendation to establish firm ratios of allowable Debt to GDP and Taxes to GDP, a sensible way of keeping America from spending and taxing itself into European-type economic extremis.
We believe, and have so written, that it’s time to dust off old zero-based budgeting plans and reconsider a realistic, but modified approach to zero-based budgeting. We wrote that under a zero-based budgeting regime (quite common in the private sector) every agency and department would have to build its budget from a zero base each year, eliminating (or reducing) every unproductive, inefficient or duplicative expenditure. We suggested a modified zero-based budgeting process in which managers would be charged with the responsibility of on-going evaluation of their agency or department’s productivity and identifying those operations that can be reduced or eliminated. Perhaps every three years or five years, every agency’s budget would be adjusted consistent with these rolling assessments of productivity.
We are strong believers, and have so written, that taxes should be levied for the sole purpose of raising the revenue needed to efficiently run our government and not to influence the behavior of the people. We also believe, and have so written, that government should be committed to keeping taxes as low as possible, in order to leave the greatest purchasing power in the hands of the people so that the peoples’ priorities can be funded, instead of the government being committed to keeping taxes as high as it can get away with so that the government’s priorities can be funded.
We have favored, and have so written, that we support a single income tax rate with an exemption for the neediest among us, and a substantial reduction in corporate taxes so that we attract capital investment rather than drive it away.
Given the exceedingly sorry spectacle of state finances, we suggested in our January 24, 2011 essay consideration of a change in the federal bankruptcy laws to permit states to file for bankruptcy. Presently there is no provision for state bankruptcies. If there were, bankruptcy judges would be empowered to void or rewrite existing contracts. This could be accomplished, we suggested, with minimal risks to the bond market by excluding bond obligations from discharge in bankruptcy.
We gave Representative Ryan (R-Wisc.) three cheers (immediately adjusted to four cheers) for proposing what we believe is a far sounder approach to health care. Serious thinkers on both the left and the right have advocated the equivalent of his insurance-premium voucher plan for many years. In fact, the only real differences between his proposal and that of well respected Democratic economic guru Alice Rivlin are Ryan’s preferred inflator going forward versus hers (his = $15,000 base-year voucher subsidy with annual rate-of- inflation adjustment; hers = $15,000 base-year voucher subsidy with rate of GDP growth + 1.0% inflation adjustment). Ryan would move everyone under age 55 into his program, while Rivlin (like Gingrich) would make moving to the plan voluntary.
Rather than embracing the concepts put forth by Republican Ryan and Democrat Rivlin as two health care proposals with differences worth discussing, the President reverted to what has become d’rigour at the White House…ridicule. Incidentally, the first-year premium voucher subsidy proposed by Ryan is equal to the government’s current average annual cost per Medicare enrollee.
We have strongly supported the elimination of most individual and corporate tax preferences, deductions, and exemptions such as earmarks, farm subsidies, ethanol subsidies, and preferences for people who own homes versus those who rent homes, etc.
We advocated the privatization of Fannie Mae and Freddie Mac and primarily blamed these two government sponsored enterprises (and their congressional protectors) for the lion’s share of the financial meltdown. We believe, and have so written, that too big to fail, is too big to be.
We strongly supported the so-called NewStart Treaty negotiated by the Administration, and were critical of those in Congress who were clearly opposing the treaty for the purpose of political posturing.
We also believe, and have so written, that America, in its own self-interest, is in need of substantial immigration reform. We do not produce enough new population to support the rapidly aging population in America. Our economy is in danger of crashing of its own weight given the commitments we have made to our senior citizens. Tweaking the system around the margins will not solve the problem and there is no financial incentive we can provide that will alter the demographic reality that is staring us in the face.
We see our mission, generally, as simply sharing with our readers our perspective on the conduct of the nation’s business. While our views can accurately be described as right of center on many issues, our essays have, from time to time, drawn sharp criticism from the right as well as the left. That doesn’t bother us a bit.
By Hal Gershowitz and Stephen Porter