Freedom Line Blog

Some hard-liners in the House are refusing to support John Boehner’s latest plan. They seem to believe it’s doesn’t achieve enough savings.

Not to be too blunt about it, but they need to get a clue.

James Capretta, who trashed the Gang of Six plan, says Boehner’s plan is okay. So does Grover Norquist.

Here’s what they understand: $1.2 trillion of savings from domestic discretionary programs, with real, enforceable budget caps, over ten years, is a huge accomplishment. And it still leaves on the table some of the low-hanging entitlement fruit (a “chained” Consumer Price Index adjustment) and some of the mid-hanging entitlement fruit (hiking the Medicare eligibility age merely to coincide with that of Social Security). So that means that part of the other $1.6 trillion in savings, to come from the later commission, is actually likely to be fairly easy to achieve as well.

The history is this: Never before has Congress used the debt ceiling hike to force serious budget savings. Any successful use of this debate toward that end should be counted as a significant accomplishment. Sure, some on the hard right — and I have ALWAYS been hard-right on cutting spending — may complain that Boehner’s plan isn’t as good as the original “Cut, Cap, and Balance.” So the bleep what. Anybody who ever expected CC&B to become law in its original form wasn’t living in the real world. James Madison and Roger Sherman didn’t design our system to allow one House to steamroll both the other congressional chamber and the president (although they did indeed give more power to the House of Reps. vis-a-vis the president, on domestic issues, than it has historically made use of).  The U.S. government is designed to force compromise.

Frankly, the Boehner plan isn’t a 50-50 compromise; it’s a win for conservatives, for fiscal responsibility, and for the nation. It effectively changes the trajectory of spending for the first time since Washington started bingeing again (after three good years) in the fall of 1998. It’s a remarkable achievement when working against the most leftist president in history. Conservatives should not torpedo it.

As I have written and argued repeatedly for months, President Obama wants a crisis. He plans to use a crisis to seize even more power for himself and for the government. Now he is a significant step closer to his goal. Despite his finger-pointing con-job in his nasty press conference this afternoon, Obama is the one who deliberately torpedoed the budget talks. He is the one who has yet to put an actual plan on the table. He is the one who refused to even let GOP negotiators talk. He is the one who insisted through most of the year that no other provisions be attached to the hike in the debt limit — that the debt limit hike should be “clean” rather than include even a single cost saving. Now, as Speaker John Boehner just said, and as so many others have said in less vivid language, “dealing with the president is like negotiating with a bowl of Jello.” He just won’t stay still. And he’s doing it on purpose. He’s doing it because he doesn’t want a deal. He wants a crisis. This is a very dangerous game he’s playing, but he’s playing to win. And if he wins, we all lose — we lose financially, and we lose at least some of our freedom. Mark my words. This is what Obama’s game is. To try to win it, he has been fibbing, faking, and fulminating. Once he wins it, he will do far worse.

Over at The American Spectator, I explain why conservatives should accept a scaled-down version of the Gang of Six plan on the budget. Let me make it even more clear. Herewith, the Hillyer Plan, which has legislative elements simple enough that they should be able, on a fast track, to be passed by Aug. 2 — and if not, by about mid-August (which means a delayed August “recess”), which would require a temporary extension of the debt limit which all sides should accept. But let’s be up front about this: Sometimes, Washington gets WAY too tied up with official accounting “scores” of budget proposals, when in truth almost all out-year projections are nonsense, with huge shifts in numbers dependent on unpredictable effects of economic growth, inflation, and other factors. The Hillyer Plan would specifically NOT be “scored” in advance, because the point isn’t to figure how many economic assumptions can dance on the bead of an abacus. Instead, the guiding principle should be good policy combined with overall debt reduction, without worrying about whether the reduction officially hits a specific numerical target. As Jack Kemp and the Gingrich Congress showed, economic growth can and will balance a budget that is reasonably restrained.

Okay, here’s the plan:

1) Permanent (non-sunseted), three-tiered rates for both individual and corporate income taxes, at 12%, 24%, and 30%.

2) Capital gains taxes at the same levels — except that the calculation of the base price would be indexed for inflation for the first time, and no individual capital gain under $5,000 would be taxed.

3) Complete elimination of taxes on ordinary stock dividends. Dividend taxes require far too much accounting for far too little bang for the buck.

4) A cap on the deduction for mortgage interest at $3,000 per month (adjusted upward for inflation every five years). Owners of McMansions will be getting a big enough break via cutting the top rate from 35% to 30% that this trade-off will be more than worth it. A cap, too, on the deduction for state and local income taxes, set at perhaps $10,000. (This would have the effect of at least subtly pressuring high-income-tax states to reduce their own tax rates, while of course gaining at least a little money for the feds.)

5) Complete and permanent elimination of the Alternative Minimum Tax.

6) Elimination of Barack Obama’s hated tax break for private jets.

7) Elimination of all tax breaks for corn ethanol, combined with elimination of the import tariffs on cellulosic ethanol.

8) From the Gang of Six plan: Shift to the chained-CPI (a more accurate measure of inflation) government-wide starting in 2012, along with the following specifications for Social Security: (1) exempt SSI from the shift for five years, and then phase in the shift over the next five years; and (2) provide a minimum benefit equal to 125% of the poverty line for five years. (According to CBO, the shift to chained-CPI would result in the annual adjustment growing, on average, about 0.25 percentage points per year slower than the current CPI.)

9) From the Gang of Six plan: Repeal the CLASS Act.

10) Allow the Dems to pick any business tax “loopholes” of their choice for elimination, of up to $150 billion over ten years, of which the GOP would be obliged to accept $100 billion of them. (Note: The selection of options, first by the Dems and then by the GOP, could easily be done within two weeks.)

11) Require the administration by law, within a year, to approve permits to open enough federal-government-owned lands to energy development to produce, via royalties and taxes, at least $100 billion in federal revenue over the next ten years. This idea stems from a column by Gary Palmer of the Alabama, not yet available online. Palmer explains: “According to the U.S. Department of the Interior and the Bureau  of Land Management, there are 800 billion barrels of recoverable oil from oil shale in the Green River Formation. This is three times more than the proven oil reserves of Saudi Arabia. The Green River Formation covers about 11 million acres in Colorado, Utah and Wyoming, with about 80 percent of the recoverable oil in a 1,225 sq. mile area of western Colorado. The federal government owns or manages 73 percent of the lands that contain significant oil shale deposits in the West and 80 percent of the recoverable oil in the Green River Formation.”

12) Immediately remove authority to spend at least $75 billion in whatever “unobligated” funds still remain (some were withdrawn a few months ago in the 2011 Continuing Resolution).
13) Pass a shell budget resolution that sets overall non-defense Appropriations limits for 2012 of $25 billion less than the combined budget authority approved for 2011 (in actual dollars, without an inflation adjustment).

14) Before final passage of this whole package, pass “Sense of the House” and “Sense of the Senate” resolutions (there’s no time for actual legislation before Aug. 2 to implement the specifics)  supporting the following items in the Gang of Six spending outline:

• Health, Education, Labor, and Pensions would find $70 billion.
• Homeland Security and Government Affairs would find $65 billion.
• Agriculture would find $11 billion while protecting the Supplemental Nutrition Assistance Program.
• Commerce would find $11 billion.
• Energy would find $6 billion and may propose additional policies to generate savings that would be applied to the infrastructure deficit or to reduce the deficit.
• Judiciary would find an unspecified amount through medical malpractice reform.

• Impose spending caps and security/nonsecurity firewalls.
• Sequester accounts at the end of the year to recoup any excessive spending by Congress.
• Restrict the use of emergency designations that circumvent the spending caps.
• Prevent Congress from exceeding the caps by requiring a stand-alone resolution subject to a 67-vote threshold, in order to isolate that vote to increase the deficit from any other policy items.

• Achieve program integrity savings of $26 billion in entitlement programs to curb fraud, abuse, and other wasteful spending government-wide.
• Create a working group to provide updated budget concepts for CBO and OMB.

There. I hate to have a “14-point” plan because it has the cringe-inducing whiff of Woodrow Wilson, but that’s just how the numbering came out. Anyway, I believe every one of the first 13 points could actually be enacted in law by Aug. 2 or certainly by August 15, and while the resolutions in Point 14 obviously do not have the force of law until subsequent legislation enacts them, it would have enough moral force, with enough public attention, to effectively force compliance as soon as the complicated legislative wheels could operate.

The bipartisan “Gang of Six” has been in bad odor with conservatives for months now because it always has been seen as a sell-out and a way to force tax hikes into law with bipartisan cover. But the deal outlined today actually claims to represent a net tax cut of $1.5 trillion over ten years. It would actually lower marginal tax rates on both individuals —

* Simplify the tax code by reducing the number of tax expenditures and reducing individual tax rates, by establishing three tax brackets with rates of 8–12 percent, 14–22 percent, and 23–29 percent.

* Permanently repeal the $1.7 trillion Alternative Minimum Tax.

— and businesses:

Establish a single corporate tax rate between 23 percent and 29 percent, raise as much revenue as the current corporate tax system, and move to a competitive territorial tax system.

I haven’t had much time to study all the details, but it looks like this deal would achieve $500 in real savings in the short term and then set up about as good a budget “cap” system as I’ve ever seen, without triggering tax hikes. I reserve final judgment, but, frankly, I don’t see anything in here for conservatives to seriously object to.

Fred Barnes’ story at the Weekly Standard about our supercilious, self-important, rude, overbearing, blowhard of a president is absolute must reading. It explains why these budget talks have been unproductive: because Barack Hussein The One The Redeemer Obama has absolutely no regard for anybody else’s opinion, no patience with dissent of any kind — and no manners. In short, he’s a boor — a boor with authoritarian inclinations:

The president has been less genial away from the prying eyes of the press and the public. In the private talks, he’s dominated the discussion with the eight most senior members of Congress in an overbearing way not likely to lead to compromise. He’s been argumentative. He’s come across as President Blowhard.

After Sperling briefed the group on the deficit cap proposal, House Democratic leader Nancy Pelosi addressed another subject. When a Republican participant criticized the deficit cap, Obama interrupted with a monologue. When the Republican tried to speak a second time, the president quickly cut him off and delivered another sermon on why the criticism was wrong.

I have argued all along that Obama doesn’t really even want a deal. He wants  a crisis. His behavior — pretending to be the adult and compromiser in public while actually torpedoing progress in private — is exactly that of somebody who is trying to foment a crisis from which he can benefit.

That’s why Charles Krauthammer makes sense:

[D]are the president to put the country in default on the basis of ‘I won’t accept anything short. I only want something that will serve me on Election Day.’

All of this talk about a Balanced Budget Amendment is fine and dandy, but it has NOTHING to do with the debt ceiling fight. It is literally impossible to get a BBA in time for the debt limit deadline. The best thing to do is to stop talking and actually pass spending cuts attached to a short-term lifting of the debt limit. Even better, doing a shorter-term debt limit hike also means the spending cuts, while substantial, are less likely to include things against which Obama can demagogue. In other words, the cuts, while not as big in total dollars, can be more carefully chosen for PR purposes — and they will accompany a more restrained debt-limit hike, which itself sends a message that conservatives refuse to give carte blanche to debt as high as Obama wants the new limit to be.

Yes, call Obama’s bluff. The way to do that is to pass a politically palatable bill with real savings — and leave extraneous things out of it.

David Malpass and Stephen Moore have a great column at the Wall Street Journal about investment money flowing out from the United States rather than into the U.S. from abroad:

Americans are taking their investment dollars abroad at a faster pace than foreigners are bringing capital to these shores. In 2010, for example, U.S. investment abroad was $351 billion—$115 billion higher than foreign investment here. Economic recoveries are periods when investment capital usually surges into a country, but since this weakling rebound began in the middle of 2009 the U.S. has lost more than $200 billion in investment capital. That is the equivalent of about two million jobs that don’t exist on these shores and are now located in places like China, Germany and India.

One cause of this bad situation is federal over-spending:

Today, foreigners are financing food stamps and the next bridge to nowhere while Americans are building state-of-the-art production systems abroad. This is the real pernicious “crowding out effect” of the federal government’s borrowing.

But another big cause is high corporate income taxes, which make investment here far less rewarding:

Capital flows to where it is most highly rewarded, and low marginal tax rates on the returns to capital and business income create a gravitational pull on global funds.

Even former President Clinton says so:

“We’ve got an uncompetitive rate. We tax at 35 percent of income, although we only take about 23 percent. So we should cut the rate to 25 percent, or whatever’s competitive, and eliminate a lot of the deductions so that we still get a fair amount, and there’s not so much variance in what the corporations pay.”

The problem, in short, is that nobody has any incentive to invest those dollars, or to lend them for investment, here in the United States. Eliminate the corporate income tax and, immediately, every American corporation becomes more profitable by as much as a third. All the pensioners who own stock in those companies get richer — immediately. All the workers with company stock-share plans get richer. Prices will drop as companies can make more money, net, even with lower prices. Companies also would save billions of dollars spent in tax-form preparation, and in time spent figuring out tax-avoidance schemes. The economy will get more efficient when tax considerations no longer distort decision-making.

Real interest rates will drop due to market forces (rather than through panicky fiats from the Federal Reserve Board). And, wonder of wonders, companies that have been moving operations overseas will now reverse course and race back within our shores — bringing hundreds of thousands of jobs with them. All of those complaints about “outsourcing” will end, virtually overnight.

That’s why this is one “pro-corporate” reform that also is overwhelmingly pro-labor. The Congressional Budget Office has noted that “domestic labor bears slightly more than 70 percent of the burden of the corporate income tax.”

At last measurement, the corporate income tax was taking in $195 billion per year. I argue that a large chunk of that would be recovered, even without the dynamic growth effects of the tax cuts, via near-immediate growth in dividends and capital gains and therefore in the taxes on those dividends and capital gains. I further argue that, under any reasonably dynamic analysis, especially one which takes into account the tremendous growth in tax revenues after prior cuts in taxes on investments, the economy won’t actually lose any money at all — but the whole economy will be stronger, jobs will be more plentiful, and even the ethics of Washington will be improved:

Indeed, it is all the mucking around in the weeds of the tax code and in the pig trough of spending earmarks that leads otherwise well-meaning congressmen to become favor-dispensers rather than statesmen. Without a corporate income tax to fool with constantly, a huge chunk of the grounds for favor-dispensation will be taken away.

So, again, eliminate the federal corporate income tax entirely. Doing so would go a long way toward completely ending the recession.

Please allow for a personal sentiment: I have no respect for Barack Hussein Obama. None.

Yes, I respect the office of the presidency. But I have no respect whatsoever for its current occupant.

There is a good reason why Mark Halperin used a nasty word to describe Obama after Obama’s press conference yesterday: because, if a not-so-nasty but otherwise entirely synonymous word had been used, Halperin would have been right on target. So was Sen. Marco Rubio.  This hugely egotistical man, Obama, has nothing to offer but demagoguery; has offered no leadership; has saddled us with debt; has no personal grace when challenged; has no dignity, but only petulance, when in the fray; has no respect for constitutional limits on his own power or those of his political appointees; has no real love for what this country is or has been but only for what he wants it to be after he “transforms” it; has little respect for the actual views of the American citizenry; has a dangerously radical belief in subjugating ethics for the sake of power; is fundamentally dishonest, not to mention horribly hypocritical on subjects ranging from the debt ceiling to the War Powers Act and plenty of other issues as well.

This is not a man who has ever achieved anything OTHER than self-advancement — indeed, he himself has admitted that he accomplished little as a community organizer; his legislative record is incredibly thin; and his presidency has been, in terms of results, disastrous.

In short, this is not a man to emulate either on the basis of character or significant attainments of any sort that are not self-aggrandizing.

There: ‘Nuff said.

Deroy Murdock has a great column up this week. He credits my wise friend Jim Guirard, veteran of many a battle on Capitol Hill, for proposing better marketing language for Paul Ryan’s Medicare proposal (or variations thereof).

Jim Guirard, long-time chief of staff to the late Sen. Russell Long (D., La.), runs the TrueSpeak Institute (TrueSpeak.org). He advises the GOP to market “MediChoice.” Unlike the head-scratching that “premium support” inspires, MediChoice signals that Republicans would give seniors choice in medical coverage. Just as the GI Bill helps veterans pay tuition at schools that match their interests, MediChoice would help future Medicare recipients (now 54 or younger) buy coverage that suits their circumstances.

Guirard urges Republicans to call today’s Medicare system “MediCrash.” The Democrats’ policy — snatching $520 billion from Medicare to fund Obamacare and pretending that the program is the platonic form of fiscal health — invites financial catastrophe. By Sept. 30, 2020, the Congressional Budget Office forecasts, Medicare’s Trust Fund will be “exhausted.” Republicans should reiterate that Democrats — not the greedy, granny-killing GOP — perpetrated a half-trillion-dollar heist against Medicare’s coffers to underwrite Obamacare. Democrats pitifully refuse to do anything to prevent this calamity. What will their negligence yield in just over nine years? The CBO predicts: MediCrash.

Note, in the Murdock column, his photo at the bottom of a potential MediChoice notice that every senior citizen would receive.  Talk about bringing home to them the essential idea that THEY and nobody else controls their choice of a health-care plan!  Great idea.

In the debate last night, Rick Santorum made the excellent point that what Ryan proposes is what ALREADY is working, in popular fashion, in the otherwise problematic Medicare Part D.  If seniors can make such an individual-option plan work for prescription drugs, why not for their whole health-care coverage?

I noted the same analogy here, back on May 5. As I also explained:

[B]ecause of very similar, consumer-based, market-oriented provisions, has cost the government far less money than projected while costing consumers remarkably less in premiums than even the most optimistic number-crunchers expected. In short, the experience of Medicare Part D suggests that Ryan is hardly being outlandish to say that giving control back to consumers in a market-based system can save money without harming benefits – and thus preserve Medicare for future generations.

Now, back to Murdock. As he noted, Ryan’s plan is hardly radical:

Republicans should remind mewling Democrats that economists in liberal thinks tanks came up with the idea in the first place. The Brookings Institution’s Henry J. Aaron and the Urban Institute’s Robert Reischauer fathered “premium support” in 1995.

Former senator John Breaux (D., La.) promoted this reform as co-chairman of President Clinton’s bipartisan Medicare-overhaul commission…. Former senator Bob Kerrey (D., Neb.) echoed Breaux. As he told Reuters in May 1999: “You’re much better off letting 50 million people make decisions on their own than having [Washington] decide things from the top down.”

Santorum was right to take up the gantlet on this issue last night (and earlier), and Newt Gingrich is incredibly wrongheaded to run away from it.  Meanwhile, with some smart use of language, as per Jim Guirard, MediChoice might be a real political winner.

Actually, it’s not the bureaucrats who individually are necessarily incompetent; it’s the system that causes so much rigmarole that truly idiotic mistakes get made. Whatever the reason, the truth is that private companies that consistently screw up rarely stay in business, whereas bureaucracies that screw up not only stay in business, but often add more bureaucrats to try to “correct” the problems that themselves are caused by too many hands in the pie and too many regulations being promulgated by too many people already.

What brings on all these musings? Here’s the latest: People whose entire houses have been blown away by tornadoes who nevertheless are denied FEMA aid because their houses supposedly showed “insufficient damage.” FEMA continues to make these sorts of mistakes even though “A pending lawsuit accusing FEMA of improperly denying thousands of farm workers in Texas money to repair their homes after Hurricane Dolly struck in 2008 based on the insufficient damage finding claims that FEMA used a concept called ‘deferred maintenance’ to back the rejections.”

Note, too, that it wasn’t an American establishment media outlet which outed this story; it was a British paper.  Don’t look to the MSM to question bureaucratic incompetence when the administration is Democratic.

Anyway, the question should arise: What happens if mistaken denials like this do not apply to somebody’s health, but to somebody’s life-saving surgery or life-saving drug treatment?  Hello, Obamacare.

Drudge has been all over this one today, but it bears comment anyway.  This is the sort of thing that should never, ever happen in a free society.  Armed, officious, thuggish bureaucrats in a pre-dawn raid burst into a man’s home and handcuff him in front of his children because his estranged wife is late on student loan repayments.  This is sick. It is outrageous.  It is inexcusable.  The bureaucrats, the SWAT team itself, ought to be thrown in jail for this type of behavior.

This is an increasing problem.  It is the sort of thing that ended up with a small town’s mayor’s dogs killed and his mother-in-law terrified within an inch of her life in a mistaken raid in Maryland a few years ago. And there are a horrific number of similar stories, all indicative of the fact that we are all subject, at the whim of idiots without any good reason to carry arms, to tactics reminiscent of a terrible police state.

When I was at The Washington Times, exactly one year ago yesterday, I wrote about the proliferation of armed agents in federal departments that shouldn’t let any of its workers within BB-gun distance of a real firearm. Why, for instance, do the Small Business Administration and the Railroad Retirement Board have armed agents?!?  How about the IRS: Isn’t that agency scary enough, and doesn’t it have enough access to regular law enforcement, without arming its own agents?

Congress is utterly at fault here. Congress should de-arm federal agents. It also should stop overcriminalizing honest mistakes or clerical errors, and weed out thousands of criminal laws from the federal code. Congress is shirking its responsibility to keep federal power in check, and thus to protect individual freedom.

Words cannot express how dangerous it is for these sorts of abuses to continue unchecked. Again, it is the SWAT teams, and the bureaucrats who order them, who ought to suffer, and face imprisonment, for these abuses.

I’ll write more about this locally, because it is a scandal of incompetence, but…. if ANYbody wonders why most Americans don’t want government functionaries controlling access to medical care or insurance, I had a perfect reminder this morning.  Having just relocated back to my wife’s home city of Mobile, AL, I went this morning (with her) to the driver’s license office, run by the state Department of Motor Vehicles, just to transfer my license from Virginia back to Alabama. Since they still had my old Alabama license on file in their computer system from five years ago, and I moved back to the same address, it should have been a snap.

Think again.

Amidst some of the worst-organized, most inefficient, most confusing, most inattentive “service” I have EVER seen in any government office (and boy oh boy, is THAT saying a lot!), I watched as they processed about six people per hour in my little area (simple license transfers rather than new drivers who needed driving tests, etc.) for the first two hours.  Eventually, my wife and I made it out of there after THREE HOURS AND THIRTY-NINE MINUTES.

This is what happens when there is NO incentive for service people to actually provide decent service.  I watched as noly one window of four went unserviced for more than an hour; I watched as “workers” who had sat at their windows for no more than about 90 minutes then picked up their purses and left the building for extended breaks; and I sat there, agape, as the one thing nobody ever asked me was to show any sign of Alabama residency: Just about the only info they SHOULD require (for something that establishes, among other things, voting eligibility) was the one thing they didn’t ask for.  (No wonder we conservatives worry about vote fraud!)

This is what happens when government entities run things. This is why government shouldn’t run much of anything.  It is certainly why government functionaries in far-flung locales shouldn’t be making decisions about whether we do or don’t qualify for certain medical treatments.

My latest column at The American Spectator gets around, eventually, to discussing why restoration of the American civic order is coming not from DC but from all the good Americans outside of the upper East Coast bubble.

There’s lots else in the column, so I do urge you to read it, but here’s the good news:

Now that I’ve escaped Washington, I am becoming aware that official Washington has somewhat, ever-so-slightly, improved. It did so because people here out in the hinterlands forced it to do so. Americans proved they love their country. The Tea Party movement played the largest role in sending four score and seven freshmen Republicans to the House even though the RNC was chaired by a bumbling, solipsistic embarrassment. And, while too many of those 87 freshmen and their Tea Party backers sometimes miss the difference between constructive compromise and craven capitulation, the courage of an entire caucus standing firm for entitlement reform is a glorious thing to behold. With the people leading, the politicians are following not sheepishly but with verve….

Eventually, I get around to discussing what I call “the Madisonian ideal for responsible citizenship.” I hope I’m right that this ideal is gaining new adherents.