The Boehner Plan: Bad for Conservatives, Bad for the Republican Party, Bad for America

In my last post, I wrote about how the current debt deals, Cut, Cap and Balance mostly, are showing the problem with “Conservatives” (not really conservative, but that will be discussed in an upcoming post, Heritage Conservatism: The End of Conservatism?).  In this post I will be writing about why the Boehner Plan is in no way conceivable, conservative and why the best option is Cut, Cap and Balance.  In case you are reading this from a deserted island, the Boehner plan I speak of is Republican Speaker of the House, John Boehner’s debt limit plan.  His plan calls for “$1.2 trillion” in cuts, which was later found out to be actually $850 billion in cuts.  The plan also doesn’t actually include cuts; it does limit discretionary spending over the next ten years, but doesn’t actually cut anything.  You may be asking, “Then why does the Speaker get to call them cuts?” The answer: the “cuts” in the Boehner plan are only “cuts” from the CBO baseline, which is an imaginary path of future spending designed as a planning tool for Congress. Boehner can propose to spend any amount in any future year he wants, and in this plan he chooses to have a steadily rising spending path. The Boehner plan also only “cuts” $6 billion from the FY2012 budget, which is $105 billion short of Cut, Cap and Balance. Most importantly, the Boehner plan doesn’t lead to a Balanced Budget Amendment like Cut, Cap and Balance does.  A true conservative plan would involve, at a minimum, sending the Balanced Budget Amendment to the states along with statutory caps on spending to restrain Congress while the Balanced Budget Amendment is being ratified.  Cut, Cap and Balance, while not the perfect plan (see last post), is the best available option to get a Balanced Budget Amendment to the states, which should be the goal of these negotiations. 

The Boehner Plan doesn’t cut, cap or balance (Bad for Conservatives), the Boehner Plan doesn’t fulfill the promise of $100 billion in cuts that the Republican Party promised in the last election (Bad for the Republican Party) and the Boehner plan raises the debt ceiling without getting anything real in return (Bad for America).  To sum it up, The Boehner Plan is Bad for Conservatives, Bad for the Republican Party and Bad for America.

Debt Limit Talks showing the problem with “Heritage Conservatism”

The last few weeks, along with the next two, have been pretty exciting here in D.C.  Both sides are trying to haggle their way into getting what they want.  The Democrats (and some Republicans) want to raise taxes and “cut” spending (yeah right), the Republicans want to cut spending and pass Cut, Cap and Balance (which, in theory, includes passage of the balanced budget amendment).  A lot of my fellow libertarians have been very vocal about not liking Cut, Cap and Balance and saying that we cannot under any circumstance, raise the debt limit.  While this sounds great in theory, it falls a tad bit short in reality.  The truth is that the debt limit is going to have to go up, BUT we also need to get something for it and that is where Cut, Cap and Balance comes in.

So far, Republicans (the ones not in the Gang of Six) have held up well against the idea of tax increases and minimal cuts, but they also are still stuck in the mode of no cuts to defense.  This is simply not acceptable.  Recently, the Heritage Foundation released a Web Memo titled, “Cut, Cap and Balance Makes Sense – So Does Providing Adequate Support for Defense.”  By “adequate support” they mean a minimum of $720 billion a year.  WOW!!! If that’s what adequate is, damn! 

In the Web Memo, Heritage states:

"Thomas Jefferson once said that “the price of freedom is eternal vigilance.” Today, as has always been the case, the cause of liberty is under assault. Internationally, authoritarian states and the supporters of Islamist extremism in non-state groups seek to use violent coercion to extinguish liberty everywhere. Failing to prepare for these threats would not only weaken U.S. national security but undermine the international security of world commerce and trade if the U.S. is unable to defend the open seas and maintain a global military presence."

This suggests that it is the job of the United States to defend liberty everywhere, no matter the cost in dollars or lives of our troops.  This is exactly the problem with modern conservative movement, it has been hijacked by this “Heritage Conservatism.”  The very fact that they dare use a quote by Thomas Jefferson to justify spending 100s of billions a year on a massive empire defies all common sense and logic. 

To get back to the debt limit talks, it is vital that Republicans realize that spending “adequately” on defense is not quite adequate.  Republicans must put every kind of spending on the chopping block including defense spending.  Cut, Cap and Balance is a good plan and our best chance at a Balanced Budget Amendment and real spending cuts, but it needs to include defense cuts.

Liberty = Prosperity

The United States Chamber of Commerce recently released a report titled “The Impact of State Employment Policies on Job Growth,” looking at variance in state employment regulations and its effect on economic growth. The Chamber report places states into 3 tiers: good, fair, and poor.  Americans for Tax Reform took a look at a number of other policies to see if there was any corollary relationship with economic performance. Area of analysis include: tax burden, spending restraint, labor policy, and partisan control.

Tax Burden

When comparing states placed in the top and bottom tiers by the Chamber, one will find a substantial difference in marginal tax rates for both individuals and corporations.  Top tier states have an average marginal income tax rate 25.3% lower than bottom tier states.  Top tier states also have lower corporate rates – 27% lower on average than bottom tier states. When it comes to overall tax burden, states rated as bottom performers by the Chamber have a state and local tax burden that is 12.8% higher on average than the top tier states. .

Top Tier-Bottom Tier	Top Tier	Bottom Tier	Difference
Top Marginal Income Tax Rate	4.86%	6.09%	25.3%
Top Corporate Income Tax Rate	5.29%	6.72%	27%
State/Local Tax Burden	8.90%	10.04%	12.8%

Spending Restraint

As was the case with level of taxation, when comparing state spending, we once again find significant variance between top tier states and bottom tier states.  Prior to recession, in 2007, the Chamber’s top tier states spent an average of 9.6% of state GDP compared to the 10.6% for bottom tier states spent; a difference of 10.4%.  In 2009, top tier states spent 9.9% of GDP compared to the bottom tier’s 11.1%; an increased difference of 12%.  It is clear that the top performing states in the Chamber’ report spend a significant amount more as share of their economy.  

It should also be noted that bottom performing increased spending at a rate 66% great than top performing states during the recession.

Top Tier-Bottom Tier	Top Tier	Bottom Tier	Difference
2007 State Government Spending as Percentage of GDP	9.6%	10.6%	10.6%
2009 State Government Spending as Percentage of GDP	9.9%	11.1%	12%
Percent Change in Government Spending	0.3%	0.5%	66%

Right-to-work and Collective bargaining restraints for Public Sector Employees

Right-to-work along with scope of public sector collective bargaining rights appears to be another factor in how state’s faired in the report.  Of the states that the Chamber placed in the top tier, all are right-to-work states. Four of the TK top tier states (Georgia, North Carolina, Texas, and Virginia) outlaw public sector collective bargaining completely and three states (Alabama, Mississippi, and Utah) that allow some form of collective bargaining for certain public sector employees.  While roughly half of the top tier states restrain government sector collective bargaining, all bottom tier states allow full collective bargaining for their public employee. Only one bottom tier state, Nevada, is a right to work state.  Not unexpectedly, Nevada also has the lowest spending and lowest tax burden of the bottom tier states.

Partisan Control

Perhaps the biggest factor when it comes to performance in the Chamber’s report is partisan control of state government.  Aside from North Carolina, all top tier states are all either Republican-controlled or have split control.  Of the bottom tier states, all are either under total Democrat control or split control.

Of the top tier states, those under Republican control are shown to have a more favorable business tax climate than split control top tier states, In top tier states with total Republican control, the average top marginal income tax rate is 26% less that split controlled top tier states; top corporate tax rates drop 9.1%, and state and local tax burdens drop 1%. 

The contrast between top tier Republican-controlled states and bottom tier Democrat-controlled states is even greater.  The top marginal income tax rate for Republican states drops 26.9%, the top corporate income tax drops 19.1% and the state and local tax burden difference grows from 1.14% to 1.45%. 2007 Republican state spending per GDP drops from 9.6% to 8.5% and 2009 Republican state spending per GDP drops 11.2%.  Once again, the differences between Republican and Democrat states also increases with 2007 spending differing from 1% to 2.1% and 2009 spending from 1.2% to 2.3%.

Republican-Democrat	GOP	DEM	Difference
2007 State Government Spending as Percentage of GDP	8.5%	10.6%	24.7%
2009 State Government Spending as Percentage of GDP	8.9%	11.2%	27.0%
Percent Change in Government Spending	0.4%	0.7%	75.0%
Percent Change in Real GDP Growth (08-09)	-1.05%	-2.40%	118.10%
Top Marginal Income Tax Rate	3.83%	6.33%	59.80%
Top Corporate Income Tax Rate	4.44%	7.06%	59.40%
State/Local Tax Burden	8.81%	10.26%	17.30%
Unemployment Averages 2007	3.8%	4.8%	26.3%
Unemployment Averages 2010	8.4%	9.3%	8.3%
Percent Change Unemployment 07-10	4.6%	4.3%	6.5%
Gain/Lose Congressional Seats	9	-3	133.0%

Results

When all of these factors are combined, a state’s economy fares better than a state with the opposite factors (higher taxes, more spending, and union and democrat controlled).  The GDP growth for top tier states is 1.73% higher than bottom tier states.  Unemployment was .6% lower in 2007 and 1.2% lower in 2009.  Unemployment growth during the recession was less in the top tier states (4.5%) than the bottom tier states (5.1%).  The states in the top tier are also among the states gaining congressional states with a net total 9 new seats while the bottom tier states are losing a net total of 4 seats.  All of these results point to one conclusion: More freedom from government = More prosperity.

Top Tier-Bottom Tier	Top Tier	Bottom Tier	Difference
Percent Change in Real GDP Growth (08-09)	-0.80%	-2.53%	216.30%
Unemployment Averages 2007	4.0%	4.6%	25.30%
Unemployment Averages 2010	8.5%	9.7%	27.00%
Percent Change Unemployment 07-10	4.5%	5.1%	12.80%
Gain/Lose Congressional Seats	9	-4	15.0%

Time for Harrisburg to Get Out of the Liquor Business

Currently in the state of Pennsylvania, the state runs approximately 625 stores statewide that control and sell all liquor and wine in the state.  This has been the policy in the state since Governor Gifford Pinchot’s administration in 1933, which subsequently was the end of prohibition.  Governor Pinchot’s original intention of the Liquor Control Board (LCB) was to make buying alcohol as inconvenient as possible as he viewed alcohol as a drug.  The current Governor, Tom Corbett said in his first budget address, “My administration is committed to a study that looks at how best to get us out of a business we should never have entered.  I'm talking about the liquor business.”

The current system, which provides for the government monopoly of the business of selling spirits and wine, has been hotly debated as of late.  Just last month Representatives Mike Turzai and Dwight Evans debated the issue.  The Republican Turzai is the Representative in the legislature pushing privatization, while the Democrat Evans is pushing “modernization.”  This so-called "modernization" calls for allowing more government-run stores to be open on Sundays, expanding store hours on Sunday, allowing direct shipment of wine and liquor to consumer’s homes and allowing a flat 30 percent markup to vary from product to product.  The modernization plan also allows for more George-Orwell-1984-style “wine kiosks” that allow customers to buy wine in Red-Box-DVD-style machines by submitting their ID and a breathalyzer test where they must blow .02 or below.  If you’ve started either laughing hysterically or throwing your mouse against the wall, then you’ve joined the club to rid Pennsylvania of the LCB.  Critics of the privatization plan that Turzai has presented point to the loss of revenue as the primary reason to oppose the plan.  They claim that the current $500 million will be cut down considerably by Turzai’s plan.  The problem is not the potential lost revenue (a theory debunked by the Commonwealth Foundation), the problem is the very fact that the state, in a leviathan-like action is controlling an entire industry and using that industry to hoard money for the state.  Governor Corbett hit the nail on the head when he said, “This isn't about the money. It's about the principle. Government should no more run the liquor stores than it should run the pharmacies and gas stations.”  Representative Evans, in his argument for the “modernization” of the LCB, claims that one of the state’s functions related to the LCB is to “have a system that protects the public.”  In this argument, Representative Evans has gone completely off the tracks.  The Pennsylvania state government should not be hoarding money in the form of monopolizing a market, but it should be allowing for a free-market approach to liquor sales.  Privatizing the industry is true modernization.  So to all of you legislators in Pennsylvania who are on the side of government monopolies and public sector hoarding, it’s time to get out of the liquor business.

The Orwellian Police State

Is it just me, or is our society getting closer and closer to a book written by George Orwell.  Whether it's Obama's Newspeak about "Spending in the tax code" or my home state's obsession with downloading information from cell phones.  It seems like our government has forgotten what their purpose is, to PROTECT rights not to CONFISCATE them.  An issue that has been popping up all over the country is the issue with red light cameras.  In the city of New Orleans, the city has profited $18 million in fees and tickets from having red light cameras that can detect speed along with catching drivers who run red lights.  Now I'm all for up holding the law, but then idea of cameras at every traffic stop and big brother watching you wherever you go, that I have a problem with.  Currently 13 states have cameras with both red light and speed capabilites, plus 12 more with only red light capablities.  Just this week, the Ohio Supreme Court threw out a lawsuit claiming that Columbus' red-light camera fines violate the constitution.  I guess the judge forgot about reading the constitution.

Map of hand-held cellphone bans

Map of texting bans

The red light camera problem isn't the only one of it's kind.  States are also banning cell phone use in the car and smoking in public areas like restaurants and bars.  Policies like these assume that the state must take care of the citizens and tell them what is and what isn't good for them.  The police-state infection is also at the federal level with Supreme Court Justices saying they would require people to vegetables three time a day.

Now some reading this blog may be saying, "So whats the big deal?  Its only cigarettes, cameras and veggies, why should I worry?  Thomas Jefferson had the right idea when he said, "A government big enough to give you everything you want, is strong enough to take everything you have."  This thought in government that the people need to be taken care of is an extremely dangerous one that always leads down the path to tyranny.  So while it is now just the little things like smoking, it very well could lead to the real world version of Orwell's 1984.

Let's get Serious about Cutting Spending (Defense Spending)

A few weeks ago, Congressmen Paul Ryan released his vision for the future in the form of a budget that cuts $4-6 trillion and pays off the national debt by 2050.  While I commend Congressmen Ryan for his vision, more needs to be done.  In the budget, their was no mention of Social Security reform or Defense cuts.  To be fair, Ryan has a proposal for Social Security reform that would turn the system over to a privatized personal account based system but this reform didn’t make the budget because of the reality that Republicans only control one house of Congress.  This proposal is a great step forward and will be pursued, I would assume, after the 2012 election cycle.  What should be pursued now is defense spending cuts, which outside of the entitlement programs (all together) is the biggest expenditure in the budget.  

Currently, the U.S. spends over $700 billion in defense per year and operates over 700 bases in more than 135 countries around the world.  If you calculate all defense spending around the world and compare that number to the United States’ number, the U.S. spends 42.8 percent of all world spending of defense.  The next highest percentage is China at 7 percent.  This number is a very conservative number because the number does not include the majority of the Department of Homeland Security, and any interest on the debt that is defense related.  Clearly, this is an area of spending that needs to be addressed.

Before I get into specifics of what should be cut and how to cut.  First we need to realize that MAJOR reforms should come first.  By this I mean withdrawing troops from both Iraq and Afghanistan and ending this ridiculous “military action” (pronounced undeclared war) against Libya.  Also, the Department of Homeland Security needs to be eliminated and the agencies within in either cut completely or merged with other agencies that have similar objectives.  Also, the intelligence community is in desperate need of major reforms.  Currently their are 16 (that I could find, probably more) intelligence agencies.  Let’s start out be whittling that number down to five- the CIA, FBI, DEA (technically an considered intelligence agency), and for the final two: an Army intelligence agency and a Navy intelligence agency.  Also keep in mind that that I am for an end to the war on drugs and the DEA, but small steps.  Now each of the agencies need massive and major reforms to streamline intelligence, but I am not by any means an expert on this issue, so I’ll stop at just saying we need reforms.  Other smaller, yet very important reforms that won’t necessarily save a lot of money are also needed.  Most importantly, this means completely abolishing the draft and repealing the PATRIOT Act.

Now lets take a look at defense cuts.  Currently, Defense spending accounts for approximately 5 percent of GDP, while before 9/11 it accounted for approximately 3 percent of gdp, with a 45 year average of 5.3 percent.  To start out, let’s cut 10 percent of defense spending the first budget cycle (2012 budget).  This cut should also be applied to every federal department and agency as a starting point, but that is an issue for another upcoming blog post.  Getting back to defense, after the initial 10 percent cut, the entire Department of Defense needs to thoroughly audited and be assessed in terms of what spending is essential and what is not.  This audit should be done by a non-governmental firm, of course all precautions will be taken to secure classified information, and each of the military bases oversees should be paid special attention to in this audit.  After completion of this audit, pull out your machete, because its slashing time.  At a very minimum, defense spending should be rolled back to 2000 levels (3 percent of gdp), this cut would occur over a period of 5 years.  Critics (most of which will be Republicans) will say that a cut that size will leave the the U.S. vulnerable to attack.  These critics will probably suggest a defense budget at that or around that 5.3 percent 45 year average.  The problem with that number is that for most of that 45 year stretch, the U.S. was engaged in the Cold War with a Communist threat in the Soviets and if you haven’t noticed, we no longer are in that situation.  High defense spending was necessary to defeat the Soviets, but no longer is.  What Reagan did (increasing defense spending) was needed and caused the Soviets to decay and rot from the inside.  Most Republicans now have this notion that high defense spending means better and more security, but that simply doesn’t jive with the rest of conservative thought and belief. Conservatives believe (and know) that more spending programs such as the War on Poverty and massive spending in education doesn’t make those programs better, it in fact in those instances, it made the problem worse.   

The battle for the control over spending and the debt has many fronts, but one of them must be Defense cuts.  The Ryan budget is a great first step, but defense spending must also be included in cuts to the budget.  In this article, I have mostly talked about spending cuts and not sweeping reforms in foreign policy, but reforms are just as important because they change how we spend taxpayer dollars on defense.  These reforms are not easy and will not be easy to implement.  One example is ending all foreign aid and not propping up countries like Israel and giving money to their enemies.  These policies are destructive to both our security and Israel’s.  The U.S. can no longer afford to be the police of the world and simply can’t afford to pay for the defense of other countries. Organizations such as NATO and the United Nations delegitimize our sovereignty and our security. Despite what many conservatives believe, terrorists don’t attack us because of what we believe, they attack us because we support the governments that oppress them.  The former head of the CIA’s Bin Laden Unit, terrorism expert Michael Scheuer stresses that they come here precisely because we are over there.  Scheuer stated, “On no other foreign policy issue since the Cold War’s end has the truth been so easy to establish on the basis of hard facts but so hard for Americans to see...that Muslim hatred is motivated by U.S. interventionism more than any other factor.”  If terrorists did attack us for our freedom, prosperity or religion why wouldn’t they attack a more economically free country such as Liechtenstein or Hong Kong or the home of Christian faith, the Vatican.  As I’ve already stated, these solutions are not easy, but they are essential to paying off our debt and to our security and our liberty.

Worth the Cost?

Last night, it was announced that Osama bin Laden had been killed in a military operation.  In Washington D.C. and around the U.S. many people were seen cheering and celebrating.  Crowds gathered outside the White House and in Times Square in New York to celebrate the death of the man responsible for the 9/11 attacks.  When I came into work today, several of my colleagues asked me if I had gone to celebrate at the White House last night and what I thought about the killing of bin Laden.  While I am glad that families of 9/11 victims have justice and am proud of our troops that have accomplished this feat, I didn't and still don't find myself celebrating.  Now many will portray what I am writing as un-patriotic or un-American, but I have to wonder if the “war on terror” is truly worth the cost.

If you look at the cost in terms of dollars, according to the Congressional Research Service (CRS):

Congress has approved a total of $1.283 trillion for military operations, base security, reconstruction, foreign aid, embassy costs, and veterans’ health care for the three operations initiated since the 9/11 attacks: Operation Enduring Freedom (OEF) Afghanistan and other counter terror operations; Operation Noble Eagle (ONE), providing enhanced security at military bases; and Operation Iraqi Freedom (OIF). This estimate assumes that the current CR level continues through the rest of the year and that agencies allocate reductions proportionately.

This is ONLY the money appropriated by Congress; therefore it doesn’t include any future costs such as interest payments on the debt and long term medical costs for wounded (both physical and mental health).  In 2007, the Congressional Budget Office (CBO) estimated that the war would cost $2.4 trillion by 2017.  This estimate includes the impact of borrowing, but does include the expansion of the war in Afghanistan that began in 2008-09.  Of the $2.4 trillion, $1.9 trillion was expected to be spent in Iraq while only $500 billion in Afghanistan (we have already spent $444 billion in Afghanistan which doesn’t include any interest on the debt).  Most estimates now are in $3 trillion range.

The bigger cost in this “war on terror” is the number of fatalities and casualties.  The most up-to-date number for fatalities (American) is 6,336 (4,452 in Iraq and 1,566 in Afghanistan) according to iCasualties.  The official number of casualties (combination of wounded and fatalities) for Iraq (still trying to find Afghanistan number) is 33,023 according to AntiWar.com.

While I am proud of the troops who caught and killed a truly evil man and acknowledge that the world is better without bin Laden, I can’t quite celebrate.  I took a minute to be proud of my country and it’s amazing liberties and the men and women who defend those liberties.  Then I came back to reality.  This war has helped create a massive debt that is now approaching $15 trillion and cost too many American lives (although one is too many for me) to celebrate in the streets.  I’ll leave you with a couple questions and a statement.  My first question: Do we have more liberty and freedom now than before 9/11 and if not, Isn’t that what people who hate us want?  My second question: Was it worth the cost both in terms of dollars and lives?  I will, however celebrate when we bring all the troops home and end this war.