I want to talk about what we should support, both in terms of what is right to support and what will help Republicans win in 2010 and 2012. I think the Economy will be issue #1 followed by Security and Immigration, and I have a few specific planks to recommend in support of these themes.
People are unhappy about the recent economic downturn. This is something we need to focus on. To win, the Republican Party needs to sell four ideas simultaneously:
- To heal the economy we must heal business. Just handing out money to people or growing the government (Obama's strategy) will not solve America's problems.
- The Republican Party has a plan to make businesses more successful
- While still watching out for things that concern people, like economic fairness and the environment,
- And not allowing the budget deficit to get out of control (like we did last time)
Economy 1: Eliminate the Corporate Income Tax
Coolidge was right. The business of America really is business. All our third world relief efforts, education, help for the poor, medical care, sports programs, environmental programs, pensions, parks, schools, tenured professorships, public transportation, even protestors…everything ultimately is paid for because someone somewhere made a product or service and made a profit. The more business thrives, the more options we have. Business is what puts food on the table for everyone.
The less money the government takes out of our businesses the more money businesses have to invest in research to make our economy more competitive. Let’s lower corporate taxes.
My proposal is to eliminate the corporate tax and make the United States an international tax haven. Sounds crazy but corporate taxes only bring in 9.8% of federal receipts. We can simply shift that revenue over to the other taxes on a progressive basis such that the burden of the new income tax is allocated in proportion to each tax bracket’s likelihood of benefiting from the reduction in the corporate tax. Not only would this make our corporations more productive, it would greatly reduce corporate costs by eliminating the burden of preparing quarterly tax reports, and it would attract considerable investment from foreign corporations looking for a secure tax haven.
Eliminating the corporate income tax would be much more impactful than reducing it to a nominal rate because a complete elimination by definition eliminates the work that goes into preparing taxes. Even if the rate is miniscule you still have to file a return and figure out all the deductions, etc. It is a huge burden whatever the rate.
At the end of the day, it is people who get and spend money, who benefit from corporations, so why don’t we just simplify things and stick with one tax -- the tax on the people (as much as it pains me to say that, it makes sense in this context).
Economy 2: Switch from the Personal Income Tax to a National Sales Tax
This is an idea with some bipartisan support actually (though when Democrats advocate a sales tax or a VAT they usually intend it to be additive to the income tax). Taxes create disincentives. Our current tax system reduces incentives to earn money. This makes the economy smaller. A Sales Tax creates disincentives to spend money but does not punish making money or saving money. We need people to save more money. Eliminating the personal income tax would substantially reduce the burden of preparing taxes for individuals ad S-Corporations. See Rudolph Penner’s paper for lengthier discussion here.
Economy 3: Fix our broken trade relationship with Asia
See previous analysis here.
Economy 4: Make Life Less Complicated for Businesses -- Start by Ending Sarbanes-Oxley
This is simple. We need to eliminate any regulations that cost more than they are worth. I will start with one: Sarbanes-Oxley. Sarbanes-Oxley requires US firms to file various onerous reports with the government about their financial controls and reporting. It costs US businesses billions of wasted dollars per year and discourages foreign firms from listing in US stock exchanges. We need to reduce red tape for US businesses and we should start with this over-reaction to the Enron scandal.
Economy 5: Reduce the burden of securities lawsuits by creating a special process for securities lawsuits
The cost of raising capital is increased dramatically by the prospect of class action securities lawsuits that allege fraud whenever companies disappoint investors. This is a ridiculous indulgence. Few of the companies that get sued actually ever committed any fraud. They typically pay off the class action lawyers to avoid an expensive trial. It’s a big business for the lawyers but a difficult burden for US business, especially younger businesses. Congress under Article I can designate special courts and procedures for special subjects, granting them "subject matter jurisdiction," as was done for bankruptcy cases. This should be done for securities lawsuits, such that there would be federal securities courts whose proceedings are much like an administrative hearing or arbitration than a full jury trial. The goal should be to speedily, at minimum cost, resolve any allegations and only proceed to a larger case when plaintiffs show that theirs is a case of deceit by a criminal organization and not a mere error or oversight on the part of a well intentioned company. In the case of an oversight, there would be no damages.
Economy 6: Instead of increasing SBA loans, invest in Venture Funds
Obama is putting another $30B into SBA loans and he thinks this will help fund startups. It is sad how little he knows about business. No start ups get SBA loans. Certainly not the ones that create real value, like say Google or Amazon.com. Real technology ventures take equity in their early stages. If we are going to help business along, we should invest in venture funds. Here’s the other good part: we will get the money back and then some.
Economy 7: Balance the Budget
Republicans have for years advocated for low taxes and we have always wound up with high deficits. This rhetoric doesn't work anymore, and accounts for a lot of the Tea Party fervor. We need to make the case that we will achieve a balanced budget. This means we must reform Medicare and Social Security and make tough choices in doing so. I think we should start with Mark Ryan's Roadmap for America's Future.
Economy 8: Reduce the Burden of Medical Malpractice Lawsuits
Malpractice lawsuits are a large part of our growing health care cost problem. There are two types of damages in malpractice cases, compensation for costs and punitive damages. The punitive damages are a large part of the total cost of malpractice claims. Punitive damages at the end of the day do not restore the health or costs of the plaintiff and serve, in theory, only to make the world safer by changing the behavior of doctors, both the specific doctor before the court and other doctors. There are easier ways to achieve this.
I propose that the government should handle claims of medical negligence in administrative hearings. If negligence can be established, actual cost damages can be assessed plus some allowance for the plaintiff's legal costs. If negligence is extreme, the government, instead of assessing punitive damages, can take action against the accused doctor's license and/or subject the doctor to criminal proceedings in the rare case where that would be appropriate. It is possible that in the case of extreme negligence some sort of whistle blower reward could be established for claimants. However, that would be much cheaper than punitive damages. Moving against a doctor's license would be a significant disincentive for bad behavior, but a much, much cheaper one than the one we have today.
Issues That Are Not Strictly Economic in Nature
Immigration
Immigration of skilled workers, i.e. doctors and engineers, should be open. It is a tremendous gift to us when the most skilled workers from other countries come to contribute their knowledge to our economy. Immigration of unskilled workers, on the other hand, is a corrupt bargain between the wealthy, who want low wage workers, and Democrats, who want reliable voters. Who gets the short end of the stick? Low skilled Americans, and that disrupts our society. The burdens of low skilled Americans are quite sufficient without having to compete against people who grew up with even lower expectations. The American poor should not be ground into the dust, as they have been, by this corrupt bargain. We must take a stand for skilled immigrants and against low skill immigrants. There was a time when we needed low skill workers -- or whatever workers we could get. That moment in history has passed.
In addition to reducing immigration of low skill workers, we should assert our right to make cultural choices in selecting types of immigrants to the US. Inevitably, if we change the cultural mix of our citizenry we will change the nature of our culture. Since culture is so profoundly important to the life of any society, it is not wrong or racist, indeed it is wise and essential, to express cultural preferences in managing the evolving makeup of our citizenry. The reality is that if we wanted the USA to be more like a given other country, the easiest way to accomplish that would be to import a large number of people from that country. At one point in history we believed that people were generic and fungible, and they would over time, perhaps generations, embrace the successful American culture that we enjoy and hope to preserve. But the advocates of multiculturalism and of racial grievance politics have shown quite clearly that we should not count on any melting pot effect. Therefore, we should ask ourselves whether there are any groups that -- given that there is no melting pot -- culturally might tend to push our nation in an unwelcome direction. The experience of our European allies suggests that any large influx of Islamic immigrants from the Middle East, Pakistan or Northern Africa would be extremely undesirable and should simply be disallowed. Immigrants from Europe, Australia, Korea, China, India and certain islands in the West Indies have been our most successful immigrant groups. Their immigration should be prioritized over others.
Security 1: Recognize That Our Conflict with Islamic Jihad is a War
The number one issue internationally is Islamic Jihad. We can effectively attack Democratic policies of political correctness that reduce our ability to be effective in the War on Terror.
Trying to handle Islamic warriors as regular domestic criminals is silly and naive and people rightly oppose it. Trying to cover up Islamic terrorist activities such as the attack by Major Hasan at Fort Hood (the government report on the attack did not mention his Islamic views) is a huge mistake. The Obama administration and all democrats are deservedly vulnerable on this issue.
Security 2: Energy independence
Energy independence is part of security. Some portion of every dollar we send to Saudi Arabia for oil comes back as a roadside bomb. Replacing gasoline and jet fuel with a realistic alternative (not wind power, but natural gas and nuclear) should be the next American Manhattan Project.
Security 3: The F-35 Fighter Program
With respect to other nations, such as Russia, we must take a more firm stance. Obama tried to follow his liberal instincts and befriend Iran and Russia. Didn’t work. They are as hostile as they were before. China is developing an advanced fighter. You never know what is going to happen in the future. It is better to be safe than sorry. We need to ramp up F-35 production, which Obama recently cut back.
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