August 27, 2010

What's in Your Wallet... That Won't Be There Tomorrow?

Hatched by Dafydd

The Republican leadership still can't absorb the new reality of the popular front for Capitalism and against statism; surprise, surprise on the Jungle Riverboat Cruise tonight. They're running away from the vital spending cuts offered by Rep. Paul Ryan (R-WI, 96%), afraid to embrace them -- unwilling to debate them. Once again, the people must lead their putative "leaders":

Rep. Paul D. Ryan's "Roadmap for America's Future" - which proposes major changes to taxes, Social Security, Medicare and Medicaid - has attracted support from some of the GOP's most conservative members, but top leaders have kept their distance....

The plan has attracted just 13 co-sponsors in the House, and a handful of candidates running for the House and Senate have also embraced it. But no congressional Republican leader has signed on, drawing a rebuke from former Rep. Dick Armey, an architect of Republicans' 1994 electoral success.

"The fact that he only has 13 co-sponsors is a big reason why our folks are agitated against the Republicans as well as the Democrats," he said Sunday on NBC's "Meet The Press." "The difference between being a co-sponsor with Ryan or not is a thing called courage."

For those of you saying "roadmap... huh?" -- here's a pointer. The Roadmap for America's Future, developed by Paul Ryan, the ranking Republican on the House Budget Committee, is a fully integrated plan for eliminating debt and sustaining economic growth via spending cuts and transferring some government and employer benefits to individual ownership. Here are the major planks; descriptions come straight from the website, where there is of course more detail:

  • Health care - The plan ensures universal access to affordable health insurance by restructuring the tax code, allowing all Americans to secure affordable health plans that best suit their needs, and shifting the ownership of health coverage away from the government and employers to individuals.
  • Medicare/Medicaid - The Roadmap preserves the existing Medicare program for those currently enrolled or becoming eligible in the next 10 years (those 55 and older today); [f]or those currently under 55 -- as they become Medicare-eligible -- it creates a Medicare payment, initially averaging $11,000, to be used to purchase a Medicare certified plan....

    The proposal also fully funds Medical Savings Accounts [MSAs] for low-income beneficiaries, while continuing to allow all beneficiaries, regardless of income, to set up tax-free MSAs.

  • Social Security - Preserves the existing Social Security program for those 55 or older.

    Offers workers under 55 the option of investing over one third of their current Social Security taxes into personal retirement accounts, similar to the Thrift Savings Plan available to Federal employees. Includes a property right so they can pass on these assets to their heirs, and a guarantee that individuals will not lose a dollar they contribute to their accounts, even after inflation.

    Makes the program permanently solvent -- according to the Congressional Budget Office [CBO] -- by combining a more realistic measure of growth in Social Security’s initial benefits, with an eventual modernization of the retirement age.

  • Tax reform - Provides individual income tax payers a choice of how to pay their taxes -- through existing law, or through a highly simplified code that fits on a postcard with just two rates and virtually no special tax deductions, credits, or exclusions (except the health care tax credit).

    Simplifies tax rates to 10 percent on income up to $100,000 for joint filers, and $50,000 for single filers; and 25 percent on taxable income above these amounts. Also includes a generous standard deduction and personal exemption (totaling $39,000 for a family of four).

    Eliminates the alternative minimum tax [AMT].

    Promotes saving by eliminating taxes on interest, capital gains, and dividends; also eliminates the death tax.

    Replaces the corporate income tax -- currently the second highest in the industrialized world -- with a border-adjustable business consumption tax of 8.5 percent. This new rate is roughly half that of the rest of the industrialized world.

There are some other elements, but that is the gist.

The Roadmap doesn't just nibble around the edges of the federal budget; it sets its sites squarely on the real spending blockbusters, the so-called "entitlement" programs that comprise, all by themselves, about 40% of the budget -- and are responsible for many tens of trillions of dollars of unfunded liability. Every economist agrees that without somehow reforming entitlement programs, they will continue to grow out of control until they gobble up the entire federal budget, and sooner than most of us realize.

So naturally, you can see why Republican "leaders" seemngly have no interest in signing aboard the Roadmap for America's Future; heaven forbid they should actually take a stand, one way or the other, on the biggest economic calamity facing the United States today. I think Dick Armey has it pegged: "The fact that [Ryan] only has 13 co-sponsors is a big reason why our folks are agitated against the Republicans as well as the Democrats."

Among those afraid to embrace, but unwilling to debate are House Minority Leader John Boehner (R-OH, 96%) -- the man who would be Squeaker -- and Senate Minority Leader Mitch McConnell (R-KY, 96%), the man who would be president (in a sow's ear).

Just two more "profiles in cowardice." Time to light a spur under the pair of them, and the rest of the established Republican establishment. The goal should not be merely to "get more Republicans" into Congress; it should be to get more Capitalists, anti-statists, and defenders of individual liberty.

Most will surely be Republican, as the Democratic Party has been consumed and digested by its most radical wing; but sometimes, a lukewarm Republican is worse than a Democrat... if he's so "moderate" that he can cross the aisle and start caucusing with the Democrats at the drop of a primary challenge, a la Charlie Crist in Florida or the execrable Arlen Specter (R D-PA, 75%).

Hatched by Dafydd on this day, August 27, 2010, at the time of 4:30 PM

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The following hissed in response by: GM

Here is what actually has to happen. We need to pass the six amendments to the Constitution listed below so the politicians and bureaucrats are henceforth and forever stopped from playing fast and loose with the highest law of the land. Yeah, I know. It would be hard to pass amendments but ask yourself how hard a hyperinflationary depression will be because that is what we are headed for if we don't stop these collectivist morons.

1. A balanced budget Amendment with real teeth like the one from Representatives Jeb Hensarling of Texas , Mike Pence of Indiana and John Campbell of California.

2. Repeal of the 16th Amendment that also makes plain that only consumption taxes like the FairTax are henceforth permitted cutting off the massive money pipeline that politicians use to punish enemies, reward friends and of course reward themselves.

3. An original language or original intent amendment that makes clear that the bogus and sophistic "living document"/ "general welfare" concept is henceforth banished from American jurisprudence.

4. An amendment that either abolishes the Fed or at the very least backs the dollar with precious metals so that out of control money creation is stopped.

5. An amendment that explicitly makes the commerce clause (in Article I Section 8) more restrictive and in line with its original intent, i.e. limits its applicability to acts by the states that are in restraint of trade such as duties, tariffs, subsidies, etc.

6. Repeal of the 17th Amendment and a return to Senators being appointed by the state legislatures so that the original idea of preserving state sovereignty is protected.

If the GOP takes both the House and Senate they need to get really tough on spending and get behind amendments like these. They also need to level with the American people that it won’t be easy or painless to get control of $14 trillion in debt and the entitlement mess. Too much structural damage has been done to our economy for a painless solution. We are closing in on extremis. If they just try to finesse this situation all that will do is maybe put off the inevitable for a year or so. We will end up in a hyperinflationary depression anyway and the Dems may actually be successful in blaming the GOP. The GOP has to get out in front of this and tell the truth.

We are running out of daylight. A Chinese rating organization downgraded U. S. sovereign debt to AA from AAA. Our government will downplay this but you can bet the Chinese government is paying attention. Also it isn’t out of the realm of possibility that a western rating agency will soon downgrade our debt. That will mean higher interest rates and an immediate crisis in the U. S. fiscal position.

The above hissed in response by: GM [TypeKey Profile Page] at August 29, 2010 5:19 PM

The following hissed in response by: GW

GM: Add to that a clause that requires Courts to refer to the original intent of the drafters in interpreting the Constitution. It would not stop judicial activism, but it would circumscribe it.

Daffyd: I have blogged this precise issue extensively over the past weeks. The old rules don't apply. 2005, when the Dems were able to successfully demagouge Social Security, might as well have been a century ago in terms of public attitudes. When the biggest concern of Americans is that our economy may really, truly implode, then there is, one, a willingness to entertain very serious solutions and, two, no time to waste on fools. There is a reason Chris Christie is today, more popular than Corzine ever was in bluest of blue NJ. The Congressional Republican leadership is still stuck on 2005. They don't get it.

The above hissed in response by: GW [TypeKey Profile Page] at August 29, 2010 10:38 PM

The following hissed in response by: MikeR

I will vote for anyone who supports Ryan's Roadmap against anyone who doesn't. It's (almost) true to say that I don't care about anything else.

The above hissed in response by: MikeR [TypeKey Profile Page] at August 30, 2010 9:14 AM

The following hissed in response by: Dafydd ab Hugh


Actually, I oppose every one of those amendments except for number five, the Commerce Clause amendment.

  1. A federal balanced-budget amendment is unworkable; if it were ever in place, it would virtually mandate Congress to raise taxes left and lefter, letting them escape accountability for it.
  2. Consumption taxes are also fraught with danger: The most likely implementation would be a huge value-added tax (VAT) -- which makes it virtually impossible ever to tell when your taxes are raised, because you never see the VAT rate at the point of purchase... the taxes are applied at every level of production, from mining the raw materials to distribution of the finished product.

    A flat income tax is much less perilous; you can see exactly what the rate is and punish lawmakers who try to raise it.
  3. Patterico has made a very compelling argument why using "original intent" to decide the meaning of statutes is quite impossible; the gist is that there is no such thing as "original intent," because every lawmaker who voted for it has a different intent, except for those who have no intent at all.

    And an amendment ordering "original language," by which I assume you mean the clear meaning of the words at the time of enactment, a.k.a. "strict constructionism," is likewise an exercise in futility: An activist Court that wants to interpret a statute in some goofy way will first interpret the "strict constructionism" amendment in a goofy way, clearing the decks to rule any way they choose on the statute itself. (By the same token, one Congress cannot vote to bind a subsequent Congress.)
  4. It would be economic suicide to tie our money supply to some commodity that is fixed, like gold or silver. The money supply must match the actual wealth in society, but wealth is always increasing, due to technology and Capitalism.

    If you fix the money supply, then as wealth increases, you get rampant deflation, which is even more dangerous to the economy than inflation.

    There is really no fix for inflationary spending other than electing better congressmen who have actual respect for monetarism a la Milton Friedman.
  5. I don't particularly mind the Commerce Clause amendment, but it's unnecessary: Any Court that chooses can interpret any amendment in any way necessary to arrive at their predetermined position, no matter what a new Commerce clause says (it's already perfectly clear what the words mean. Any Court that would be balked by a new, stronger version of the clause would already be balked by the current version.
  6. And I certainly don't want such a corrupt legislature as we have here in California appointing our senators... we would have Barbara Boxer forever!

Sorry on that one, guys; I am very stingy with constitutional amendments. We have a million of them in the California state constitution, most put in place by "Progressives," and they make the state virtually ungovernable.

I only propose them where real liberty issues are at stake, and when the amendment is very likely to make things better, not worse. They're not for tinkering with the processes for partisan purposes.


The above hissed in response by: Dafydd ab Hugh [TypeKey Profile Page] at August 30, 2010 11:41 AM

The following hissed in response by: LarryD

Adding more words won't stop judges who ignore the Constitution, we need a Congress that is willing to impeach Judges, even SCOTUS justices, who cross the line.

We might start with the remainder of the Kelo majority, I'm sure there are more cases than just Kelo

The above hissed in response by: LarryD [TypeKey Profile Page] at August 30, 2010 11:52 AM

The following hissed in response by: GM


I won’t refute you point by point. Suffice it to say that I am convinced that we are on our way to becoming a third world country. Think that isn’t possible? Just wait. This is the most advanced high tech economy in history but don’t think it can’t be destroyed and destroyed a lot quicker than people can possibly imagine. A lot of economic policies tend to be exponential in nature. Just look at the last two years of the collapse of the Weimar currency. Things were bad for Germany in 1922 but I’ll bet very few Germans had a clue about what was just 1 year ahead. Weimar is an interesting case study because they actually hard coded into their constitution a lot of the stuff collectivists did here by just ignoring ours. What they got was a classic debt driven collapse. Yes, it is true that some of that debt was imposed upon them. But the source of a crushing debt doesn't matter.

“Poverty is no excuse for bad money. Government outlay is conditioned by income and monetary disorder does not improve the situation.”

-- From an Economic Study of the Weimar Republic Hyperinflation (Princeton University 1930)

Also the results for us could be worse than anyone can imagine much worse than the Great Depression for example. One thing to consider is that this economy has a lot of specialized workers which is necessary for a high tech system but could be a weakness under stress. Back during the Great Depression a lot more folks had direct involvement in agriculture or had family with direct involvement in agriculture. That describes my mother’s family for example. They had the skills and wherewithal to feed themselves in extremis.

I’ll make a quick comment about 2 and 4. The Founders knew all about wealth and income taxes and how destructive they are to an economy. Remember a progressive income tax is number 2 on Marx’s list of how to bring about Communism. I don’t like the VAT but the amendment can be worded to only allow a national straightforward sales tax like the FairTax. As for 4 this is a power thing. Don’t confuse money with wealth. Money is only a convenient store of value and medium of exchange. It is a proxy for wealth. No society has lasted without a stable store of value. No fiat currency has ever been successful, not ever. You can go back to a gold and silver standard. Why is $2,800 rather than $28,000 for a car bad? I paid $2,800 in cash for a new Toyota back in the day. The economy did not collapse. You can’t trust one or a few people with the power to create fiat money. They will always abuse that power.

"Give me control over a nation's currency and I care not who makes its laws."
- Baron M.A. Rothschild (1744 - 1812)

"I care not what puppet is placed upon the throne of England to rule the Empire on which the sun never sets. The man who controls Britain's money supply controls the British Empire, and I control the British money supply.”
- Nathan Mayer Rothschild (1777 – 1836)

So it is time to think out side of the box and maybe think of some historical successes. IMHO my amendments would take us back to a lot of positive aspects of the environment for entrepreneurs that we had between 1800 and 1913. A lot of progressives and central bankers will pillory that period but it had many good points. Given that we had a devastating civil war right in the middle of that period the economic and technological progress was phenomenal. In addition there was no overall inflation during that period. A house in 1800 for example cost about the same as one in 1913.

BTW, I am not looking for perfect because perfect does not exist. I am just looking for a system where individual liberty is protected and most folks can survive and even prosper without help. That whole concept will soon become untenable.

The above hissed in response by: GM [TypeKey Profile Page] at August 31, 2010 7:04 AM

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