Conservatives need a new economic platform, one that the media can’t write off (no matter how unfairly) as the “same, old, tired nostrums that got us into the current mess.” Herewith, the planks it should include:
Strengthen the dollar while letting interest rates “float.” I wrote on this here here, among other places.
Eliminate the corporate income tax. I wrote about this last week.
Immediately cut all ethanol subsidies in half and immediately cut all future biofuel mandates in half. Ethanol subsidies and requirements are pushing up the price of gasoline and of food across the board. New scientific studies show that biofuel production actually adds to greenhouse gases in the atmosphere rather than decreasing them, and that it will take 167 years before the so-called “benefits” of the fuels will eliminate the “carbon debt” caused by these added greenhouse gases. Finally, new studies show that ethanol is more dangerous than ordinary gasoline, because the fires it sometimes fuels are more difficult to extinguish.
Show concern about executive compensation. This will not be a popular one with hard-liners, but it’s important. It really is a problem, both morally and politically, when corporate execs get $70 million parachutes when they flee failed companies. For that much money, 70,000 workers could each get raises of $1,000 per year. The solution, though, is not to tax executives directly. Instead, the solution is to give companies an incentive not to lavish so much wealth on so few individuals. Elimination of the corporate income tax provides companies plenty of extra money to afford this without even batting an eye: For ALL of an executive’s compensation above, say, $500,000 per year — including the current value of stock options, and including bonuses and anything set up as “contract” work rather than wages — have the company pay its half (6.9 percent) of what the executive’s Social Security taxes would be if those taxes weren’t capped as they presently are at $102,000 annually. (The executive would not be made eligible for any additional retirement benefits, though.)
The added 6.9 percent would be just enough to make a company think twice about whether the extra costs are worth giving to an already extremely wealthy executive or instead better spent on R&D or on worker benefits, or whatever.
Meanwhile, the Social Security system could use the added windfall to pay for the so-called “transition costs” for my next item….
Implement Rep. Paul Ryan’s GROW Accounts for Social Security or Sen. Jim DeMint’s similar plan. (See here or here.) Private accounts will work in Social Security, and they can be sold as a viable option for younger workers. (As a second stage of the project to save Social Security, but only a second stage after private accounts are established, conservatives can try to implement the Pozen Plan) that would readjust the formula to cover inflation but not full wage growth for upper-income workers. The argument used to sell the Pozen Plan would be the one Fred Thompson used in promoting his even tougher plan, namely that grandparents should care for the futures of their grandchildren.
Adopt the “Health Care Choice Act” by Rep. John Shadegg and Sen. DeMint. (See here.) This one simple step of letting individuals purchase medical insurance across state lines would help the free market bring down health-care costs.
Expand Health Savings Accounts and adopt President Bush’s Proposal for tax credits for health insurance. The idea, desperately needed, is to disconnect the health insurance market from the workplace, while expanding insurance availability and accessibility. This would be far easier to accomplish if the corporate income tax were eliminated, because there would no longer be the same tax incentives (e.g.. keeping employers’ health-insurance premiums tax-deductible) for the corporations to provide the health coverage in the first place. There remains much to like about companies offering health benefits if feasible, but the current system is sclerotic.
Encourage voluntary associations to form health insurance pools. The American economy is moving more and more into an entrepreneurial model with self-employed workers/business owners operating from private homes. There is a greater need than ever for all these people to be able to enjoy the same purchasing power through economies of scale that corporate-provided health plans formerly accomplished (or were supposed to accomplish).
Model all of Medicare on the competitive/free market aspects of the otherwise ill-advised Medicare Part D (prescription drug plan). The competitive bidding process in Part D has been a smashing success, keeping prices extremely low and understandable choices abundant. The rest of Medicare should ditch its bureaucratic model and follow the Part D example.
Eliminate the Alternative Minimum Tax. It’s an abomination.
Provide for a voluntary flat tax and a H.O.T. Tax. (See here and here.) People who want the option of a massively simpler way to pay taxes should have it; liberal rich folks who think they are undertaxed should be encouraged to put their money where their mouths are.
Eliminate all legislative earmarks for at least four years. Wean Congress entirely off of purely local pork entirely. And cut the overall appropriations for each agency by at least half of the amount formerly used for earmarks; then use that lower figure as the baseline for future budgets. After those four years, Congress should appoint a commission to figure out if, and under what extremely circumscribed conditions, earmarks are ever appropriate. Among those circumstances: full transparency; a public committee vote on each individual earmark; a full, written description of the national (as opposed to purely local) need for each particular earmark.
Re-establish deficit target enforcement of the Gramm-Rudman-Hollings variety. To be constitutional, the enforcement teeth for such budget-cutting rules may be weak if push comes to shove — but just having the moral suasion of such a law in place can work wonders on the congressional psyche, at least for a little while.
Okay — that’s enough for now. But even more good economic ideas abound in the conservative intellectual universe. A benevolent dictator who implemented just those mentioned in this column, though, would surely catalyze the strongest, most lastingly solid economy the world has ever known.
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