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Modest Wishes
Looking at 2009, conservatively.


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Ramesh Ponnuru

Conservatives’ expectations for 2009 are low. The party that supposedly represents our beliefs just got shellacked and now controls neither the executive nor the legislative branch. Yet ‘tis the season of hope, so here is a modest conservative wish list for 2009.

Many free-market economists have written approvingly of Barack Obama’s initial staffing decisions for his economic team. His selection of well-known centrists suggests that some of his most extreme campaign rhetoric might be buried in the more serious business of governing — particularly during this precarious economic season. More reassuring would be the president-elect reversing his opposition to the passage of the U.S.-Colombia Free Trade Agreement (FTA).

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The U.S.-Colombia FTA, which would eliminate most existing trade barriers between the two countries, was negotiated in 2006 and has been awaiting congressional approval ever since. Its passage would give numerous sectors of the American economy greater access to Columbia’s 44 million consumers and, as one Cato Institute report describes, wouldn’t affect most domestic special interests, since U.S. tariffs on Colombia’s major exports are already low or nonexistent. Yet passage of the FTA is expected to boost U.S. exports to Colombia by more than $1 billion, good news to many companies facing reduced domestic demand during this financial downturn.

As a senator, Obama voted against the FTA. A shift in his position would be an important signal that he recognizes the value of using trade to reward America’s allies, and of trade liberalization’s role in strengthening our economy. In doing so, he would be following the tradition of Pres. Bill Clinton, a free trader who helped create the North American Free Trade Agreement. Obama would also show his independence from labor unions (longtime major Democratic party supporters), whose policy agenda, if implemented, would be a major drag on the competitiveness of American companies.

The next item on conservatives’ wish list is that President-elect Obama will allow greater domestic drilling for oil and natural gas. This summer, President Bush abolished a decades-old executive order banning drilling along the outer continental shelf, and Democrats in Congress were pressured by the public to allow the parallel congressional restrictions to expire in September. As a result, major new territory is technically open for energy companies to seek new reservoirs of oil and natural gas.

When Obama began his presidential campaign, he was hostile to drilling generally, but as gas prices rose to historic levels this summer, he moderated his position to include some expansion of drilling, supposedly as a stopgap until alternative forms of energy become more readily available. But his transition team has indicated that Obama is considering reversing President Bush’s action so that the affected territory will be off-limits once again. The recent drop in the price of oil and gasoline may make such a reversal easier politically, but only in the short term. The current energy-price slump doesn’t change the underlying strain caused by growing global demand and a limited domestic energy supply. Allowing access to new oilfields is an important investment in our long-term economic health, but it won’t have an impact until there is clarity on the issue; capital investments in domestic exploration and production won’t happen if regulatory uncertainty remains.

No wish list would be complete without one item that’s a stretch. So I’m asking for President-elect Obama to join with his Democratic leadership to make good on their collective pledge for fiscal responsibility — and index Social Security to prices instead of wages. Currently, when the Social Security Administration calculates a worker’s initial benefit, it adjusts past earnings based on the growth in average wages. In addition to that, the initial-benefit formula is adjusted each year so that the new cohort of retirees gets benefits that are higher than those of the previous year, by the amount of average wage growth. Once that initial benefit is determined, monthly checks are “price indexed” each year, which means they are increased based on changes in price to keep pace with inflation. If Social Security used prices instead of wages on the first two steps, each retiree class would simply get benefits that could buy as much as the last class’s benefits would have bought.

Since this would result in lower payments than what’s currently promised (but can’t be paid for), the change could be phased in over time so that it wouldn’t affect those now nearing retirement. Yet this single change would greatly improve the federal government’s balance sheet. With this single move, the new president would more than eliminate the program’s $4.3 trillion actuarial deficit over the next 75 years, giving him the freedom to find other ways to strengthen and improve the program (say, by incorporating a system of personal accounts, but that’s for a wish list for another time). It may seem politically impossible to support anything that can be tarred as a “Social Security benefit cut,” but Americans — particularly young Americans — overwhelmingly recognize that the government has over-promised when it comes to Social Security, and would applaud this act of true leadership.

Supporters of limited government know that the next year will mostly be spent on playing defense — trying to beat back Democratic proposals that would expand SCHIP (State Children’s Health Insurance Program), abolish workers’ right to a secret ballot during union elections, and create new workplace mandates by expanding the Family and Medical Leave Act. But in this season of optimism, it never hurts to hope that real progress might also be possible.

— Carrie Lukas is vice president for policy and economics at the Independent Women’s Forum and author of
The Politically Incorrect Guide to Women, Sex, and Feminism. She is a contributor to National Review Online.



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