After expressing serious reservations about the policy discussions of the current election campaign, it seems to me useful to remember that the country’s principal problems can be addressed fairly straightforwardly.
Tax policies are available that would stimulate rational economic growth while reducing the deficit. Income taxes should be lowered on all incomes below $250,000, and taxes should be raised on elective spending, such as gasoline not consumed to earn the taxpayer’s living, as with taxis or delivery vehicles. Restaurant meals, luxury goods, and financial transactions other than simple equity or bond-market buying and selling could be lightly taxed, but very profitably for the Treasury. Taxes on capital-gains and dividend and interest income should all be reduced, and former Senator Santorum’s proposal for an extended and increased family tax credit and a reduced tax rate for manufacturing should be enacted, if not exactly as he proposes.
Some variant of the tax plans of the Republican candidates should be adopted, possibly Newt Gingrich’s proposal of a reduced tax rate or a 15 percent flat-tax alternative. More investment and savings, and less consumption of non-durable goods and products for swift and transitory gratification, should be encouraged.
Instead, the barricades have gone up between Republicans frenzied at the thought of any tax increases and the determination of the Democrats to mobilize the 97 percent of Americans who earn less than $250,000 per family per year against those above that threshold. Republicans should settle for a blend of income-tax reductions and sales-tax increases that raises taxes for discretionary consumers and stimulates the economy while shrinking the deficit. Shrieking the mantra of no new taxes is just sterile dogmatism, though the motive for it is commendable.
And if Democrats are determined to assault “the millionaires and billionaires” (as if they were in the same condition), a self-eliminating tax on very large fortunes, and not on incomes as such, could be acceptable if designed carefully. Those with a net worth of $50 million or more could pledge 1 percent of their net worth to a project they could design and supervise themselves under liberal criteria, for the reduction of poverty, as defined. As poverty declined in the country, the tax would decline, and would be eliminated when poverty was eliminated. Those who fell below the $50 million net-worth figure would have this tax already paid credited back to them. This would put the country’s most agile financial minds behind the goal of reducing poverty, and give them a vested interest in its elimination. The current Democratic crusade to take money from those who have made it and give it to those who haven’t, greasing the state administrative apparatus on the way through, in the name of a fable of social justice while really just crudely buying votes, is unjust in itself, poor economics, and indifferent politics. This tax would also at least slightly and relatively painlessly address the widespread concern about wealth disparity.
In the locked horns of the parties now, entitlement reform has been trampled in the dust, though all serious analyses of deficit reduction, including such bipartisan efforts as Simpson-Bowles, acknowledge that it will be necessary. The sooner we start, the more lead time contributors to Social Security and other schemes will have. Raising the Social Security kick-in age to 67 starting in 15 years would be a start. But the whole subject is so complicated and treacherous that, once one launches on it, it is best to make a comprehensive reform. The sacred cow of universality can be gently eased into eternity through discreet means-testing through tax data without the ancient bugbear of a pauper’s oath.
Obviously, health care is a terrible challenge to the system. Seventy percent of people have first-class health care that they don’t pay for, and 30 percent have various levels of inferior care that they generally do pay for, until they have run out of resources; and, in the case of the majority, the providers (if corporations) and the recipients both enjoy favorable tax treatment. The tyranny of the satisfied majority is therefore understandable and intractable. Health care costs $7,000 per capita per annum in the United States, against about $3,000 in Australia, Canada, France, Germany, Japan, and the United Kingdom, countries whose standards of living and medical care are roughly comparable.
It is too complicated an issue to take very far here. But we could start with the Republican platform of four years ago and give a $2,500 tax credit to everyone to use at the individual’s choice, open insurance competition completely, tax as income the health benefits above a reasonable average level, insure the financially disadvantaged and those threatened with that condition by catastrophic health problems, cap malpractice awards, and oblige the pharmaceutical companies to charge American customers for drugs at price scales similar to those enjoyed by the other nations mentioned above.
American standards of public education are not competitive. It is not really a matter for federal jurisdiction; part of the solution must be an approach analogous to welfare reform, in which the states pursue a variety of programs and competition reveals the most promising. The vast increase in education spending that has produced a serious erosion in quality of education is a cautionary tale. The dead hand of the teachers’ unions must be the largest single culprit and the long-proclaimed goal of rewarding performance must be correct, even if the application of it has yielded very spotty results. If accurate methods of evaluating the performance of different states could be found, federal funding could be largely scaled back to merit-based block grants, which is presumably not too far from what the governor of Texas was cranking up to when he scuttled his candidacy with the portentous “Oops.”
Illegal aliens should be identified and enabled to earn citizenship, initially in a program to revive domestic manufacturing with a transitional sub-minimum wage, and henceforth, the borders and entry points should be adequately staffed to ensure that people are admitted to the country by design and not by inadvertence. This, coupled with the favorable tax treatment of manufacturing, would help to revive secondary industry, reduce the current-account deficit, absorb the unemployed, and wean the work force away from its chimerical infatuation with service industries. The able-bodied unemployed and underemployed could be offered conservation and public-workfare employment modeled on the best of the New Deal public works and Eisenhower-era interstate-highway programs. They would be relieved of the specter of idle destitution and the nation’s crumbling infrastructure would be renovated economically.
Natural-gas conversions from oil should be incentivized and domestic drilling for gas and oil should be fiscally encouraged with the vigilant application of all reasonable environmental safeguards, but not continued paranoid obsessions with prudently manageable industrial hazards. These measures and a somewhat higher gasoline tax would finally get to grips with the horrible open artery of the current-account deficit.
It is discouraging that no one except Newt Gingrich among the candidates, and he only for budgetary reasons, focuses on the shambles of the American justice system, as the legal system saps almost as much national income and energy as medical costs, with not a fraction of the benefit to the country. All jurisdictions should be incentivized to reduce and consolidate the number of laws and regulations. Judges and justices should be appointed who have some demonstrated respect for the Bill of Rights and are not just prosecutors in robes. The War on Drugs is a complete failure and a corrupt fraud; drugs are cheaper, more plentiful, and of better quality after the waste of a trillion dollars and the imprisonment for absurdly overlong sentences of 2 million easily replaced small fry. Soft drugs should be legalized and treatment in most cases should replace incarceration. People with psychotic mental problems should not be in prison and per capita rates of incarceration, which are now six to twelve times those of the countries mentioned above, should be replaced by fewer and shorter custodial sentences and more community service for the nonviolent. The farcical mockery of the grand jury should be replaced by an objective para-judicial determination of whether there are probable grounds to prosecute.
The prosecution service, which is now a state-within-a-state terrorizing the entire country, should be stripped of its unlimited powers of intimidation through the hideously perverted plea-bargain system. Arrangements with cooperating witnesses must only have the probative value that survives a full revelation of the evolution of the witnesses’ recollections and the threats of the draconian consequences of non-cooperation. The exercise of the constitutional right to a trial must cease to be an offense punishable by a triple sentence; public defenders must be properly funded and staffed and not just Judas goats for the prosecutors; and the prosecutors’ favorite wheeze of using false affidavits from the FBI to claim ill-gotten gains in ex parte asset seizures in order to deny defendants the right to engage serious counsel and defend themselves must cease. The Supreme Court has been asleep for years while the Bill of Rights was turned into a Swiss cheese by the prosecutocracy.
The candidate proposing anything like the above will win, this year or eventually. And the president who enacts something like it will be halfway to Mount Rushmore. The country is waiting for that candidate, prayerfully and with longing eyes, but not seeing him or her this year. It is easy to forget, but there is not much wrong with America that a little leadership would not put right.