Topic: Government and Politics

Romney’s Tax Plan

There are at least three approaches to tax policy a candidate may take in an election campaign:

  1. Use the tax code to offer limited giveaways that do nothing to improve the economy, but offers small benefits to the maximum number of voters. This is the Obama approach.
  2. Pursue major tax reforms combined with downsizing the government. This is the Ron Paul approach. Paul notes on his campaign website: “True tax reform is as simple as cutting or eliminating taxes” and “the real enemy of tax reform is the spending culture in Washington … we will never have tax reform in this country until Congress changes its spending habits.”
  3. Call for tax cuts that will spur economic growth and benefit all taxpayers. This is the Mitt Romney approach, as we will discuss here.

The Romney campaign released a “blueprint” on tax policy yesterday. The blueprint is just seven short bullet points, but they are all excellent points. Here they are in brief with my comments.

  1. Make the Bush tax cuts permanent. Great. Extending the income tax rate cuts and the dividend and capital gains tax cuts is important. But I’d swap the Bush child tax credits for further supply-side tax cuts.
  2. Make additional cuts to individual income tax rates. Great. That would improve economic efficiency and growth. I’d take this further and collapse the current rates into a flat rate or a two-rate structure
  3. Enact a zero tax rate on interest, dividends, and capital gains for those in the middle class. That’s a move in the right direction, but better to eliminate double-taxation on all savings. 
  4. Eliminate the estate tax. A no-brainer. The current estate tax damages growth, probably doesn’t raise any money, and enriches tax lawyers.
  5. Cut the corporate tax rate. Another no-brainer. The average corporate income tax rate in Europe is 24 percent. The average federal plus state rate here is 40 percent.
  6. Oppose Social Security tax increases. Romney’s right: tax increases won’t solve the problems with Social Security, as explained here.
  7. Make individual medical expenses deductible. A move in the right direction to equalize the tax treatment of individual and business health expenses.

All in all, candidate Romney has outlined a very pro-growth tax agenda. His plan contains numerous supply-side provisions that would increase economic efficiency and raise incomes. Kudos for proposing reforms that would benefit all Americans and resisting the impulse to craft useless tax giveaways, which is the approach of candidiate Obama.

Now if we could combine the Romney supply-side approach with the Paul downsizing approach, we would really be getting somewhere.

A Small Sign of Hope on Capitol Hill?

A bipartisan bill to strengthen inspectors general (the folks who monitor fraud in various agencies and departments) has swept through Congress. It even includes a provision sponsored by Congressman Tom Davis that would require IGs to report on duplicative programs.

This bill doesn’t acutally mandate the elimination of waste, fraud, and abuse, but at least it will result in more information about ways to cut back a bloated federal budget. As the old saying goes, a journey of a thousand miles begins with a first step.

Congressional Quarterly reports (subscription required):

Democrats scored a victory Wednesday in their effort to bolster oversight of the executive branch with House passage of a bill that would give inspectors general more autonomy with the agencies they oversee. Despite a White House veto threat, the bill passed with considerable Republican support, 404-11, more than the two-thirds majority needed to override a veto.

Majority Leader Steny H. Hoyer, D-Md., speculated that Republicans were “hard-pressed to vote against an effort to prevent waste, fraud and abuse.” …Lawmakers also agreed, 274-144, to a Davis-sponsored motion to recommit the bill and amend it to require annual inspector general reports on program redundancy within federal agencies.

The idea that future administrations would be subjected to the bill’s limits was not lost on Republicans. “This is an even better bill under a Hillary Rodham Clinton presidency,” said Patrick T. McHenry, R-N.C., referring to the Democratic senator from New York.

High-Flying Bureaucrats Rip Off Taxpayers

The New York Times reports that the Government Accountability Office found pervasive abuse of premium travel by bureaucrats. Fraud was especially rampant at the Department of Agriculture, which is doubly outrageous since the Department shouldn’t even exist:

Federal employees are routinely abusing rules on business-class travel, taking trips that cost taxpayers an estimated extra $146 million annually, Congressional investigators have found. …An Agriculture Department official, for example, spent $62,000 on 10 business-class flights to Europe to attend trade negotiations. The coach fare would have been less than $9,000. …a business-class ticket costs on average five times that of a coach ticket. The investigators found very few first-class flights, which have even stricter rules. But the study found that 65 percent of the overall premium flights, $146 million worth, broke the rules or were not appropriately authorized. …The foreign affairs agency in the State Department had one of the highest shares of questionable premium-class travel, the investigators said. Cases highlighted included a family of eight that flew business class to Eastern Europe from Washington at a cost of $46,000, as part of permanent change of assignment, a trip that auditors said should have cost $12,000. The Agriculture Department at times sent large employee groups by business class, including eight officials who went to a trade conference in Geneva on flights that cost $50,000.

More on Klein (and Cusack)

Tim flays poor Naomi Klein’s impoverished reading of Milton Friedman below, but there are even more bizarre assertions in the interview (which is conducted, unfortunately, by a fawning John Cusack).

Klein claims that times of crisis, such as the aftermath of terrorist attacks, are the most fertile moments to “push through radical free-market policies” against the will of the American people. This, of course, defies all systematic study of such things, which has proved to the contrary that the State, not the private sector, is the beneficiary of such environments. For starters, go to the books by Bruce Porter or Robert Higgs. There is a wealth of literature out there on this topic, and any undergraduate with a passing interest in the subject should be familiar with it. Such knowledge would preclude making the type of nutty claim that Klein does.

But even if one limits his analysis to, say, life under the Bush administration, one would be hard-pressed to point to the “radical free-market policies” which the administration has successfully and quietly spirited into American society in the wake of 9/11. Remember, for example, the widely-debated and spectacularly unsuccessful Bush approach to trying to partially privatize Social Security. Or, for a broader look, refer to my colleague Steve Slivinksi’s conclusion two years ago that

Even after excluding spending on defense and homeland security, Bush is still the biggest-spending president in 30 years…

Total government spending grew by 33 percent during Bush’s first term. The federal budget as a share of the economy grew from 18.5 percent of GDP on Clinton’s last day in office to 20.3 percent by the end of Bush’s first term.

Those don’t sound like stealthily enacted radical free-market policies to me. To the extent that Klein gestures toward these facts in the interview, she seems to protest that she’s not against government exploitation of crises per se, but rather is disgusted that the beneficiaries of this largesse may include private sector companies. For example, Klein is aghast that “food” and “pest control” in Iraq are provided by private companies. The horror!

One might expect this type of nonsense from Klein, but it’s really disappointing to see John Cusack do the interview with his eyebrows raised about an inch and a half above his eyes, apparently floored by Klein’s analytical brilliance. A shame, really–the guy’s made some pretty good movies.

Police Create Roadblock to Collect DNA Samples for Private Research Firm

(This story was originally sent last week by Declan McCullagh to his politech e-mail group. Most of Declan’s e-mail follows.)

The Gilpin County Sheriff’s Office in Colorado, a rural area not that far west of Denver, recently set up a highway checkpoint where motorists were stopped and, at least in some cases, not allowed to leave until they gave breath, blood, and saliva samples for the benefit of a private research firm. A report by Ernie Hancock says the National Highway Traffic Safety Administration was involved as well.

A Denver Post article is here:
http://www.denverpost.com/headlines/ci_6922089

More:
http://cw2.trb.com/news/kwgn-invasive-checkpoint,0,2092732.story
http://worldnetdaily.com/news/article.asp?ARTICLE_ID=57733

http://freedomsphoenix.com/Discussion-Page.htm?InfoNo=024006

The Post says the private organization in question is the Pacific Institute for Research and Evaluation, or PIRE, in Calverton, MD. Their Web site seems to be down but can be viewed here:
http://web.archive.org/web/20050826173038/www.pire.org/

The thoroughly-misnamed PIRE is a major DC government contractor (and in fact its offices are within walking distance of the Beltway). It specializes in funneling over $35 million of taxpayer money a year into its own coffers through law enforcement contracts of dubious utility, mostly dealing with drugs and alcohol, from sources including the U.S. Department of Justice. 100 percent of its budget appears to come from government contracts or grants.

Although PIRE pretends to be a “nonprofit” organization – at least that label helps to collect those fat taxpayer-funded checks from the DOJ – in reality it spends about $1.35 million a year on lobbyists. Not a bad 30-fold return on investment. And its employees are paid six-figure salaries that would be handsome even by for-profit standards.

PIRE seems to specialize in devising new and intrusive ways of government meddling in personal lives. One PIRE success story helps to coerce retailers to card octogenarians who dare to try to buy a bottle of Cabernet. (“This method of enforcement gives retailers the necessary incentive to comply with the state’s law regarding the sale of alcohol, given that their next customer could be part of a compliance check. The Pacific Institute for Research and Evaluation (PIRE) has developed a detailed document to assist in the development and implementation of compliance checks.” See:
http://www.nhtsa.dot.gov/people/injury/alcohol/dotpartners/chapter_5.htm

PIRE is an ardent supporter of the War On (Some Politically Unacceptable) Drugs, also known as an excellent way for Feds and contractors to fleece the public in a war that will never end, eviscerate the Fourth Amendment, and create a police state with perfectly legal no-knock raids. One PIRE researcher who focuses on “middle-school-based drug prevention programs” and has written a paper claiming anti-drug programs in schools actually work:
http://www.nida.nih.gov/Meetings/Prevention/PrevBios4.html

PIRE also supports higher taxes on alcohol and firmly opposes lowering the minimum drinking age to be akin to Europe or Canada (something that would probably do much to limit abuse). See:
http://www.higheredcenter.org/thisweek/tw010629.html
http://resources.prev.org/documents/BeerTaxesNewsRelease.pdf

Those Silly Europeans

American politicians like to concoct silly ways to waste money and misallocate resources. But European lawmakers always seem to out-do them — perhaps because the Europeans have several centuries of additional experience with government.

A good example is a European Commission-led effort to promote multilingualism. The more substantive point is that the bureaucrats in Brussels are foolishly trying to pretend that English is not the language of international business. But the most amusing part of the EU Observer story is reading that the European Commission has a commissioner for multilingualism:

Europeans should learn more foreign languages and not think that a “lingua franca” — one language used internationally — is enough, EU commissioner for multilingualism Leonard Orban said on Wednesday.

What’s next, a commissioner for watching paint dry? A commissioner for shoelace regulation?