Topic: Government and Politics

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In Thursday’s Wall Street Journal, Fred Barnes makes a point (paid reg. req.) that I made here last week: Hard as it to believe, Sen. Hillary Clinton may campaign as the least statist of the Democratic presidential candidates. Barnes writes:

As surprising as this may sound, Mrs. Clinton starts her campaign as the Democratic candidate furthest to the right. The only two Democrats who might have gotten to her right — Sen. Evan Bayh of Indiana and former Gov. Mark Warner of Virginia — dropped out of the race. 

I had made that point. And I also noted that Sen. Russell Feingold would have criticized Hillary on civil liberties issues. With Feingold, Bayh, and Warner all out of the running, Hillary’s determination to constrain her big-government instincts during the campaign will be sorely tested as she fends off challengers like Sen. Barack Obama, former senator John Edwards, and maybe former vice president Al Gore.

A footnote: Barnes and I have both ignored New Mexico governor Bill Richardson, who has persuaded Larry Kudlow that he’s a “a pro-growth, tax cutting Democrat.” Maybe moderate Democrats will have a choice after all.

The Republican Future

In today’s Washington Examiner, I have a column on future directions for the Republican party. One point:

Republicans need to look to the future: Younger voters are more likely to be libertarian, more likely to accept gay marriage, and more likely to have voted Democratic in 2006.

Republicans need to reach them before the Democrats lock them in. They can do that with an optimistic, inclusive message of liberating people from the dead hand of the federal bureaucracy — a smaller and less intrusive federal government, encouragement of enterprise and economic growth, a government that respects but doesn’t embrace religion, and a de-escalation of the culture wars.

John McCain’s Empty Threat

The NYT has a front-pager this morning on the fact that “In Senate, Allies of Bush Attempt to Halt Iraq Vote.” It describes a resolution offered by John McCain, Joe Lieberman, and Lindsey Graham that seeks to “set benchmarks for the Iraqi government and describe the troop increase as a final chance for the United States to restore security in Baghdad.”

“Final chance?” Sounds serious. But is it? Consider McCain and Lieberman were at AEI earlier this month, warning, in the case of Senator McCain, that if we were to leave, it would be “the beginning of the end, in some respects” of Western civilization.

But say you’re an adviser to Maliki, and you see these two offering a resolution that says this is your last chance, this is it, we’ll pull the plug if you can’t get it together. (Put aside the fact that there’s no chance either of them would ever vote to actually cut off funding for the war, the only practical tool Congress has to stop it.) Then your researchers bring you their AEI presentation in which McCain says it’s the beginning of the end of Western civilization if we leave.

Would you be worried? Would you think “Uh oh, if we don’t meet all of the American objectives, John McCain and Joe Lieberman are going to stop supporting the war. Of course, in their own minds, leaving on those terms would mean the beginning of the end of Western civilization, but they still might do it!” Doubtful.

If John McCain and Joe Lieberman think the stakes are as high as they implied at AEI, then they should just say flat-out: We can’t leave, no matter what, unless we achieve our goals. That’s an honest position, although one I think profoundly misguided.

Of course, the American people wouldn’t be too hot on such a proclamation. They certainly wouldn’t be inclined to, say, elect someone who said that to be president. But consistency’s never been McCain’s strong point.

It’s almost like the guy’s running for president or something.

Public Choice in Action

The Washington Post ran a story today that could be a case study in a Public Choice textbook, “Maverick Costco CEO Joins Push to Raise Minimum Wage.”

The chief executive of Costco Wholesale, the nation’s largest wholesale club, yesterday became the most prominent member of a new organization of business owners and executives pressing Congress to approve an increase in the federal minimum wage.

Wow, Costco’s Jim Sinegal must be a really moral and public-spirited CEO. Sinegal “said he signed onto the effort because he thinks a higher minimum wage would be good for the nation’s economy as well as its workers.” The CEO explained: “The more people make, the better lives they’re going to have and the better consumers they’re going to be… It’s going to provide better jobs and better wages.”

Who does Sinegal think he is fooling? His real aim is to use the government to squash any low-end competition. 

Costco, of Issaquah, Wash., would suffer no direct impact from a higher minimum wage because its lowest-paid employees now make about $11 an hour, Sinegal said, adding that the average worker in the company’s 504 stores in the United States makes $17 an hour.

Running for Preacher

In the unlikely event he gets elected president, would former Arkansas governor Mike Huckabee hector the country to death about cutting carbs?  Maybe, but he seems to have an even more ambitious goal than slimming us down.  As he put it on Meet the Press Sunday:

I think America needs positive, optimistic leadership to kind of turn this country around, to see a revival of our national soul.

Really: is our national soul in such a parlous state that its last, best hope is… Mike Huckabee?  I thought it was the Left that was supposed to believe America was in decline. 

More to the point, even if there was such a thing as a “national soul,” tending to it is not part of the president’s job.  In the taciturn and businesslike language of the Constitution’s Article II, you won’t find anything making the president our national pontiff–any more than you’ll find the language that supposedly makes him Supreme Warlord of the Earth.   

This isn’t just a complaint about the Republican party, or the Religious Right, or even about religion in politics.  I’m not sure Hillary Clinton was talking about religion in her ”politics of meaning” speech diagnosing America’s “sleeping sickness of the soul,” our deep existential angst stemming from our inability to redefine “who we are as human beings in this postmodern age.”  I’m not sure what she was talking about, but whatever it is, it doesn’t sound like something bold executive action can or should fix. 

And Barack Obama’s “Audacity of Hope” isn’t a specifically religious concept.  Instead, judging by his 2004 Democratic Convention keynote speech, it seems to refer to the continuing promise of redemption through presidential politics.  Belief in that ideal would require a leap of faith far beyond anything demanded by the world’s major religions.

Reviving our “national soul,” healing our spiritual malaise, unifying the metatext and subtext of our postmodern age–none of this is the president’s business.  He or she is a constitutional officer, charged with faithful execution of the laws.   

Former Senator Phil Gramm’s 1996 run for the G.O.P. nomination was a colossal bellyflop, but he had at least one moment of glory.  Pushed by Focus on the Family’s James Dobson to talk up values issues on the campaign, Gramm snarled: “I’m not running for preacher.  I’m running for president.”  How many of today’s candidates can tell the difference? 

Competition among Cantons Boosting Swiss Competitiveness

Federalism is a marvelous structure, both because it allows preferences for different policies to be satisfied and because it creates competition among units of government. While federalism has been somewhat eroded in the United States, it still exists and presumably is one of the reasons why America is relatively prosperous (thanks to a less oppressive level of government). Switzerland is an even bigger success story. The central government represents less than one-third of total government (as compared to two-thirds in the US), and the concomitant competition between cantons has helped control the size of government. And as a Swiss news report indicates, this has generated big benefits for the Swiss economy:

Zurich is poised for a further influx of foreign firms and workers after the relocation of Kraft Foods’ European headquarters and the expansion of Google this year. The moves earlier this month from the two United States giants offer further evidence that the region offers prime conditions for companies, according to the Greater Zurich Area relocation service. …”The relocation of headquarters and the nice growth of Google that we have seen in the last couple of months shows that we have very good basic conditions in the region,” commented Greater Zurich Area chief executive Willi Meier. …A more controversial lure for foreign companies is the low corporate tax rates offered by many cantons in Switzerland. …The competition among cantons to set the lowest business tax was intensified at the beginning of last year when Obwalden slashed its rates to a Swiss low of just 6.6 per cent. Obwalden attracted 376 new firms in the first 11 months of 2006, three times more than in the previous year. But Meier insists the Zurich region is not afraid of the increased competition. “The tax competition among Swiss cantons makes Switzerland as a whole more competitive on an international basis. Kraft has chosen Zurich despite the fact that we don’t have the lowest tax rate in Switzerland, but on an international scale its still a very competitive rate,” he said. 

Lower Tax Rates Yielding More Tax Revenue

The capital gains tax should not be reduced to give more money to the government. Instead, the tax should be abolished since it is a punitive form of double-taxation on income that is invested. Nonetheless, it is worth noting that the government is collecting more money at a lower tax rate. Because there are many factors that influence economic performance, this does not necessarily mean that the lower rate is “paying for itself,” but it certainly indicates that there is a supply-side effect. As the Wall Street Journal explains, the bean-counters at the Joint Committee on Taxation failed to predict this result: 

Data released last week from the Congressional Budget Office confirm that the tax cuts of 2003 keep soaking the rich, especially on their capital gains. CBO and Congress’s Joint Tax Committee originally estimated that reducing the capital gains rate to 15% from 20% would cost the Treasury $5.4 billion from 2003-2006. Whoops. Actual revenues exceeded expectations by 68%, creating a $133 billion revenue bonanza for the feds. CBO’s original forecast for 2006 was for $57 billion in capital gains revenues, but actual receipts were $110 billion. This surprise windfall is one reason the budget deficit is also far lower than CBO predicted. The lower capital gains tax has raised stock values by raising the after-tax return on capital investment. It has also given stock owners a greater incentive to sell their shares, and then reinvest the proceeds, because the tax penalty on these transactions is lower. …The 2003 rate cut liberated hundreds of billions of dollars of capital for new investment. By the way, the National Venture Capital Association reports that venture capitalists invested $25.5 billion in 2006, the biggest burst of dealmaking since the stock market bubble burst in 2000. This is seed money for new companies and new jobs that will lift future tax revenues.