Contract With America

Competitive advantage

On Friday I received the latest update from Newt Gingrich in my e-mail box. Even though I don’t always agree with him as to tactics – and his Presidential campaign in 2012 went nowhere but to Salisbury University – the one thing you cannot take away from him is the 1994 Contract With America, signifying a Republican resurgence in the post-Reagan era. And you have to respect him for thinking years or decades forward, such as he did in this case.

His piece on Friday looked at the economic prowess of states which did not collect an income tax in comparison to those that did. It even cited some of the same Art Laffer data that unsuccessful gubernatorial candidate Charles Lollar used in his pitch to eliminate Maryland’s state income tax.

But the part which intrigued me came toward the end, when he wrote about the effort by Vince Haley, a State Senate candidate, to eventually eliminate Virginia’s state income tax. Certainly it doesn’t have a great chance of success in the near term with a Democratic governor, but one has to ask what the effects would be if the commonwealth made it all the way down that path – and how would it affect us?

For nearly four years, a significant part of the time of my outside job has been spent on the Eastern Shore of Virginia. I’ve been over most of that strip from Chincoteague to Cape Charles for some task or other, but if you just pay attention to the drive along U.S. 13 you can see that the ESV is not the wealthiest area, nor are many ingredients for prosperity present. Compared to Virginia’s 4% population growth as a whole, the two counties which make up the Eastern Shore are leaking population, with Northampton County (the more southern of the two, closer to the Norfolk region) dropping by 2 percent and Accomack County (closer to Maryland) holding almost steady, with an estimated decline of less than 20 people in a county of just over 33,000.

By way of comparison, the two combined are less than half the population of Wicomico County, and there are good reasons for that: their geographic isolation at the end of the Delmarva Peninsula and a lack of job opportunities outside of the Wallops Island NASA station. Locally, their slogan is “You’ll Love Our Nature” and that is one thing the area can boast given its coastlines on Chesapeake Bay and the Atlantic Ocean are often less than 20 miles apart and meet at its southern tip.

Elected officials of all stripes are trying to increase business at the Wallops Island complex as they see the potential of unmanned space flights from the facility, with the prospect of good-paying ancillary jobs the spaceport creates. But the benefit of not having an income tax would likely be an influx of well-to-do retirees and others with the disposable income residents of the ESV currently lack. It may even be a better attraction than coastal Delaware and its lack of a sales tax, since those outlets are a relatively easy drive away from the northern reaches of Virginia’s slice of the peninsula.

Those who try to promote the area probably realize that prospects for certain types of businesses wouldn’t be very good because the ESV lacks some of the infrastructure necessary for manufacturing. But if the area becomes advantageous in a financial sense thanks to an elimination of the income tax, it can become a playground of sorts for affluent retirees who would like to slow down and enjoy a more rural lifestyle, allowing the remainder of the residents to share in that wealth. On the other hand I can also understand where many ESV residents may object to eliminating the state income tax, especially if they receive Virginia’s version of the Earned Income Tax Credit they call the CLI.

If all this came to pass, though, Maryland would be left in the middle, suffering from having a sales tax-free state siphoning off its retail industry and an income tax-free state choking off its wealth. (Don’t forget that an income tax-free Virginia may have devastating effects on the capital region of Maryland, too.) Of course, we can work to eliminate both those issues but it would take a larger sea change in philosophy than Annapolis has the stomach for.

It may not be the golden ticket to prosperity, but given the slow decline of our Delmarva neighbors to the south a drastic measure like eliminating their income tax may be the only way to resuscitate the area.

Hogan begins laying out run in MSM piece

First of all, I want to give the tip of the hat to Joe Steffen for noticing this. Admittedly, he was skeptical of the very first line – and so was I – but I don’t perceive that Joe Steffen and Larry Hogan are on each other’s Christmas card lists so I wanted to read the Hogan op-ed for myself. Granted, I was floored enough to ask “really?” in reaction to Joe’s Facebook post.

Obviously I have some comments, but I think this lays out where the Hogan campaign is going – a populist assault on the Annapolis “establishment.” Yet Hogan isn’t exactly an outsider to that clique because he was Secretary of Appointments under Bob Ehrlich, and deferred a 2010 gubernatorial run in order to clear the way for the “establishment” choice in Bob Ehrlich. I find that a mixed message based on the messenger.

Having said that, though, a continuance of the ongoing criticism of the current majority party from Change Maryland since its 2011 inception wouldn’t be a bad thing. The trick will be fleshing out the alternative, and Hogan’s “Third Way” speaks to revisions in the way we govern ourselves through inclusiveness, transparency, and efficiency. In that latter realm he actually covers many of the same points Ron George has brought up with his campaign promise of auditing the state government.

Hogan concludes with a promise of “a renewed focus on building Maryland’s private sector and business climate.” I would hope that would be the first priority, not a throwaway line at the end of an op-ed.

But I think the parts of Hogan’s op-ed which bother conservatives in Maryland the most are the invocation of Bill Clinton as a model and the implication that we need a Clinton-esque “Third Way.” Admittedly, Hogan seems to be basing his campaign on the populist appeal of being “bipartisan,” always stressing that a large number of Democrats and independents support Change Maryland. There’s no doubt we need at least some of each to win since the majority of Maryland voters haven’t yet seen the folly of being so heavily registered with a majority party which places their pursuit of power over the needs of the average Marylander, thereby regularly voting for that legislative majority against their self-interest.

Yet Hogan’s Clinton “Third Way” invocation bears the reminder that many of his signature achievements such as welfare reform, federal budgets with a modest surplus, and overall prosperity came from the period where he dealt with the Gingrich-led Republican Congress which dragged him kicking and screaming into enacting these changes. Left to his own devices and a Democratic majority in Congress, we would have had massive budget deficits and Hillarycare, since that’s the path we were on until the Contract With America and the 1994 midterms interceded. Bill Clinton also reaped the benefits from a natural economic recovery after the recession of 1990-91, with unemployment peaking in mid-1992.

The question, then, is whether a “Third Way” is possible in Maryland, or even desirable. As Change Maryland has shown, the progressives who run this state are bereft of ideas which don’t involve tax increases, more power concentrated in Annapolis, deprivation of personal liberty, or some combination of the three. I’d be more inclined to follow the conservative alternative than “attempt to synthesize what some regarded as the best ideas of the left and the right” because the left, in my humble opinion, has nothing which can be considered a “best idea.” We’ve tried their way at both the state and (arguably) a national level since 2007 and we see where we are.

Over the next week we will hopefully get more of a glimpse behind the curtain of a Hogan administration, but based on initial rhetoric those who really wish to change Maryland for the better could be a little disappointed. Hopefully my initial impression is misplaced.

A treaty with the electorate

It’s always amusing when politicians make promises and issue statements before they are elected, but actually have to live with what they said they’d do afterward. Some are successful and others…not so much. (“Read my lips” seems to be one of the better examples, although that middle-class tax cut his successor promised but couldn’t deliver on seems a good one too.)

So Republicans took about 20 pages to expand on what is stated here. (It’s sad when I have to use North Dakota as an example given that this isn’t on the Maryland or national Republican websites.) But I suppose it’s better than the 67 pages our last party platform from two years ago took up. In this case, the GOP is trying to replicate the success of the “Contract With America” as a bedrock campaign slogan from 1994.

But so have many other people; for example, what was wrong with the Mount Vernon Statement or the Contract From America?

Here we have oh so many words to describe in excruciating detail what Republicans in Congress promise to do, if only they are given the levers of power. Yet there already is a roadmap in place; one which has been there for 222 years (albeit amended from time to time with the last being in 1992.) You know as well as I do what that document is.

To varying degrees these more recent documents pay lip service to the supreme law of our land, but who’s going to be the first to say, “look, it’s time to sunset entitlement programs like Social Security, Medicare, and Medicaid”? I’d say it but my chances of being elected to any position of power lie between slim and none, and slim just left town. Yet that step is necessary to insure the continued prosperity of this Republic.

No one truly wants to be the person to make the hard choice. I don’t necessarily fault politicians for this because, after all, they generally receive the job by winning a popularity contest expressed in our votes. “A chicken in every pot and a car in every garage” is a pretty good slogan, but the question is how one goes about getting it. (In Herbert Hoover’s case, the bubble of prosperity built on easy credit burst – maybe that’s a lesson Keynesians who believe that government spending will get us out of our economic doldrums should heed.) Franklin Roosevelt couldn’t get a chicken in every pot and a car in every garage no matter how much his New Deal spent because there weren’t enough other job producers around – how could those in the private sector compete with the government, an entity which need not make a profit?

A legitimate criticism of many TEA Partiers is the hypocricy they exhibit by complaining about government-run health care when they themselves are the beneficiaries. I can see the point, but if you frame it as a question of whether they believe their grandchildren should be saddled with the debt that’s being incurred on their behalf the answer makes more sense. And perhaps if a truly open-market private system were made available they would take advantage. For example, many millions of seniors saved for their retirement by investing despite the fact a government program was also there to subsidize their golden years. No one told them how much to invest nor were there any restrictions on where they could put their money.

But perhaps the most immediate step government can take in the correct direction is to stop using the tax code to reward or punish certain behaviors like buying a home or putting in a solar panel. Our granting that sort of power to government is what makes change so difficult. Of course, we should dismantle Obamacare and maintain the Bush tax rates as a stopgap measure, but the real change needs to come from a shift from income-based taxation to a single-point consumption-based tax. While it may life a bit more difficult for business in one aspect, other parts of the accounting system would vastly improve, not to mention people would have more money in their pocket.

Right now it seems that all we want to do is tinker around the edges, and most assuredly by having a President of the opposite party in charge for two more long years that may be all we can do on a national scale.

But states can also lead the way by asserting their Tenth Amendment rights and becoming the “laboratories of democracy” (albeit in the opposite manner that Brandeis would have preferred) by electing conservative governors and legislators and testing the waters of dismantling their statist controls over the citizens. Obviously Texas is a popular destination for both business and the population which follows it due to its low-taxation, small-government reputation.

In many cases, even after the 2010 election those who believe in freedom and liberty through limited government will still be saddled with elected officials who try the same old same old statist remedies which haven’t worked the first ten times. But we have a role to play there as well by exposing them for what they really are and educating the rest of the population why these legislators aren’t acting in their best interests by showering them with goodies from a goose they’re betting will still be laying golden eggs. Hopefully Atlas only has to shrug once before a lesson is learned.

The fight will be long, and victories may be few. But what we believe in is something well worth fighting for, and I plan on continuing my part of the battle for either as long as I draw breath or we win, whichever comes first. It just may come down to our lives, our fortunes, and our sacred honor again.

Vote on the Contract FROM America

Earlier today I commented on the newly-minted Mount Vernon Statement, which to me is a noble gesture but seems to fall short on actionable items. After all, most conservatives are America-first, limited-government types who simply want Washington to get out of their way and allow America to continue to be the greatest country on earth – the “shining city on a hill” as it were.

In 1994 Newt Gingrich took similar principles and, with the help of dedicated conservatives, created the Contract With America for Republicans seeking seats in the House of Representatives. The success was obvious as the GOP took over the House for the first time in 40 years and all but one of the ten principles spelled out had some kind of Congressional action (term limits being the exception.) By nationalizing the election, Gingrich and his allies created the impetus for voters to look beyond their district and support a principle of governance.

This time, Newt is a bit of a Johnny-come-lately to the game, and it’s a coalition of conservative groups (including a large number of TEA Party organizers) which are spearheading the effort. And instead of a select cadre determining each planks, this contract is based on input from the grassroots. Ten of these 22 planks will be inserted into the Contract From America.

DEMAND A BALANCED BUDGET: Begin the Constitutional amendment process to require a balanced budget with a two-thirds majority needed for any tax hike.

STOP THE TAX HIKES: Permanently repeal all tax hikes, including those to income, capital gains, and death taxes, currently scheduled to begin in 2011.

COMMIT TO REAL GOVERNMENT TRANSPARENCY: Every bill, in its final form, will be made public seven days before any vote can be taken and all government expenditures authorized by any bill will be easily accessible on the Internet before the money is spent.

PROTECT THE CONSTITUTION: Require each bill to identify the specific provision of the Constitution that gives Congress the power to do what the bill does.

PASS REAL HEALTHCARE REFORM: Greatly improve affordability of health insurance by permitting all Americans access to all health insurance plans sold anywhere in the United States through the purchase of insurance across state lines and allow small businesses and associations to pool together across state lines to buy insurance.

ENACT FUNDAMENTAL TAX REFORM: Adopt a simple and fair single-rate tax system by scrapping the Internal Revenue code and replacing it with one that is no longer than 4,543 words—the length of the original Constitution.

END RUNAWAY GOVERNMENT SPENDING: Impose a statutory cap limiting the annual growth in total federal spending to the sum of inflation rate plus the percentage of population growth.

LET US SAVE: Allow all Americans to opt out of Social Security and Medicare and instead put those same payroll taxes in a personal account they own, control, and can leave to whomever they choose.

PROTECT INTERNET FREEDOM: No regulation or tax on the Internet.

GIVE PARENTS MORE CHOICES IN THE EDUCATION OF THEIR CHILDREN: Improve American education by reforming the broken federal role through eliminating ineffective and wasteful programs, giving parents more choices from pre-school to high school, and improving the affordability of higher education.

PASS AN ‘ALL OF THE ABOVE’ ENERGY POLICY: Authorize the exploration of proven energy reserves to reduce our dependence on foreign energy sources from unstable countries and reduce regulatory barriers to all other forms of energy creation, lowering prices and creating competition.

PROTECT FREEDOM OF THE PRESS: Prohibit the Federal Communications Commission (FCC) from using funds to reinstate the Fairness Doctrine in any form, including requiring “localism” or “diversity” quotas.

RESTORE FISCAL RESPONSIBILITY & CONSTITUTIONALLY LIMITED GOVERNMENT: Create a Blue Ribbon taskforce that engages in a complete audit of federal agencies and programs, assessing their Constitutionality, and identifying duplication, waste, ineffectiveness, and agencies and programs better left for the states.

PROTECT PRIVATE PROPERTY RIGHTS: Block state and local governments that receive federal grants from exercising eminent domain over private property for the primary purpose of economic development or enhancement of tax revenues.

REJECT CAP & TRADE: Prevent the Environmental Protection Agency from implementing costly new regulations that would increase unemployment, raise consumer prices, and weaken the nation’s global competitiveness with virtually no impact on global temperatures.

STOP THE PORK: Place a moratorium on all earmarks until the process is fully transparent, including requiring a 2/3 majority to pass any earmark.

NO CZAR REGULATION WITHOUT REPRESENTATION: All “lawmaking” regulations must be affirmatively approved by Congress and signed into law by the president, as the Constitution requires for all laws.

AUDIT THE FED: Begin an audit of the Federal Reserve System.

NO MORE BAILOUTS: The federal government should not bail out private companies and should immediately begin divesting itself of its stake in the private companies it owns from recent bailouts.

STOP CAREER POLITICIANS & CURB LOBBYIST POWER: Begin the Constitutional amendment process to require Congressional term limits. No person shall be elected to the Senate more than twice or to the House of Representatives more than four times.

SUNSET REGULATIONS: All regulations will be “sunset” after ten years unless renewed by Congressional vote.

LET US WATCH: Broadcast all non-security meetings and votes on C-SPAN and the Internet.

Talk about your tough choices! Most of the lot is good, but right off the top I would say that items 7, 20, and 21 would be my favorites.

Number 7 is a slightly adapted form of TABOR laws, with TABOR standing for Taxpayers’ Bill Of Rights. This provides for necessary increases in government but not excessive ones. Yes, there is the weakness of not requiring cuts which should be made (since the natural tendency would be to budget to within a gnat’s eyelash of the limit) but the principle is sound.

I would only change number 20 to a 12+12 rule (6 House terms and 2 Senate terms.) However, the one thing missing from this plank is to restore the states’ voice in the process by repealing the Seventeenth Amendment. The idea of popular election of Senators has shifted the balance in Congress and federalized the government, when the intent was to create tension between states and Washington.

Number 21 might just have been my suggestion from three years ago, back when I did my ’50 year plan’ series. My argument now is the same as it was then – if Congress is busy justifying the renewal of old laws, they may be too busy to think of new ones.

I could probably vote for 10, but it’s likely I’ll only vote for a few to strengthen their position. Bullet voting may be a good practice in this case. In any case, here’s a chance for the people to decide what they think is most important and what they’ll vote to change come November.