I’ve been smacked around, by the left and the right, for endorsing the initial proposals of the Simpson-Bowles report. Today I am going to respond to the objections raised by conservatives, like Grover Norquist and our own Peter Roff, who see this plan as a Trojan Horse.
On Monday I will try to reason with the left, who view Simpson-Bowles, with equal vehemence, as a right-wing conspiracy.
Which in itself should tell you something.
It is a tenet of conservative doctrine that man is ruled by self-interest. So here is what conservatives would get if the Democrats and Republicans reached a grand compromise, somewhat along the lines of Simpson-Bowles, to cut some $4 trillion in red ink.
What Al Simpson and Erskine Bowles propose is, basically, a cleaner and more efficient and far less debt-ridden federal government. This is a thorough repair job with nice detailing, not a new car. Call it Status Quo Lite.
And guess what? Status Quo is pretty good. Despite Glenn Beck’s fearmongering, and the GOP campaign claim that the United States has somehow evolved into a socialist state when the oil companies and hedge funds and banks weren’t looking, the latest rankings by that most Republican think tank, the Heritage Foundation, place us ahead of all major rivals, and almost all of our allies, when it comes to economic freedom.
Heritage assesses things like tax burden, business regulation, the rule of law, and corruption. Guess what? The United States stands eighth on that list, behind the controlled city states of Singapore and Hong Kong, three tiny nations—Ireland, Switzerland, and New Zealand--and two bigger democracies, Australia and Canada, that still don’t come close to us in size, complexity, or military spending.
Are we really a country where invasive bureaucrats terrorize entrepreneurs? No. “The overall freedom to start, operate, and close a business, regulated primarily at the state level, is still strongly protected,” Heritage says. “Starting a business takes six days, compared to the world average of 35 days.” We remain the world’s largest producer of manufactured goods, and the fourth-largest producer of agricultural products. Our financial markets are “dynamic,” and property rights are strongly guaranteed.
Heritage does gripe about our tax burden, caused by “relatively high” government spending. But the question is, compared to what? We serve as the cops of the world, keeping everyone from Saudi oil sheiks to Israeli software designers safe enough to get rich. But with all our extra defense costs, total government spending still amounted to just 37.4 percent of GDP.
What was spending like for those ahead and behind us on the list? Well, in Great Britain and Germany the percentage was 44 percent. In New Zealand and Canada it was roughly 40 percent. Japan and Ireland came in at 36 percent, and Australia at 34.2 percent.
Here in Washington, you don’t win votes or campaign donations or ratings by counting the blessings of America. But the fact is, the status quo--in terms of personal and economic freedom--is pretty damn good.
And here is how, for conservatives, Status Quo Lite would make it better.
- It would stop runaway deficits. I challenge Norquist, or any other conservative, to come up with plan of their own that cuts $4 trillion from the federal debt and can win popular support.
- It honors family by balancing the budget. The annual deficit would be reduced from 9 percent of GDP to 2 percent by 2015. A balanced budget would come within reach around 2030. Over 30 years, the federal debt would be reduced from 62 percent of GDP to 34 percent. We would leave our children and grandchildren a shot at the American dream.
- It flattens the tax code. Under one of the proposal’s scenarios (there are several), the plan would chop $1 trillion in tax breaks, credits, and other tax expenditures, do away with the Alternative Minimum Tax and the Earned Income Tax Credit and, as a tradeoff, leave us with individual income tax brackets of 8, 14 and 23 percent. Ronald Reagan and Jack Kemp are shouting down from heaven, “Take the deal! Take the deal!”
- It cuts the corporate tax rate from 35 percent to 26 percent, making our businesses that much more competitive with our foreign competitors. That means profits. That means jobs. [Read more about unemployment.]
- It would cap federal taxes, and spending, at 21 percent of GDP. With discipline at the state and local level, that would leave our total government spending roughly where it is now, and keep us in the top 10 in the Heritage rankings for economic freedom.
- It saves Social Security and takes it off the table for another 75 years. If, for ideological reasons, some Republicans still wish to push ahead with the privatization of Social Security and Medicare, and lose the votes of all those senior citizens who just gave them control of the House of Representatives, they should, by all means, go ahead. But more realistic conservatives may agree that the commission’s deal includes significant cost and benefit cuts, under a bipartisan umbrella.
- It requires huge concessions from government unions. The plan would cut the federal workforce by 10 percent and freeze salaries and bonuses for three years. It would also cut civil service pensions, reduce the White House and congressional budget by 15 percent, cap discretionary spending and eliminate 250,000 government contractors.
- It would eliminate all earmarks. I understand that Republican incumbents and even some Tea Party turncoats are stealthily plotting to keep the earmark process intact in Congress, but this is a professed goal of at least some conservatives.
- It would reduce healthcare costs. The Simpson-Bowles proposal would cap federal healthcare expenditures at GDP plus 1 percent, while paying doctors their coveted “doc fix” and squeezing trial lawyers via tort reform.
Remember, this isn’t even the commission report yet. It is just the chairman’s mark, as they say in Washington: a proposal from which to begin the discussion. Having just won a big election, conservatives would have momentum going into the horse-trading.
Does Simpson-Bowles have bite? Why else would the know-it-alls and elites and lobbyists and vested interests here in Washington be so quick to declare it “dead on arrival” or unappetizing cat food, or spinach? They want the game to go on. They own the bazaar.
A problem in America is that we increasingly self-select. Liberals talk to liberals and watch MSNBC. Conservatives talk to conservatives and watch Fox.
I am sure there are honest, patriotic, conservative Americans who believe that we are heading down the road to perdition and, talking among themselves, think that--given more time and a big enough push and more militant leaders--they can actually bring the American system back to where it was in the Roaring Twenties, under Calvin Coolidge.
Folks: it’s not going to happen. There are whole regions and segments of the population--last time I looked about 50 or 60 percent--who believe just as passionately, sincerely, and patriotically that the government is better than the markets at certain tasks of safeguarding liberty and equality. They are not going to cave in any more than you would. But they can be forced, in a pressing crisis, to deal.
Tea Partyers in particular should embrace the Simpson-Bowles report. It reduces debt. It stops the drift toward socialism. It puts us on a path to a balanced budget. If Sarah Palin or some other conservative champion were truly smart, they would embrace this baby and flog the Democratic and Republican elites of Washington for standing in its way, and take power with a mandate to force real change in 2012. Mr. Daniels? Mr. Bloomberg?
Take it from me, Republicans. You won’t win this one by listening to my old pal Grover. We are in too deep not to do this without raising taxes.
Take the deal. Or, if you like, move to Singapore. And Australia, I hear, has great beer and fine-looking gals and lads and lots of empty real estate.