On Cut, Balance, and Grow

Rick Perry was in a terrible bind. His initial campaign boomlet had busted; his debate performances turned off millions of Republicans; and he was in danger of becoming irrelevant in the 2012 race for President. He was – and maybe still is - desperate. This is precisely the time when politicians tend to do incredibly dumb things. Perry didn’t; instead, he brought forth an economic plan that is politically doable and will be a clear benefit to the country (even if parts of it are rather opaque).

Today, Perry will put forth an economic plan outlined in his Wall Street Journal op-ed. He proposes a nearly-flat 20% income tax rate. I say “nearly” because personal exemptions go up to $12,500, and charitable, home-mortgage, and state/local tax deductions are still in place. Personally, I could have really done without the last one (it is a back-door encouragement to government growth at the state and local levels). For a family of four, income tax is absolute zero. Corporate tax rates would also be 20% (after a one-year 5.25% temporary rate to encourage firms to reshift profits here – not sure that wil matter much, but the permanent reduction is essential).

Perry is now the only candidate other than Herman Cain to present a specific tax plan, and Perry’s has several advantages. For starters, Perry’s plan does not include a value-added tax, a horrific silent tax that governments in Europe have used as unseen ATMs for decades. More importantly, Perry doesn’t strain for a revenue-neutral plan like Cain does; he openly calls it a tax cut, and admits additional spending cuts will be needed to balance the budget in 2020.

Sadly, Perry presents no details as to how will bring spending down in nine years (he wants it to be 18% of GDP) – although no one besides Ron Paul is willing to be specific about that.

All in all, though, it is probably the best plan we’ve seen for providing the economic growth that uniquely comes with tax reductions, while avoiding future tax increases that the Cain plan practically guarantees.

Cross-posted to BD

An open letter to John Bolton

Dear Ambassador Bolton,

I do not know if you saw the Republican presidential debate last night (just in case you did not, here is the transcript via Politisite). I am all but certain the debate will leave or has left you as disappointed as I am at our current crop of Republican candidates for the Oval Office. Yet this was merely the latest in a string of debates that made clear that there is a yawning and dangerous vacuum in the field – one that only you can fill.

Many will say that it is difficult to discern the candidates’ views on foreign policy because it is so infrequently discussed. Many more believe foreign affairs are too frequently discussed as it is. Both are symptoms of a growing myopia both within the party and the nation on the global threats to the world from Palestine to Pakistan to the People’s Liberation Army. Yet no candidate is willing to even attempt to shift the debate and the campaign to a badly needed discussion of the threats will we face and how we must defeat them.

Can you not see that it was a mistake to decline to run for President? Is it not obvious how badly needed your voice is on that stage?

I know at the time you were under the impression that it would be difficult to win the nomination. Surely recent events have shown that belief – understandable at the time – to be mistaken. The remarkable fluidity in national and state Republican polls have propelled Herman Cain – the only current candidate who was never elected to office – into the lead. Republican voters are desperate for an alternative to Mitt Romney, and have gone through nearly everyone in the current field to find that alternative.

Moreover, last night made clear just why an alternative is so necessary. Mr. Romney’s comments on foreign policy were of a frightening ignorance matched only by a cavalier dismissiveness. He actually implied that it would be better for the Chinese Communist Party to backfill our foreign aid, essentially inviting that dangerous element to enlarge its current geopolitical offensive (this is not to say that foreign aid is the best way to counter or prevent said offensive; far from it in fact, but you knew that already). He then listed Pakistan as a logistical ally, rather than a two-faced, duplicitous regime. Is it really a wonder the Republicans and Republican-leaning independents are seeking someone else?

Sadly, on the international crises that await us (and face us already) no one has the strength, intelligence, experience,  or wherewithal to be that alternative to Romney (and Obama, for that matter).

Yet you have all of them.

Please, sir, if you are reading this (and I hope you do read it soon), reconsider. Take one more look at the field, and realize that it has a place for you.

You can run, you can win.

You must run; you must win.

Cross-posted to John Bolton for President and the China e-Lobby

. . . and they call it austerity

I have written before on how Greece continues to do “austerity” in a bass-ackwards, counterproductive, and useless manner.

Sadly, they are still at it. Check out the latest attempt (New York Times):

Still, the plan to cut 30,000 jobs is modest by any measure. It amounts to about 4 percent of the public work force and would affect mostly people close to retirement. They would get a soft landing, too: 60 percent of their pay for a year while they remain in a “reserve” pool. After that, those who did not retire or find another job in the administration would be laid off.

In other words, for a full year, the would-be laid-off workers get 60% of their salaries; then they may be let go. Throughout this entire wrenching ordeal of tax hikes, salary cuts, and pension reductions, not a single government job has gone by the boards. As I mentioned earlier, the Greeks want to cut the cost of government without cutting the size or scope of government – and it just doesn’t work that way.

Not that the Times gets it either:

Greece’s Constitution grants its public servants lifetime tenure.

That is not correct. The actual Article (#103) states that “Civil servants holding posts provided by law shall be permanent so long as these posts exist.” They can’t be fired without an insane review process, but their positions can be eliminated.

Yet Greece’s left-wing government refuses to let any public sector worker go (in no small part because the public sector is its political base – and it should be noted that the center-right opposition didn’t exactly “mind the store” very well when it was in power before 2009). Instead, they are trying, literally, austerity on the cheap.

Good luck with that.

Cross-posted to Virginia Virtucon

If I were Polish, I’d stockpile weapons . . . just in case

The Nazis and the Communists have come together to support Occupy Wall Street (Gateway Pundit).

The last time these two were in agreement, they erased Poland from the map for six years (it was imprisoned for fifty). I’d rather not find out what they have in mind this time.

Cross-posted to Bearing Drift

CLASS dismissed; Obamacare now a net deficit adder

According to the CBO, CLASS was supposed to slice $68.8B off the deficit from FY12-19. Total on-budget deficit reduction for that time frame was $65B.

In other words, without CLASS, O-care explicitly adds to the deficit stream, and repeal will save money.

Well, the Administration is now admitting CLASS will never be in session (NRO), turning the gigantic fiasco from a phony net saver into a genuine net spender.

The sooner this thing goes, the better.

Why Iran’s plan to assassinate the Saudi Ambassador is about more than just Iran

The Tehran regime was caught trying to assassinate Saudi Arabia’s Ambassador to the United States. The mullahcracyhad hoped to hire out a Mexican drug cartel (!) to set off a bomb at a restaurant, killing the Ambassador and a whole slew of Americans who would have been eating there, too.

Lest anyone think this was just a weird one-off, Secretary of State Hillary Clinton made clear some of what’s at stake (Weekly Standard, emphasis in original):

Here is what Secretary of State Hillary Clinton had to say during an interview with NBC’s Today Show about the Iranian plot to kill Saudi Arabia’s ambassador to the U.S.

Clinton believes that the alleged plot by the Iranian government to kill a Saudi official, which she called a “dangerous escalation,” came from the highest levels.  

“We think that this was conceived and directed from Tehran,’’ Clinton said. “We know that it goes to a certain level within the Quds Force, which is part of the Revolutionary Guard, which is the military wing of the Iranian government. And we know that this was in the making, and there was a lot of communication between the defendants and others in Tehran.

“So we’re going to let the evidence unfold. But the important point to make is that this just is in violation of international norms. It is a state-sponsored act of terror, and the world needs to speak out strongly against it.’’

Naturally, much of the reaction has centered on what action will or should be taken against the Tehran regime (Weekly Standard), although the U.S.-Mexican border has been a topic (NRO and WS), as well as American energy policy (NRO).

Yet something continues to be missing: any talk of repercussions for Tehran’s strongest ally and arms supplier – the Chinese Communist Party.

Few Americans (let alone citizens of the rest of the democratic world) think much about Zhongnanhai’s continued support for the mullahs in Iran – and that’s just how the cadres want it. For years, they have sought out opponents of America who were both willing to attack us and shield the CCP from any responsibility. Terror sponsors in the Middle East and Central Asia, for their own reasons, almost always fit the bill. That’s why the Iranian mullahcracy, al Qaeda, Saddam Hussein, the Taliban, and Stalinist North Korea have all found favor with the cadres since the Tiananmen Square massacre forced a reset of the Party’s geopolitical priorities.

Now, the first of that bunch (the mullahs) are taking the battle to American soil – and once again, the Chinese Communists are getting off scot free.

Meanwhile, in Afghanistan, our Pakistani “allies” have once again sided with the Taliban and al Qaeda against us (first WS link), while openly boasting of their friendship with Beijing; no consequences have hit the latter.

This cannot go on.

When Cuba decided it wanted a nuclear weapons program, no one in Washington tried to separate Fidel Castro from his weapons suppliers in Moscow. In fact, no Soviet satellite actions were considered to be free of Soviet influence – or unworthy of counteraction against the Soviets themselves by the free world.

The Chinese Communist Party needs a similar understanding of its attachment to its allies and beneficiaries. Washington should make it clear in no uncertain terms that Zhongnanhai will be held responsible for actions taken by their allies in Tehran, or Islamabad, or Damascus, or Pyongyang, or anywhere else on the globe.

This need not necessarily mean a military reaction. There are plenty of diplomatic and economic levers than can be used against the Communists and their allies. Acceleration and increase of arms sales to Taiwan, greater military cooperation with the CCP’s rivals in Southeast Asia (to be fair, the current Administration has already made moves on this front), encouragement of Japan’s remilitarization, threats of a retaliatory strike against China if Iran detonates a nuclear weapon by itself or throught its terrorist proxies (and yes, I do mean a nuclear retaliation), a public alliance with India, all of these should be considered and adopted (as well as my favorite, counterproliferation).

These policies (and the list is not exhaustive) would make it abundantly clear to the Chinese Communist Party that its actions have consequences, and force the regime to understand that being a superpower has grave responsibilities. The cadres in Zhongnanhai have been spared that lesson so far. It is time to teach them, good and hard if need be.

Cross-posted to the China e-Lobby

One cheer for Romney

Based on the reaction from last night’s debate (National Journal has the transcript I used), the race for the GOP nomination will come down to Mitt Romney and Herman Cain. Sadly, they both continued to get TARP wrong. Their current argument – that TARP was a good idea badly implemented – is an almost obvious way to sound like all things to all people. Even worse, defending TARP (Bush Administration) while going after its extension to GM and Chrysler (largely Obama Administration) will look ridiculously partisan and petty come next summer and fall. In fact, TARP was a fundamental mistake, the implementation simply made things worse.

What made this so disappointing for me was the comparison to Romney’s comments on Communist China – easily the toughest I’ve heard in years. John Hunstman preceded Romney with a full-throated defense of the “engagement” nonsense, and Romney proceeded to clean Huntsman’s clock. Coming on the heels of Romney’s keen perception of the CCP’s geopolitical danger, it points to a surprisingly well-rounded anti-Communism (if only Romney would complete the circle and recognize that the ChiComs’ currency manipulation is aimed at our allies’ exporters, and not us per se . . .).

In short, Romney continues to impress and infuriate at the same time.

Cross-posted to VV

Nobel Prize Winner in Economics: a message to Washington?

Over the weekend, the Royal Swedish Academy of Sciences awarded the Nobel Prize for Economics to Thomas Sargent and Christopher Sims – and in the process, the may have sent a message to President Obama and would be “stimulators” everywhere.

Now, as Tyler Cowen tells the Wall Street Journal on Sargent, “it is a mistake to view his work through the lens of politics,” and he’s right. Don’t expect Sargent or Sims on a campaign trail near you. However, in terms of policy, this is a very big deal. As I’ve mentioned before, Sargent was a pioneer in post-Keynesian economics (or, if you prefer Cowen’s phrase, “non-Keynesian”). The supposed consensus on economic policy that dominated Washington from 1940 to 2008 was demolished in academia back in the 1970s. For Sargent to be honored for his work just as Washington’s Democrats are trying the old Keynesian formula again is – or at least should be – something to give American pause. If anything, Sims, whose work is far more technical but essentially an assault on all economic modeling, has been even more damning of the Keynesian outlook on economics.

Contrary to popular belief, the biggest obstacle to reducing the size and scope of government has been the old, crusted consensus among economists of both parties and factions that government spending is necessary to grow the economy. In recent years, that debate has finally reached the political realm (this is the real reason the two parties can’t agree on anything these days; for the first time in decades, the Republicans are actually getting decent economic advice). No one did more to crack and crush that consensus than Sargent, and he has earned the honor he has received (Sims, too), but the timing of the award may have – or should have – more impact than the award itself.

Cross-posted to Virginia Virtucon

Mitt Romney may actually get it

Mitt Romney gave his first major foreign policy speech at the Citadel today, and for anti-CCP folks, it was a pleasant surprise. Of course, presidential candidates fortunate enough to be elected have a habit of sounding anti-Communist before Election Day, only to fall into the “engagement” morass soon after the victory party. Still, Romney broke new ground for a top-tier candidate, new and welcome ground.

In previous post-Tiananmen election cycles, incumbents hew the engagement line while challengers rail about economic threats from the CCP. Romney is the first major candidate I remember to go straight to the geopolitical threat. Here’s his first mention of the problem (transcript courtesy of Katrina Trinko - NRO, emphasis added):

China has made it clear that it intends to be a military and economic superpower. Will her rulers lead their people to a new era of freedom and prosperity or will they go down a darker path, intimidating their neighbors, brushing aside an inferior American Navy in the Pacific, and building a global alliance of authoritarian states?

Let me restate for emphasis: no other top-tier candidate for president has ever even noticed, let alone warn of the CCP building an anti-democratic alliance – not one. This is a major step forward for anti-Communists; even most of our prominent allies in Congress are missing this.

Later, Romney reiterated his concerns about the world with a list of “ a handful of major forces that vie with America and free nations, to shape the world in an image of their choosing . . . determined, powerful forces that may threaten freedom, prosperity, and America’s national interests” – and the Chinese regime made the list.

This is not to say it was a perfect speech. When Romney talked about what he would do as president, East Asia was not specifically mentioned. India was never mentioned at all, a glaring faux pas on several levels.

Still, Romney has given hope to anti-Communists everywhere that he at least understands better than anyone else how dangerous the Chinese Communist Party is to the democratic world. If that is maintained by Romney as GOP nominee (if he is to be that), it could be one of the surprise issues of the 2012 campaign; if President Romney (if he is to be that) turns it into policy, it could dramatically halt the CCP’s global march, and perhaps even hasten its demise.

I once thought I could never be able to support Romney’s bid for nomination. I can’t say that anymore after today.

Cross-posted to the China e-Lobby and Bearing Drift

Steve Jobs: Only in America

The passing of Steve Jobs has led to a lot of commentary. Most, as expected, focuses on his later life: the innovations he spawned, the consumer tech revolution he led, the fact that his vision came without government regulations or subsidies, etc. Kevin Williamson – over at NRO - summarizes it better than anyone:

Mr. Jobs’s contribution to the world is Apple and its products, along with Pixar and his other enterprises, his 338 patented inventions — his work — not some Steve Jobs Memorial Foundation for Giving Stuff to Poor People in Exotic Lands and Making Me Feel Good About Myself. Because he already did that: He gave them better computers, better telephones, better music players, etc. In a lot of cases, he gave them better jobs, too. Did he do it because he was a nice guy, or because he was greedy, or because he was a maniacally single-minded competitor who got up every morning possessed by an unspeakable rage to strangle his rivals? The beauty of capitalism — the beauty of the iPhone world as opposed to the world of politics — is that that question does not matter one little bit. Whatever drove Jobs, it drove him to create superior products, better stuff at better prices.

This is how most will remember Jobs, and I can understand why. However, there was more to it than that. Steve Jobs wasn’t just a great success story, he was arguably one of America’s greatest failure stories as well. His success speaks well for him, but the fact that he could recover from the depths to which he fell speaks more profoundly for America (and, I hope, to America as well).

Lest we forget, at age 30, Steve Jobs was an abject failure. Fired from his own company, bested by rival Bill Gates, he was – in 1985 – just another visionary who had a hand in the computer age, but was laid low by his own hubris. The 1980s Steve Jobs was a tragic story about the rough-and-tumble world of American business (the best depiction of this comes from a now long-forgotten 1998 TNT TV Movie, Pirates of Silicon Valley). That said, at least the 1980s Jobs was a noble failure. By contrast, the 1997 version was a joke: a last gasp move by a desperate and dying Apple; a has-been who needed funding from Gates himself retake the tech version of the Titanic. Those who remembered and admired Jobs shook their heads as he talked about moving Apple into consumer products. What could he be thinking?

Fourteen years later, the joke’s on us. Hardly anyone remembers (and no one under 30 is even knows) the events of the paragraph above. But I think they should, because while Jobs’ success is praiseworthy, his recovery is a remarkable and stunning tale that should provide hope and inspiration to every American.

We’d like to think that Steve Jobs could only succeed here, but success stories circle the globe these days. However, I genuinely believe there is nowhere else on Earth where someone could fail as spectacularly as Jobs did and come back to be such a great success and pivotal person. Jobs “had it all,” lost it all, and earned it all back.

That happens only here, in the land of the second chance; the land where we still let the market pick winners and losers; where we still let the market turn yesterday’s winner into today’s loser and – if justifiable – tomorrow’s winner once more.

Steve Jobs began his second act in technology at 42; in just fourteen years he rescued his company, restored his reputation, and revolutionized how we work, live, and play. As I said, he could have “made it” just about anywhere. But plumb to the depths he fell and still come back to do all he did?

Only in America; only in America.