What 'stimulates' American commerce?

If Republicans can modify or delay the “stimulus” package, we might be in the midst of a debate over whether our economic woes can be overcome with government policies that encourage production or consumption. That is not likely for, as “post-partisan” President Barack Obama let slip, “We [meaning Democrats] won.” There has been a major divide between parties over this question at least since the Great Depression, and especially since President Reagan led a successful charge for cuts in income tax rates that gave rise to a 25-year boom.

The two opposing views are supply-side and demand-side political economy. The first holds that prosperity is driven by business enterprise, facilitated when income and other tax rates are low. The second maintains that the cause is consumers with spending power, boosted when federal spending “primes the pump” with new government programs.

Let us admit that supply and demand are as inseparable as the concave and convex sides of a curved line. No one can buy what is not for sale and nothing can be sold when there are no customers. But bearing in mind that commercial republics like the United States are vastly more prosperous than primitive societies largely dependent upon agriculture, we must consider that something accounts for the difference.

That “something” is the entrepreneur, who neither commands wealth nor depends upon the beneficence of others. Unlike landed aristocrats or powerful oligarchs, those in business for themselves provide a good or service which a sufficiently profitable number of people need or want, and freely choose.

The supply-side approach demonstrated its capacity for fostering national prosperity when Congress in 1981 reduced the highest income tax rate from 70 to 50 percent, and decreased the number of brackets from 14 to five. Double digit inflation, unemployment and interest rates all fell to lower levels.

In the early 1960s President Kennedy effectively made the case that the existing top tax rate of 91 percent on incomes of $200,000 yielded little revenue to the government because wealthy persons legally shielded their income in ways Congress had made possible with tax breaks.

Why is this? The explanation lies in a combination of human nature and mathematics. High tax rates are, to say the very least, burdensome. So if they can avoid it, people will find ways around them. If someone earns a million dollars and is taxed at 91 percent, that only theoretically (but not actually) nets the government $910,000 . For if he reduces his taxable income through various tax shelters to, say, $500,000, the government gets only $455,000. And even this is fanciful.

On other hand, if the income tax rates are lowered, the enterprising businessman is more likely to invest more and earn more on his money. If he then makes two million dollars under a more favorable tax regime, at 50 percent that yields a million dollars, or more than twice as much as he actually paid under the higher tax rate.

Thus, not only did this policy revive stagnant commerce, it yielded more revenue for the government than ever. Indeed, even substantial federal deficits each year during the Reagan years put no drag on our growing prosperity. We had high defense spending to face down the Soviet military threat along with increases in social welfare spending, but lowered tax rates kept commerce humming.

The demand side approach was first implemented in the administration of Franklin Roosevelt. Income tax rates, which already had risen in the previous administration, went even higher, causing the recession inherited from Herbert Hoover to expand into a Great Depression as the government added agencies and bureaus on an unprecedented scale.

Deflation and high unemployment plagued us during FDR’s first two terms, and only World War II’s demands for armaments and supplies turned the corner. Then, for the first time, income tax was withheld from pay checks to ease the pain of taxing not just the wealthy (who can’t pay it all) but everybody else with any income.

Currently, Democrats are saying that the failures of the New Deal were due to the federal government not spending enough money fast enough. But that is just so much blowing of smoke, for even the government cannot spend money fast enough to stimulate anything except a passion for the political power made possible by enlargement of government beyond its constitutional functions.

The government cannot spend us into prosperity and certainly cannot pay for it with confiscatory tax rates which free people will always find ways to avoid, if they do not move their enterprises elsewhere. Real political economy consists in restraining the government, not unleashing it.

What rule by Democrats brings

It has often been said that, as California goes, so goes the nation. And for good reason. With the largest population and so many talented and influential people, the Golden State has long set the standard, for good or for ill, in both the public and private sector. It is the public sector that concerns us now. Long before Democrats took control of our national government, they had effective control over California government, whether or not there were Republican governors. Democrat control of Congress for half a century limited what Republican could presidents do, too.

Some have likened California government to a kind of social experiment in which every political, economic, social or pseudo-scientific nostrum gets free play because of the iron lock Democrats have on the legislature. As long as redistricting has been in the hands of the legislature, district lines have been drawn to freeze the political advantage of the permanent Democrat majority and Republican minority.

Even term limits have done nothing to change this. Time will tell whether the measure enacted by California voters last year to put the redistricting power in a commission will make any difference either.

In any event, because of their dominance–and more important, because of their "progressive" (i.e., interventionist, latitudinarian) principles–Democrats now threaten to enfeeble commerce, drive away entrepreneurs, curtail government by consent and, as practically everyone knows, bankrupt the state's government.

Surely the most useless comment that is made about politics is that party labels don’t matter, that one should vote for the person and not for the party, that there’s no difference between the parties, that we can all get along if we just put aside partisan differences, ad nauseam.

California Republicans are pretty disappointed in Gov. Schwarzenegger because he wants to balance the budget with a combination of spending cuts, tax increases and borrowing (not to mention kicking the fiscal can further down the road to the "out years"), and they are right to be. A more principled man, like Tom McClintock, for instance, who also ran in the recall election that dispatched Gov. Gray Davis, would be standing firm.

However, since Californians have who they have, and especially since there are lopsided Democrat majorities in both the Assembly and the Senate, a "solution" will ultimately be found that is fiscally irresponsible. What is needed is not only need a staunch Republican governor, but also a Republican legislature.

Democrats on principle oppose tax cuts and spending cuts because they want a big, intrusive government that overrides free citizens in a free marketplace. They believe that markets are incapable of allocating resources fairly, because they believe "fair" means equal conditions rather than equal rights. They are oblivious to the fact that unrestrained government spending, with its corollary of high taxes on incomes, sales and properties, is lowering the standard of living and diminishing economic opportunities.

The flip side of government micro managing commerce is moral latitudinarianism for the populace. Sexuality freed from moral or legal constraints is consistent with the short-sighted, present-oriented perspective that the government has aided and abetted via the credit crisis in which many people, rich and poor and in between, have gotten in way over their heads.

Consistent with this pernicious policy is the virtual conspiracy by all three branches of state government to challenge the right of the people to determine what their constitution shall protect or secure. Together Democrat Attorney General Jerry Brown, Democrats in the legislature and, of course, a majority of the State Supreme Court seek to set aside the clear decision of Californians last fall to define marriage as the union of one man and one woman.

The Court’s ruling last May that homosexual and lesbian couples have a "right" to marriage, which not only the current common sense limitation but even civil unions evidently cannot adequately satisfy, might have provoked a constitutional crisis from an attorney general who is required to uphold the law in court or a state legislature which is authorized to legislate, but in fact all three branches are in cahoots.

The shocking thing about the California government’s movement to shut down Proposition 8 is that it’s no secret and therefore it is not, strictly speaking, a conspiracy. Considering the fact that it is aimed at the right of self government, the foundation for our republic, it is deserving of the massive public outrage that an offense of this magnitude should generate. It must not be allowed to stand. Only Republicans can be counted upon to perform this necessary work.

Recipe for Republican renewal

How could the GOP could become the Grand Old Party once again? Their chances in 2010 aren't very good right now, even if the Democrats go hog wild with more pork-barrel spending, and big-government programs. The past eight years of George W. Bush and his administration don't inspire a lot of confidence for most Americans in the Republican party. Now, it's still possible the party could regain relevance in the next few years. It's not an easy process, and will require attributes that a lot of politicians don't have – or if they do, they're in short supply. Such as common sense. Economic and financial literacy. Remembering and governing by the founding principles of the Republican party and the United States.

Vince Lombardi told his Green Bay Packer team back in the 1960s, “Gentlemen, this is a football.” It was his way of stressing the fundamentals to his players. That's exactly what Republicans must remember (and put into governance) if the party wants a chance in hell of staying relevant – or even in existence. It's the Constitutional, limited-goverment principles our country was founded on.

Simple things like cutting (or at least freezing) spending... balancing our budgets... and making sure new programs are necessary before approving them. And utilizing our military for national defense – not international offense into foreign lands, with no clear enemy, goals or exit strategy.

It's definitely not the “neo-conservative” bill of goods that was sold to the GOP and our country. And it's not blindly supporting a leader regardless of how they govern, because they have an “R” behind their name.

That's the reason Republicans lost en masse in 2006 and 2008. Average Americans looked at supporters of the party and the President as loyal Kool-Aid drinkers who acted like Seargeant Schultz from Hogan's Heroes (“I know no-thing... I see no-thing!”), and saw nothing wrong with anything President Bush did. It was “Hallelujah, Hail Bush, Pass the Ammunition.”

Republicans and some “conservatives” who looked at everything President Clinton did with a critical eye, turned a blind eye to the Bush Administration's policies that increased our country's debt, and decreased our liberties – all in the name of the “War on Terror.” Never mind that terror is a tactic, not an enemy – and makes about as much sense as a “War on Frontal Assaults.” The WOT rings hollow when our southern border with Mexico is an absolute sieve, and it's obvious the Administration was never serious about border security, or discouraging illegal immigration.

Americans saw borrowing and spending skyrocket to new all-time highs... and “staying the course” in two military conflicts, because we hadn't “finished the job” yet – whatever the hell it was. Even though back in 2003 the President declared, “Mission Accomplished.” Combine this with the biggest stock market crash since the Dirty 30's, and most folks on Election Day were ready for “change.” They didn't care about the details – as long as it wasn't the policies or party of George W. Bush.

Effective leadership today will require a lot of courage and candor from elected officials to citizens, bordering on brutal honesty. Especially when it comes to financial and economic matters, and how they affect policy decisions across the board.

The starting point for all decisions must be made with this premise: The United States of America is bankrupt, along with at least a dozen states. The state of California is Exhibit A. We can no longer afford to be the world's policeman, or show other countries the American way of life, whether they want it or not. The bailouts and stimulus programs (whether from Bush or Obama) are probably being funded by printed – and not borrowed – money, which is debasing the currency, and will cause high (if not hyper-) inflation in the next year or two.

We're the world's largest debtor nation, owing a good chunk of that debt to foreigners. The Fannie Mae and Freddie Mac bailouts last September were done to appease these foreign investors, who could have put in “sell” orders, and really wreaked havoc with our bond and real estate markets. The more important international battles in the short to medium-term will be financial and economic, and not military.

In the coming years, there will major paradigm shifts in the US. There will be a reduction – if not an elimination – of guaranteed pensions from corporations, state and federal governments. Fewer benefits, an increase in retirement age, and means testing will probably all be in place. Wall Street will no longer be a major financial center or sphere of influence, because of the arrogance, corruption and excessive greed of investment bankers – and that includes Hank Paulson.

For you “true believers” who think Paulson is a hero deserving Man of the Year honors, I'll sell you ocean-front property in Wyoming. Paulson made a ton of money shorting the mortgage-backed securities that he helped create – which means when the value of these “assets” went down (and he knew they would, because they were dogs from the get-go), he cleaned up. The $850 billion Banker Bailout Bill he railroaded through Congress was a scam as well. Banks have hoarded the money, and it hasn't gone to buy up troubled assets as Paulson said it would.

Wall Street and the stock market are a huge Ponzi scheme, and 401(k) plans will go down in history as one of the biggest scams ever foisted on American employees/investors. Warren Buffett says it best: “If you're at a poker table for awhile, and you don't see the sucker – you're it.”

Americans are starting to realize they've been played for suckers by Wall Street with the help of Democrats and Republicans, and they're none too happy about it. I've got a hunch that the Madoff scandal is only the tip of the proverbial iceberg, and we'll see more stories like this in the future.

Foreign leaders, central banks and investors are looking at our country and leaders like we've smoked large quantities of crack cocaine. They don't believe in or trust American leadership like they used to – and neither do a growing number of citizens.

I realize that some of you may disagree with what I'm saying, and think none of these events could ever happen in the US. Or you think that I'm not being a loyal Republican. Frankly, I don't care. I call it like I see it, and my predictions in the past have been pretty accurate. I knew that John McCain was a no-hoper back in July, and if you didn't figure it out by Labor Day, you were truly drinking the red-state Kool-Aid. Think about this: If the new-fangled, neo-conservative Republican way was so great, then what caused the electoral a**-kicking the last two elections?

The only way the GOP can regain prominence is to totally reject the foreign and domestic policies of George W. Bush, and get back governing by the limited-government, Constitutional principles that made this country great. And not just giving it lip service – but actually putting it into practice. Voters today are increasingly angry about what's going on; and their patience for nice platitudes, speeches, or general BS is quickly running out.

A lot of Obama supporters engaged in the cult of personality, but too many Republicans did as well. Either the party gets back to the fundamentals of our country's Founders, or it's doomed to irrelevance and a footnote in history.

Ken Blackwell for RNC Chairman

The Republican Party's vitality as we enter 2009 is attested by six strong candidates vying to be chairman. Ken Blackwell of Ohio, a longtime personal friend and ally, is my pick for the choice that will be made by 168 members of the Republican National Committee at the end of January. Blackwell is a time-tested Reagan-Kemp conservative and a natural leader.

As Ohio Secretary of State, his tough supervision helped an honest process for the 2004 election that saw President Bush gain the decisive electoral votes for reelection.

With better timing, Ken might have been Governor of Ohio today; he stormed to the 2006 nomination but lost in the Democrat tide that November.

That he also happens to be African-American is not a big deal, but it doesn't hurt. Nor does the fact that his wife is a reform-minded inner city school superintendent in Cincinnati.

His bid for the RNC chairmanship is detailed at KenBlackwell.com.

Early last month, Politico had a full rundown on the six contenders.

This week, The Hill updated the race, including a note that Blackwell has picked up the endorsement of Mark Hillman, Republican national committeeman for Colorado.

Nine lessons from my CD-2 race

Needless to say, 2008 was not a good year for Republicans. Our nation faced major financial and energy crises brought on by direct actions and inactions of Democrats in Congress. Not only did Republicans fail to capitalize on these issues, but we were defeated at nearly every level. It is easy to try to lay the blame on the unpopularity of George Bush, or an ineffective campaign by John McCain or on a media bias. However, if we do not identify and address the root causes of our resounding defeat this year, we are destined to experience further political losses in the future.

Republicans have lost significant ground over the past four years. All areas of political advantage have suffered, including: lack of a positive message that resonates with people; lack of highly qualified, articulate candidates that are backed by the party at all levels; the need to repair the Republican brand which has been severely damaged; poor communication at all levels of the party; lack of leadership from the top – down; the need to appeal to the young generation; and the need to increase Republican voter registration.

Democrats had a full court press of registration while Republicans felt it was somebody else’s job. We must also increase our fund raising efforts at all levels, as well as increase grass-roots community involvement. Because Democrats have a media advantage, we must find alternative and more creative ways to get out our message.

I believe that to regain a majority in the state of Colorado, we need to address these fundamental systemic root causes of a weakened Republican party. Colorado is a center-right state, and we can regain majorities at the state and federal levels by articulating consistent and inspirational messages.

By turning around each of the shortcomings that I observed as a congressional candidate this year, we come up with the following 9-point agenda for a better showing next time.

1. Articulate a Positive Message

We need to articulate a positive message based upon conservative principals and values. People want to be inspired to vote for a candidate, not against the opponent. We must convey a positive message, based on the greatness of America. Ronald Reagan and the ’94 Republican revolution were so successful because we communicated a positive message from the top down. We must communicate that message always, even if it is not articulated from the top.

The fundamental messages that strike a chord with the people include: Personal accountability, freedoms and opportunities, as well as national security. It is acceptable to demonstrate contrast with the Democrats, but primarily negative campaigns never work. While trying to appeal to unaffiliated voters it is acceptable to present contrast, but it should be presented in a non-confrontational manner.

2. Candidate Development

People want to find reasons to vote for candidates, or to join a party. We must develop inspirational candidates and party leaders who think for themselves and are not partisan parrots. We must develop candidates at every level and compete in every race in every district. The Democrats have been very successful with their 64 county approach in Colorado, while Republicans have only tried to maintain status quo.

We cannot grow as a party or as a philosophy with a hunker-down mentality. We must adopt a Fifty-State approach nationally and a 64 county approach in Colorado. State wide races can be won by being competitive in Democratic strongholds. Ignoring these districts will further widen the divide and make is harder to ever change the tide. I believe this in one of the major contributory factors in Republican losses this year.

Unaffiliated voters do not want to be represented by partisan hacks. They want independent thinkers who will stand up for what they believe in. Most voters want the same opportunities and freedoms that make America great. If we communicate the conservative principles that provide the foundation of our decisions, Republicans will attract independents and even Democrats to their side.

Conservatism did not fail us this year, our abandonment of fiscal responsibility and our lack of inspirational leadership failed us. This is demonstrated by the fact that Obama ran on a platform of tax cuts and eliminating wasteful government agencies. Even though Obama lacked specifics, and was not challenged by the media, his message resonated better than McCain’s message.

3. Intra-Party Communications

We have had poor intra-party communications at all levels. Infighting and posturing have diverted energy that should be used to get our message out. I believe we must generate Candidate Handbooks and lessons learned manuals at all levels: Handbooks to include fund-raising ideas, lessons learned, campaigning “dos and don’ts” etc... These handbooks must cover all levels of party organization including State Party, county, and local republican clubs as well as candidates and candidate committees.

We must also collect and share available data about precincts, lists of voters and voting history. Gathering statistical data on registration is a key component in obtaining metrics by which we can gage our progress and focus in on programs that work. The current voter registration data and information process has been too cumbersome and the availability of accurate data has been lacking.

Additionally, Republican organizations must make more effective use of websites, blogs and email blasts. We are not making effective use of the internet for communication, and this must be addressed.

4. Party Leadership

I believe that with several exceptions, our party’s leadership has not adequately supported candidates, state and local organizations. Along with the lack of a strong, consistent and positive message, our national leadership seemed resigned to defeat this year and hoarded resources to a few targeted races. Leadership at the county level must be strengthened. Party leadership must be enforced with defined roles and responsibilities for leadership positions at all levels. We cannot tolerate complacent or indifferent performance from our party leaders. If they do not perform, they should be replaced.

5. Youth Movement

We need to plant seeds and take our message directly to the youth of America through the means they communicate, with a message that resonates with them. Several methods of effective communication are Facebook communication networks, internet sights & blogs, Young Republican and College Republican organizations. I believe county level organizations should subsidize and encourage local youth groups. I recommend at least 10% of county funds go to youth group organizations, such as Young Republicans. We must also focus on issues which resonate with youth including education, the environment, government fiscal responsibility including long-term social security viability.

6. Voter Registration

We have lost significant ground this year on the voter registration front. We must be diligent in our efforts to register as many new voters as possible. To do this we must contact newcomers into the area (County level responsibility). We must also hold registration drives at any public events. We must make people feel welcome and connected to the Republican party. We should find people’s interests and connect with unaffiliated voters to make them realize they identify with the principals of the Republican Party.

7. Fund Raising

Traditionally, Republicans typically held advantages in fund raising. That advantage is gone. We must reignite our find raising efforts at all levels. We focus too much at the top levels and ignore down-ticket candidates. Grass-roots level communication starts at the lower levels and we must support candidates financially to help communicate our message. Further, we must adopt a 64 county approach and support every candidate, every race, every time.

If every registered Republican in a congressional district sent their candidate $10, they would have over $1M to get our message out. This will have a significant affect on raising the tide and making all districts competitive. We must also put pressure on the federal and state levels to adopt this approach. If we had a holistic approach this year, we might be celebrating a McCain victory right now. I also propose adopting a “Change for Change” program that encourages Republicans to start spare-change jars, every two years, tally it up and divide the monies to candidates, with largest apportionment to the top ticket candidates.

8. Community Involvement

The party and all prospective candidates must be continually involved at the community level, and not just in election years. Voters (particularly unaffiliated voters) will vote for candidates they know personally or know of their community involvement. Being active in the community will generate positive press and the voters receive a sense of connectivity with the candidate.

Examples of community level involvement include Rotary Clubs, Optimist Clubs, Schools, PTA, sporting teams, Astronomy Clubs, VFW, Kiwanis etc... I also propose that we hold fund raisers for clubs typically not associated with Republican organizations (for instance environmental causes). Community level activists must also promote national level candidates. As an example, at every town parade I attended this year had dozens of Obama supporters, and no organized McCain supporters. There were people who would carry a McCain sign, but there was no organized effort to show support for the top of our ticket.

9. Communication Methods

We must use all available communication avenues to get our message out. We are the party of ideas, we must articulate those ideas any opportunity we can. Communication venues include: Websites, Blogs, Facebook networks, Yahoo groups, Talk radio, Letters to the editor, Community events and Conventional media (newspapers, TV etc...). There is no debate that most conventional media outlets favor Democrat principles and candidates. It serves no purpose to whine or lament this reality. We must increase our efforts to counter it. With new communication and information venues we can effectively get our message out.

Summary

The Republican Party is the party of ideas and we can regain a majority in Colorado by communicating those ideas in a clear, consistent and positive manner. A clear majority of people identify with our message, so we must be confident and consistent in connecting with people about our message. We must adopt a 64 county approach in Colorado (50 State nationally). We must compete in every race and support our candidates, even in Democrat strongholds. We must develop strong community involved candidates that can effectively articulate our message. Strong party leadership with clearly defined roles and responsibilities will also increase our effectiveness and ability to communicate within the party. We must take advantage of new media communication methods and appeal to a new generation of voters.

I believe that by addressing these systemic issues, we can turn the tide of the political winds, and regain a majority at the state and federal levels, but it will take diligence and determination.

Scott Starin lives in Lafayette and works in the aerospace industry. He was the 2008 Republican nominee for Congress in Colorado's 2nd District.