The editor’s opinion from Marketplace, Northeast Wisconsin’s business magazine. (Obligatory disclaimer: Most hyperlinks go to outside sites, and we’re not responsible for their content. And like fresh watermelon, peaches, pineapple, grapefruit, tomatoes and sweet corn, hyperlinks can go bad after a while.)

June 2, 2008

Spoilers or shifters?

Back in January, National Review’s Donald Luskin wrote a column in which he hoped that Republican presidential candidate Ron Paul might serve the purpose of focusing the other Republican candidates on pro-growth economic policies:
On the economics front, Paul is a delightful paradox. If you crack the nut shell and look objectively at what Paul is really advocating, conservatives will find that Paulonomics looks an awful lot like Reaganomics. Paulonomics emerges as a refreshing return to conservative roots: small government, low taxes, deregulation, and sound money. If Paulonomics seems nutty, that may say more about the sad state of events today, with “big government conservatism” having become the new touchstone. …

Paul would outright eliminate what he believes are wasteful and counterproductive federal programs, such as the departments of Education and Energy. Nutty? Most Republicans wouldn’t dare talk about eliminating the Department of Education in the age of “No Child Left Behind.” But Paul reminded me in a recent interview that it wasn’t so many election cycles ago that scrapping this department was an official plank of the GOP platform.

And if you mean it about cutting the cost of government, you’ve got to after the big-ticket items. As to the biggest-ticket items of all, Paul would decommission Social Security and Medicare by honoring obligations to those who are utterly dependent, but letting young people opt out of both systems entirely. Nutty? Let’s be honest: Most conservatives want to do exactly this, but are afraid to say so in a political environment where even mandatory personal accounts are vilified as a “risky scheme,” as Al Gore famously put it. …

If I’m right and Ron Paul doesn’t just fade away as the primary season progresses, he’ll make a real difference. … It’s on the economics side where I think he could make the biggest impact. In an election year in which bigger government, higher taxes, and protectionism seem to have so much momentum, Paulonomics may be just what is needed to rebalance the debate in favor of growth.
Paul actually never officially abandoned the presidential race, but obviously he’s not going to be the GOP nominee. In somewhat of a surprise, he’s not going to be the nominee of the Libertarian Party either (he's running for reelection to Congress instead); former U.S. Rep. Bob Barr got the Libertarian nomination Memorial Day weekend.

The concern for Republican-leaning voters is that Barr will siphon off votes that would otherwise go to John McCain, in the same way that Ralph Nader supposedly siphoned off votes that would have otherwise gone to Al Gore, thus getting George W. Bush elected in 2000, or that H. Ross Perot supposedly siphoned off votes that would have otherwise gone to George H.W. Bush, thus getting Bill Clinton elected in 1992. Perot, however, had no set ideology, unlike Nader (who is running again this year) and Barr.

But third-party candidacies can have a purpose even if voting for them is a wasted vote in that neither Nader nor Barr have any hope of being elected president. Belmont University Prof. Jeff Cornwall, who heads Belmont’s Center for Entrepreneurship, hopes that Barr is able to do what Luskin hoped Paul would be able to do — shift the presidential debate on economic issues in a more pro-growth (and, in Cornwall’s case, pro-entrepreneur) direction:

I have worried openly that both major parties in the U.S. are following agendas that have little to offer for entrepreneurs. All of the remaining candidates in both parties favor programs that will lead to higher taxes and expanded roles for government. …

What helps entrepreneurs is lower, simpler taxes and less governmental involvement in the economy. These are the two of the major issues addressed thus far by Barr. He favors a massive roll-back in the role of federal government and a change to a consumption tax (which includes a repeal of the 16th amendment that created the income tax). …

He does offer a voice for those who favor more freedom and less government. The last two Republican Presidents and the current party nominee have all left that part of their party behind. Just a Nader pulled the Democrats sharply left, as we see in the two final candidates remaining this year, perhaps Barr could help pull the Republicans back to the right.

Paul didn’t really shift the GOP debate much, as demonstrated by the surprising success of Arkansas Gov. Mike Huckabee, who doesn’t seem to grasp the meaning of the word “fair” when it refers to trade or taxation. Democratic nominee Barack Obama is an economic disaster waiting to happen, and his primary opponent, Hillary Clinton, has abandoned her husband’s relatively better economic policies for the usual Democratic fearonomics.

One reason conservatives are hesitant about McCain is that he has strayed from the current iteration of the GOP bible on numerous occasions — he worked with U.S. Sen. Russ Feingold (D–Madison) on bad campaign finance reform law, he voted against President Bush’s 2001 tax cut proposal (because of a lack of spending discipline), he takes a position on immigration that is not nearly as punitive as much of the GOP wants, and he doesn’t seem skeptical in the least about human-caused global warming.

But if you look at his stand on economic issues, most of them make sense, though some are not very specific:
  • Keep tax rates low and at current levels. (Yes, tax rates should be lower, but they should not be higher, which is the point and which is what Obama advocates.)
  • Require a supermajority to raise taxes. (Excellent idea, although I’d prefer a unanimous vote instead of a three-fifths majority.)
  • “Low taxes on dividends and capital gains” and other investments. (See the first bullet point.)
  • Allow immediate deductibility of equipment investment, and reduce corporate income tax rates from 35 percent to 25 percent. (The corporate tax rate should be zero, but 25 percent is better than whatever’s hatching in Obama’s hopeful mind.)
  • No Internet taxes and no new cellphone taxes. (Because, as his Web site points out, “John McCain understands that the same people that would tax email will tax every text message — and even 911 calls.”
  • Reduce trade barriers. (This is particularly important to Wisconsin, because Wisconsin businesses, particularly in agriculture, are among the biggest beneficiaries of free trade.)
One area McCain doesn’t focus on, but Paul and Barr do, is the importance of sound money. The deflation of the dollar’s value is one of the three biggest reasons that gas prices are now within spitting range of $4 per gallon. There are benefits to a weaker dollar — it makes the price of American goods more in reach of foreign buyers — but a weaker dollar makes everything we buy, especially gasoline, more expensive.

I’d like to see McCain focus on other areas that Paul and Barr focus on, including inflation, excessive regulation, personal liberty and privacy, and property rights (particularly with environmental issues). For that matter, I’d like to see both McCain and Obama focus on, as US NewsJames Pethokoukis suggests, “what the candidates think needs to be done to increase innovation, productivity and growth. Every problem America has is harder to deal with if we fail to maximize all those things.”

I’m not sure McCain is going to focus on those other areas, which is why voting the right way for president is necessary but not sufficient. McCain’s Senate history proves this — Bush could have (that is, should have) vetoed McCain–Feingold, instead of rather transparently signing it so he could say he favored campaign finance reform, while simultaneously hoping the Supreme Court would find it unconstitutional (as they should have, but did not). It would have been, and would be, helpful if congressional Republicans were less feckless and more interested in getting the right things enacted into law than in merely perpetuating their remaining in office. Their focusing on the latter over the former is why they're losing right now.

1 comment:

charles lawlesss said...

So is or isnt Ron Paul endorse endorsing the barr root ticket? Ive looked everywhere but i cant find what Paul has said or is saying about Bob Barr, other than they are friends? Has anyone heard rumors that Paul might be thinking about bumping Root and trying to get the veep spot? I read an article posted on suggesting this might be the case?
Also what qualifies wayne root to be Vice on the Libertarian ticket. I read a bio description on wayne root that said he was a tv host and in the gaming industry? Thats strange credentials for a Veep. I read the Bio on Curious what everyone thinks.