Senator Rubio on the Obama Administration’s Scandals and Intimidation

Let’s see, in the past week or so we have learned that Obama administration officials in Libya knew that a video had nothing to do with Benghazi, that the IRS has been targeting conservative political organizations, that the Health and Human Services Secretary has been asking private industry to pay for Obamacare, and that the Department of Justice has been tracking phones of journalists. Senator Rubio is calling this a culture of intimidation.

I’ll let him speak for himself, but his point is this: when a government administration is concerned primarily with politics and will divide people to win politically, it easily turns into an abusive operation that intimidates the people whom it represents.

Even David Axelrod had it right today when he admitted that it’s impossible for a President to be aware of what’s going on in a government this large. Too bad this large government is what this President has pushed for. Axelrod may not know it, but he made a very powerful defense of conservatism by accident.

Contrasting Center-Right Healthcare with the Affordable Care Act

Ezra Klein has considered an outlined center-right healthcare plan offered by Ramesh Ponnuru and Yuval Levin, and a summary of Republican healthcare priorities provided by Bob Domenech. In response, Klein displays a misunderstanding of (or just misrepresents) the true center-right market approach to healthcare while still highlighting the important contrast between such an approach and the Affordable Care Act. As Klein suggests, the center-right approach to healthcare isn’t a direct replacement policy to achieve the same goal as the Affordable Care Act, but is directed to a different goal. That goal, however, is actually better than the one the Affordable Care Act is meant to achieve.

“We Don’t Have a Spending Problem”

Several Democrat politicians, including the former Speaker of the House, have recently been on the record asserting that our country’s financial and economic problems are not because we are spending too much, but because we are generating insufficient revenue. While it’s obviously true that by definition debt means taking in less revenue than the government spends, the point these politicians are trying to make is that we can’t cut spending because spending is what creates jobs and economic growth that produce revenue. To listen to them say it, we have to keep investing in education, research, and infrastructure to spur job creation and economic growth. This is instructive, so let’s consider this argument.

In order to not have debt, the government must collect at least as much in tax revenue as it spends. Federal tax revenue comes from various sources generally linked to some form of income. People pay a portion of their income, depending on the source, in federal taxes (if the income reaches certain levels). Therefore, to generate tax revenue paid at less than 100% of a person’s income, the taxable income must be higher than the amount of government spending used to generate the income in order for there to be no deficit from that spending. Let’s consider an example with simple numbers to illustrate this.

Say the average amount of income the federal government took in taxes was 25%. If the federal government spent $1 trillion, it would have to generate $4 trillion in taxable income to make a full return on that investment and avoid any deficit (1/tax rate x spending). That’s a 400% return on investment measured in taxable income, which is very high and unheard of. Return on investment for government spending is often measured in financial capital, and is nowhere near that rate of return. Even if the average federal tax liability were 50%, spending would have to produce twice as much in taxable income to avoid a deficit, which is also unheard of. Also, keep in mind that higher tax rates can limit investment and growth.

So we can’t simply find a higher tax rate to reduce the level of taxable income that must be generated by government spending to avoid a deficit. In addition, this hypothetical considers only new investments and ignores the $16 trillion in debt we already have. We also have tens of trillions of dollars in unfunded liabilities for entitlement programs. So any government spending to create jobs would have to produce not only enough taxable income to pay for itself, but for our current liabilities, in order to actually reduce the debt. That level of return is never going to happen.

The problem is therefore not one of revenue, because there will never be enough revenue to pay for the spending that arguably generates it. The problem is that constantly adding debt is holding down the economy and threatening our future, and the source of that problem is spending that can never produce enough revenue to pay for itself. In other words, spending must be reduced.

Krauthammer to Republicans: Do Nothing on Sequestration

Charles Krauthammer offers some solid, although perhaps counterintuitive, advice to Republicans on the sequester: do nothing. This is exactly what President Obama and Senate Democrats did on the fiscal cliff/tax expiration deal at the end of last year because doing nothing meant tax rates would rise on everyone, forcing Republicans to come to the table to avoid that outcome. The shoe is now on the other foot, however, because sequestration is about automatic spending cuts if Democrats don’t come to the table.

One should note as Krauthammer does that sequestration is bad policy. Many of us know people who will be negatively impacted by the arbitrary, across-the-board cuts that come from sequestration. Many of us in particular are concerned about cuts to defense. It was those defense cuts, however, that were designed to make Republicans concede to tax increases; the Democrats never had any intention of real spending cuts, and President Obama’s game of chicken on sequestration was always a bluff when it came to spending reductions.

Republicans, however, have already agreed to tax increases in the fiscal cliff settlement. The other part of President Obama’s  ”balanced approach” is spending cuts. There were no spending cuts in the tax increase deal the Republicans allowed to avoid even more tax increases. The President has never had any intention of spending cuts to reduce the debt, but if Republicans are indeed willing to allow the sequestration, President Obama and his side have lost their leverage to extract further tax increases from Republicans.

Could we avoid sequestration? Sure, if the other side of the “balanced approach” — spending cuts — can be agreed upon in a way that replaces the sequestration cuts. Only the House Republicans have offered any such replacement, however, and the Democrat-controlled Senate won’t touch that alternative. Supposedly the Democrats are working on a budget of their own, which would be their first since before the launch of the iPad, but one can only assume that their proposal will include more tax increases and some pretend spending cuts (like not spending on wars that we weren’t going to spend money on anyway).

Right now the President and his party are the ones responsible for the sequester because they have not agreed to the other half of the deal that was supposed to avoid sequestration and have not proposed an alternative for the other half of the balanced approach. No one wants to see the sequestration happen, but unless the Democrats agree to the other part of the balanced approach, the options right now are sequestration or more of the unbalanced approach of tax increases with the prospect of sequestration only further delayed for a subsequent debate over the exact same issue.

Sometimes doing nothing and taking the least bad option is the most responsible move.

Obamacare Chronicles: New CBO Estimates and State Medicaid Struggles

As more of Obamacare rolls out, we learn more about what’s in it as then-Speaker Nancy Pelosi suggested. Unfortunately, much of what we are learning isn’t exactly what we were told would be the case as a result of this healthcare law. The two latest newsworthy stories concerning Obamacare are the CBO’s new (increased) cost estimate and estimate of people losing insurance due to Obamacare, and the difficult decision of governors about whether or not to accept Obamacare’s coercive (in the words of the Supreme Court) Medicaid expansion.

Starting with the latest CBO report, it’s no surprise that the 10-year cost estimates continue to increase. It was well-known by those who understood how the bill was scored in the legislative process that the first 10-year cost of the law was understated. This was because of various reasons, including the delayed benefits that drive the cost of the law. The law started taking in money to pay for itself before many of its benefits started adding to the cost of the law, meaning that the first ten years of the law would cost less than later sequences of ten years after the costs became applicable. There are other assumptions about the cost of the law, including the half a trillion dollars that are supposed to be cut from Medicare, CLASS Act payments that will not occur now that that long-term care portion of the bill has been removed, and a myriad of other estimates about the cost impact of some of the reforms whose many details are yet to be determined.

The bottom line is that the CBO now says Obamacare will cost over $1.3 trillion for the next ten years. The CBO also estimates that seven million people will lose their employer-sponsored insurance due to Obamacare. In other words, if you like your health plan, you can’t necessarily keep it. In addition, the media has been forced to report on the coming “sticker shock” for health insurance premiums, as insurance companies and analysts sound the alarm. Reforms like band compression, guaranteed issue, and medical loss ratio requirements are going to increase insurance costs for many, especially the young (who just guaranteed this by reelecting Obama). It remains to be seen if Obamacare’s other potential reforms will ultimately reduce government healthcare expenditures enough to offset increased costs and if any such spending reductions would be worth the losses in benefits in which they may result, but for now it’s clear that the law is going to cost more than originally marketed.

Much of the cost estimates will depend on how various pieces of the law are implemented and what impact they have. One glaring issue is over Medicaid expansion, which was one of the issues dealt with in the 2012 Supreme Court decision on the new law. The Supreme Court held that Obamacare’s Medicaid expansion plan was too coercive to be constitutional, and so governors may opt out. While avoiding the federal government’s coercion of states is a reasonable goal, the choice for governors isn’t simple.

Obamacare intentionally expanded Medicaid to provide more people with insurance, with the promise to hospitals and providers being less unreimbursed emergency room care. Reasonably rejecting the Medicaid expansion could mean exacerbating the free-rider problem that will come with guaranteed issue and could mean perpetuating the problem of unreimbursed emergency care. In addition, more people may turn to the state exchanges, which the IRS suggests could require steep increase in premiums when compared to the current average insurance plan. So the choice is between bad and worse, with each state left to determine which option is the least bad one. Republican governors like John Kasich in Ohio and Rick Snyder in Michigan have apparently weighed the issue in favor of Medicaid expansion, and while such decisions are met with derision from the media and the left and with frustration from the right, they are somewhat justified in a climate of mostly negative choices.

The main counterargument to all of the negatives of Obamacare is that it will help insure the people who were uninsured, but even that claim is being scaled back. The CBO now estimates that seven million less people than originally estimated will be covered by Obamacare. Coupled with higher costs, higher rates, and bad situations for states, it’s safe to say that Obamacare isn’t off to such a hot start.

Jindal to RNC: Shift Focus from DC to Local Communities

Shortly after the November election I was talking with some disappointed and frustrated people about what one could do to help the country during another four years on the wrong path. People both inside and outside of Washington think that the federal government cannot and will not address the biggest issue of our day, which is the debt that threatens our future and the opportunities of younger generations. There are plenty of maneuvers to try to get the least bad deals in DC, and those tactics should not be ignored, but we concluded that real changes were most likely to occur at the state and local levels, and thus could provide examples of what works and does not for governance.

Governor Jindal, speaking to the RNC last night, echoed this message of focusing on the vast area between the individual and the federal government. His message: instead of focusing so much on battles in DC, focus on the local communities that are the true strength of the country. In an apparent dig at Paul Ryan, Jindal suggested we focus less on zeros and spreadsheets (more on that below), arguing that the internal battles of the federal government are not going to produce the policies we need right now and that so much centralization is undermining local communities. Jindal has a point here; with so much frustration and distrust of the federal government right now, we should naturally emphasize our local communities and governments instead.

That is not to say that the federal government and its policies are not important (and Jindal was quick to emphasize that point), but to say that Americans opposed to the path we are on should fight the battles they can win and that can have a positive impact on their lives. Doing so isn’t acquiescing to the path of managed decline we are on at the federal level, but a way of countering in a practical way the argument advanced by President Obama and other progressives that society is a choice between collective action (federal government) or the lonely and helpless individual.

The GOP is obviously adjusting to the loss from last November and is looking for a path forward as the window for saving the country from its debt problem is rapidly closing. One way to move forward is to contrast center-right policy outcomes with progressive ones, and that is unlikely to happen at the federal level right now. There are now thirty Republican governors, however, many of whom are starting to create contrasts by adjusting outdated labor laws and proposing pro-growth tax policies. Contrast that with bankrupt blue state models like California, New York, and Illinois. Contrast Texas’s job growth with no state tax to Maryland, where supposed Democrat rising star Governor O’Malley recently hiked taxes and hasn’t seen much growth as a result.

Of course, it’s essential to explain why economic growth is more important than the idea of fairness by taking from people who produce. This isn’t something that can be taken for granted; it must be explained to the millions of Americans who may believe in opportunity and hard work, but who think the market is unfair and discriminatory. This is where Jindal’s dig at Paul Ryan comes in.

Ryan is as good as anyone at explaining economic policy and why growth should be the goal over fairness. But Ryan is perceived by many as a really smart guy who sees things in terms of numbers rather than fairness. This is a misguided perception, but it exists nonetheless. Ryan reportedly wanted to talk more about poverty and how center-right growth policies help lift people into upper socioeconomic classes, but he was only able to at the very end of the Romney campaign (the Cleveland speech).

What Ryan said in the Cleveland speech, what Senator Rubio said at his convention speech, and what Governor Jindal said to the RNC are the kind of message that Republicans need to adopt. It’s not a new message, it’s just one that is often forgotten in the daily fights over which party is to blame for whatever the story of the day is, and over which party cares more about a particular group of people based on its support for funding the latest “I Care More” bill.

Jindal, Ryan, and Rubio have all shown the ability to articulate a system of governance that allows the vast space between the individual and the federal government to thrive. That vast space is where neighborhoods, schools, local governments, businesses, churches, and philanthropic organizations all exist and do what they do, and not simply because the federal government compelled them. The center-right must persuade enough people that the space created by a Constitution that limits the federal government to core functions is not only fair, but allows the efforts of communities and individuals who choose on their own to do great things.

Ryan and Rubio are in Congress now, trying to shape the debate internally. Jindal is on the outside at the local level, where most of America operates, and where people can show that policies espoused by Ryan, Rubio, and the center-right actually work. The country needs both, but Jindal is justified and probably wise to emphasize shifting the focus away from DC and towards the places where positive results are actually happening right now. Anyone unhappy with the direction of the country and performance of the federal government ought to pay heed to the likely 2016 candidate here.

Partisan President Delivers Partisan Inauguration Speech

The inauguration of American presidents is truly a special event. Historically, the peaceful transition of power has been rare, and the pageantry that provides the backdrop of this American tradition is both special and remarkable. The United States is a unique nation, but watching the second inauguration of President Obama, one can’t help but be concerned over what happened.

In some ways, Charles Krauthammer was correct that President Obama’s inauguration speech represented the end of the Reagan era. This is not to say that more people now identify as liberals rather than conservatives or that Reagan’s conservative policies no longer work; neither is the case. It is to say that President Obama has empowered those who do not believe that the individual liberty and markets created by our Constitutionally limited government are just and right for the country. The Reagan era was marked not only by success in the form of prosperity and strength, but by the widespread acceptance that government must be limited to provide the freedoms under which such prosperity and strength occur.

For a few decades, those who disagreed with those ideas (progressives, so to speak), had to accept the reality of an electorate that mostly espoused those limited government beliefs. Now, however, President Obama has not only empowered progressives to not have to cater to such an electorate, but to mock and insult anyone who believes in Reagan’s America of a Constitutionally limited government rather than a government of mandated positive rights. Take, for example, this list of straw man attacks directed at his opponents, provided by Michael Gerson quoting from the President’s speech:

Those who oppose this agenda, in Obama’s view, are not a very admirable lot. They evidently don’t want our wives, mothers and daughters to “earn a living equal to their efforts.” They would cause some citizens “to wait for hours to exercise the right to vote.” They mistake “absolutism for principle” and “substitute spectacle for politics” and “treat name-calling as reasoned debate.” They would have people’s “twilight years . . . spent in poverty” and ensure that the parents of disabled children have “nowhere to turn.” They would reserve freedom “for the lucky” and believe that Medicare and Social Security “sap our initiative,” and they see this as “a nation of takers.” They “deny the overwhelming judgment of science” on climate change, don’t want love to be “equal” and apparently contemplate “perpetual war.”

In other words, President Obama no longer advocates a United States above red and blue states; he now advocates the complete dismissal of those who believe there is a vast space between individuals left on the street and federal government programs as not only extreme but ill-intentioned.

This rhetoric will underscore the partisan battles that will likely continue. President Obama is not likely to achieve success like Reagan in the form of prosperity and world influence, and he is equally unlikely to overcome the reasons for the deepest partisanship of our country like Lincoln was able to. He is far more likely to facilitate a deeper hostility between the left and right as he not only pushes for more progressive policies while ignoring and exacerbating the greatest issue of our day, but also facilitates the outward manifestations of jealousy and even hatred that drive many people to blame those who have for the plight of those who have not.

No one knows exactly what the future will look like, but a good bet is that in the future, the country will remain deeply divided and will experience more animosity as animosity is encouraged.  In the meantime, the debt will grow, our wealth and prosperity will likely decrease, and a diminished American influence in the world will likely leave the world less safe.

But perhaps in a few years the poorer, weaker America can celebrate same-sex marriage and forcing Catholic organizations to provide contraception. Forward.

Rubio, Jindal Take the Republican Lead

A big question following the 2012 election was who among Republican leaders would seize the opportunity to step up, and it looks like Marco Rubio and Bobby Jindal are in the early lead. While the country has been engaged in battles over worthless fiscal cliff negotiations and will soon receive fruitless deals on the next fiscal cliff and debt ceiling debates, Rubio and Jindal have been putting out bold policy ideas.

Jindal started early by proposing a way to get out of the “women’s health” mess that makes Republicans look horrible on some social and healthcare issues. His suggestion is to make contraception available over the counter so that it is cheaper and therefore more accessible to female consumers who might be concerned with price and were supportive of the HHS mandate.

Governor Jindal didn’t stop there. He came out with an idea this week to eliminate income and corporate tax in Louisiana, replacing it with an increased sales tax (note: not a value-added tax). This is a pro-growth tax policy that is still progressive (for the likes of the center-left) and would make Louisiana more competitive with neighboring state Texas, where much of the country’s jobs and economic growth have been coming from.

In the Senate, Marco Rubio opposed the dreadful fiscal cliff deal that raised taxes and did nothing to help our debt problem. He had been quiet since a strong post-election speech in Iowa, but is now emerging with an expected immigration plan that he shared with WSJ. Ed Morrissey summarizes the plan at Hot Air:

• Gain “operational control” of the border first
• Enhance employment checks
• Raise the hard cap on high-tech immigration
• Create a guest-worker program for low-skill labor
• A lengthy but not indefinite process for normalizing longer-term illegal residents

These are not bad policy ideas for discussion, but just like the Senate Democrats will not cut spending under any circumstances, Harry Reid and his Democrat pals will be very careful to undermine Rubio’s or any Republican’s efforts to be the face of immigration reform. Not having a functioning immigration policy helps Democrats blame Republicans and win votes, while if we were to have a functioning one that Republicans were a major part of, it would hurt Democrats politically. So expect whatever Rubio proposes to be demagogued as never going far enough so that Democrats can maintain their favorable perception.

Immigration reform, however, seems much more likely than pro-growth tax reform and actual structural reforms to reduce our debt. If we are unable to achieve positive reforms in any of those areas in the next few years, however, it will not be because we lack leaders on these issues. Jindal and Rubio are out there not just running their mouths like Senator Reid and the President, but actually proposing and trying to get things done.

Now, who’s next…Paul Ryan?

Michigan Becomes 24th Right to Work State

What a difference a year makes. Last winter, I had the privilege of sitting in a packed and enthusiastic room to hear Wisconsin Governor Scott Walker address an optimistic CPAC crowd. Governor Walker was facing a bitter challenge from unions and Democrat supporters who had moved for a recall, and he reminded us that the entire country was watching what Wisconsin was doing with its labor reforms:

This recall isn’t about me and it isn’t just about who will be the Governor of Wisconsin. It is about all of us and whether or not we can make bold decisions for the future.

You see, I made tough decisions because I want our kids and our grandkids to inherit a Wisconsin – and an America – even greater than the one we did.  That’s what this is all about.

Walker would win his recall election and cement Wisconsin’s new labor laws that make the state more competitive. The country noticed, including neighbor Michigan and its Governor Rick Snyder of the same 2010 Republican class. With Detroit considering bankruptcy and the state struggling economically, Governor Snyder and the state legislature passed a right to work law to help make Michigan competitive again. Likely due to some of the pushback in Wisconsin, Michigan has elected to exempt some police officers and firefighters.

This is a bold move that might not have happened had Governor Walker not led the way and survived a furious opposing effort. Michigan is now seeing some union protests, and one can expect to see more ugly opposition similar to what happened in Wisconsin. For now, however, the state has shown the determination to start a comeback by making a difficult and necessary choice.

Congress hasn’t shown the same ability to make the tough choices on our economy and debt, but states are starting to, and that’s a good sign.

‘The Obama administration has chosen a course of American retrenchment and retreat’

While the country focuses on “nation building at home” that is not going so well — unemployment remains around 8% and has slightly dropped mostly due to people dropping out of the labor force — Bill Kristol sees the big picture and reminds us that the world is becoming less safe under President Obama’s weak America. Syria and Egypt, for example, are messes and threaten not only our strategic interests, but human rights. A beat up America in such a dangerous world is a scary idea, but as Kristol remembers, this country has roared back before:

We’ve recovered before. In the late 1940s, a war-weary nation looked the other way as the Soviet Union occupied Eastern Europe and China went Communist. It was only after the North Korean invasion of the South that the United States, first under Harry Truman and then Dwight Eisenhower, faced up to its responsibilities​—​but at considerable cost in lives and treasure over the next decades as we fought wars that perhaps could have been avoided and endured a Cold War that needn’t have been as threatening as it was. In the late 1970s, a war-weary nation watched as Khomeini took over Iran and the Sandinistas Nicaragua. This time, the Iranian hostage crisis and the Soviet invasion of Afghanistan served as the wake-up call, answered first (to a degree) by Jimmy Carter, then resoundingly by Ronald Reagan.

Kristol, like many conservatives today, thinks the Republican party is probably in need of a reformation that will bring in a new generation to lead the American comeback. I believe he is correct, and while I pointed out that Mitt Romney was trying to usher in that new generation, the new faces are already emerging despite Romney’s defeat.

For conservatives and anyone not willfully blind to the disaster of the Obama administration both at home and abroad, there is reason for hope and optimism thanks to this new generation of conservative leaders stepping up. But the challenge will be daunting; America will be weakened and the world will be more unstable. As Kristol pointed out, however, that’s when The Gipper led an American resurgence that lasted for years before President Obama arrived to try to erase that success from history by convincing people that tax reform and limited government were the causes of our woes.