Wednesday, September 22, 2004

Revised Answers to Steve's Questions

First, perhaps you should say Republican friend, singular, as the other conservative members of this blog have been virtually silent.

Going after Hussein before getting bin Laden:

I’m not sure it was an either/or situation. Had we not gone into Iraq, would we now have bin Laden? I really don’t think you can put the rest of the war on hold until you capture a man that no one has seen for three years. Who knows when we’ll catch him. I’m not fully convinced that Osama’s not buried in the rocks somewhere.

I don’t see how you can make the argument that the war is best fought by doing one thing at a time, especially when the enemy is in many places at once doing several things at a time. The War on Terror is not just about Osama or al Qaeda, but a web of terror networks that spawn from a depraved midsection of the world.

Also, I apologize if I come across as an armchair general. That is certainly not my intention. My view is that I simply believe we should fight this war aggressively on multiple fronts, militarily, economically, and diplomatically. The overall strategy of going after states that support terror is one that I believe is sound. I try to refrain from “generalship” and leave the specifics up to the commanders. I also realize that even successful wars are a mess, so there is no point confusing victory with perfection.

Tax cuts:

To me, it is a moral issue. Money is property and belongs to the person that earned it. Government does not have a mandate (so far as I know) to redistribute wealth. However, government is responsible for national security and upholding constitutional freedoms. As such, taxes are necessary, but they should be as minimal, and they should cut evenly. I personally believe in a flat tax, but I don’t see that happening anytime soon. As for now, the rich get the bigger part of the tax cut because they pay the most taxes. Who am I to say that a dollar for a millionaire is not more precious than a dollar for a pauper? Most hand-to-mouth people I know piss their money away as it is (including myself). I have religious feelings about sharing wealth, but that does not mean that I can impose those feelings on others? I am not currently in the income bracket to fully enjoy the tax cuts, but someday I plan to be. (When I get a chance, I’ll look at my tax records and get back to you on that). I have recently joined the investing class, and the dividend tax cuts (I wish they were eliminated altogether) will be welcome. At first, since my dividends are still small, those cuts will be small. However, since I plan on increasing my wealth, I look forward to having a fair and (if Bush can come through during a second term) simplified tax code to help me gain wealth. Once I gain wealth, it's my business about what I do with it.

Tax cuts on the economy:

Most economists that I read (except Paul Krugman) seem to agree that tax cuts and tax certainty (i.e. making the tax cuts permanent) encourage investment, which encourages economic growth, which will create business and jobs. It’s an immense topic and I don’t pretend to know half of it, but I’m learning, slowly but surely. I’m still trying to figure out how much the deficit plays into things. I do believe that part of the reason why a big nation like the U.S. has better unemployment figures than smaller European countries (or the rest of the world, for that matter) is that it taxes lighter and puts more emphasis on individual freedom. Also, the tax cuts are meant for long-term benefit and haven't all gone into effect yet, so it’s impossible to estimate its effects this quickly. However, I certainly think they've played a part in the recovery. I know you don't want to hear about numbers so much, but allow me this one: in 2001 the CSMonitor was posting massive layoffs on an almost daily basis. Since the tax cuts, that trend stopped and has turned around. Aside from a slow mid summer period, this year has posted some pretty steady job creations. Those numbers mean something. When there were 9 democrats running for office, the talking point was that Bush lost 3 million net jobs. Now, Kerry is forced to say it's under a million. Considering that you agreed that the job hemorraging at the beginning of Bush's term was not due to Bush, I'm not sure what your gripe is.

No Child Left Behind:

I don’t have children at the present time, but it does not take much revisionist history to realize that education has been problematic throughout civilization -especially universal education. In fact, such a thing was not feasible until the last two hundred years. I’m not sure what you expect, but to think that a single initiative by the federal government, which accounts for an average of less than 6% of funding for public schools, is going to turn around education is just not realistic. I don’t know how this plan will work out, but I’m willing to give it time. I think that if the federal government is going to give money to schools, then they should set criteria. The schools can always opt out of the funding if they believe they can do better without it. Ultimately, education reform is going to come about locally. I think vouchers are an interesting alternative that I would like to see tried.

Defense of Marriage:

I oppose any amendment to the Constitution, whether for gay marriage or foreigners wanting to run for President. I strongly support leaving the Constitution alone. However, I don’t mind settling the issue of gay marriage through the amendment process. Why? For a couple of reasons. I would rather have the states decide through the legislative branch what is legal and what is not. If unelected judges decide that marriage can constitutionally be same sex, then forty-nine states will have to recognize Massachusetts law. Again, I have no qualms about same sex marriage, but I think it should be decided by the states. At least a amendment has to get a 2/3 vote through congress and then pass through three fourths of the state. At that point, Massachusetts is still able to approve gay marriage, but no other states are obligated to uphold their law. At least, that is how I understand it. The second reason: despite the fact that a majority of Americans disagree with same sex marriage, I don’t see how there’s enough support to pass the amendment. Ultimately, I know some conservatives see gay marriage as a long term threat, but since I don't share that view so I hesitate to explain that position.


I don't know all the ways that this act has been used effectively, but I noticed that during the 9/11 Comission hearings, people from both sides of the aisle testified that it was long overdue. Not only am I not a armchair general, I'm not an armchair lawyer or cop either. If people in law enforcement thinks it will help them fight terror, and I don't see significant violations in civil liberties, then I say go for it. I have no problem at all about tweeking the law before renewing - strengthening it in some areas and cutting other areas out.

Whether it is due to the war abroad or the PATRIOT Act at home, I have taken note that there has not been a major terror attack on this soil since 9/11. I attribute that to us and not to the terrorists. I'd like to see that trend continue.

Ultimately, for 2004, I'm a single issue voter. It's about the war. That my candidate supports tax cuts, the 2nd Amendment, overhauling social security, and supporting judges that take a strict interpretation of the Constitution is all gravy.

In short: 1) I feel safer when we are fighting the war aggressively and everywhere; I'm not an armchair general, I'm an armchair cheerleader; 2) tax cuts promote investment in the economy; 3) No Child Left Behind is not an end-all reform measure, but deserves time to work; 4) I believe that government should stay out of the bedroom, and the bedroom should stay out of government; and 4) the only thing regrettable about the PATRIOT act is its awful name.


Dude said...

Tax cuts -

Jeffrey - since the government for decades has been using the Social Security Trust Fund to balance the budget, then taking money from the fund while giving tax cuts to the rich is itself a re-distribution of wealth - albeit upward in this case. Even more so, considering that the payroll taxes (SS and Medicare) are capped out at $89,000, so that someone earning $1 million pays the same payroll tax as the person making $89,000.

Bush could have used the surplus (again, including the SS Trust Fund) to get this country off of Social Security. He talks about privatizing, but when he had resources to do so, he blew it.

Social Security was probably a reasonable program when implemented, but an unwillingness to do means testing or to adjust the ages to the increasing life span (they have budged some, but not a lot), have left a massive ponzi scheme that won't be fixed until it is horribly, horribly broken.

Additionally, Bush's tax cuts are setting up a code in which wealth alone is rewarded (dividend tax cut, estate tax cut) and wages are increasingly burdened. That's a good way to restore aristocracy.

In Alexis de Toqueville's "Democracy in America" (1835), he remarks that the way in which estates were passed down in this country contributed to the spread of democracy. Previously, the estate was passed down to the eldest son. Here, we started distributing it to all the male heirs at around the the time of the Revolution. With less inherited wealth, there was a greater percentage of people who had to work for their fortunes.

"In America the aristocratic element has always been feeble from its birth; and if at the present day it is not actually destroyed, it is at any rate so completely disabled that we can scarcely assign to it any degree of influence on the course of affairs.

The democratic principle, on the contrary, has gained so much strength by time, by events, and by legislation, as to have become not only predominant, but all-powerful. No family or corporate authority can be perceived; very often one cannot even discover in it any very lasting influence.

America, then, exhibits in her social state an extraordinary phenomenon. Men are there seen on a greater equality in point of fortune and intellect, or, in other words, more equal in their strength, than in any other country of the world, or in any age of which history has preserved the rememberance."

Dude said...

Tax cuts on the economy -

The theory is that tax cuts will pump money into the economy. However, which provides more stimulus - investment or consumption? If you believe investment, then you target the tax cuts at the investing class (rich folks). If you believe consumption, as consumption accounts for 2/3 of the American economy, then you target the lower and middle class, as more of their money is spent than invested.

Of course, what compels a rich person to invest in the American economy? If they get a greater return on emerging markets, like China and India, then their money goes there. With such tax cuts, we have helped prime the economies of other nations.

With tax cuts targeted at the lower and middle class, more of that money is spent in the United States. Yes, most manufactured goods come from China these days. However, it was an American dockworker that unloaded it, an American conducter or truck driver that distributed those goods, and an American retailer (probably Wal-Mart) that sold those goods. So more of that money is getting into the hands of American business.

Also, the effect of low interest rates should not be underestimated. Interest rates were low when Bush came in - Democratic deficit-cutting in the 90s had given Greenspan room to lower interest rates. When the economy tanked due to the normal cyclical process and the subsequent shock of 9/11, Greenspan further lowered interest rates. Home ownership rates continued the upward trend from the Clinton administration. Those who already had homes were able to re-finance at a lower rate, giving them more money in their pocket every month.

Now that we're "spending money like a drunken sailor" (McCain's words), the government is competing in the credit pool. Since a creditor knows loaning the government is a sure bet, interest rates for individuals and businesses will go up to offset the risk. With higher interest rates, it's harder to invest in capital expenditures, or harder to buy a home.

Jeffrey Hill said...

I think you’re right about tapping into Social Security. I see it as a case that it is just difficult for the government to handle money responsibly, which (in my mind, at least) is a reason to morph social security into individual accounts less accessible to goverment. It seems to me that when social security was implemented it was obligated to be a short term and long term solution during a time of crisis.

You’re idea about using the surplus to wean us off SS is interesting and if it worked, it would solve a huge problem. But can you imagine politicians pitching an idea to spend the surplus to get rid of SS? They’d really have to put some lipstick on that pig! I’ve always thought that the president who managed to solve the SS problem would be committing political suicide.

One encouraging sign about investments is that the investing class is ever widening and including more and more middle class people. And much of the investment philosophy they’re adopting is long term. I would hope that this trend would offset any restoration in an aristocracy. To stray off topic for a moment, I think public education would be well served teaching basic finance to students. Not to get too pie-in-the-sky optimistic, but if we could develop a culture that better understands money and investing, we could proliferate wealth tremendously and in a very natural and healthy way. I think some of that is already happening for people after their education.

Re: Tax cuts on the economy – I’m not sure I’d say that investment for returns necessarily means that money will go overseas. Certainly much of it does, and that is not necessarily a bad thing. When investment does go overseas, that does not mean it stays there, or that it really leaves here. Money (or perhaps I should say capital) has a funny way of being several places at once and can benefit several people at once. Ultimately, a broadening global economy benefits us.

I’m not sure how the trail of a dollar from an investor compares to that of a consumer. Ultimately, I would assume that they tend toward the same place, but I’m not sure that one route goes through more American hands than another.

Finally, I do have problems with Bush’s spending. One can make the case that Clinton was more of a free marketer and fiscally more responsible. Particularly in his second term, I think Clinton was good on the economy. However, I do think that it’s more difficult to man the economy during bust than a boom. That comment is not to detract from Clinton, but is meant to defend Bush. I’d like to see Bush be a meaner fiscal president during his second term.