DiFi dodges debate over Emken economic plan
October 9, 2012
By John Seiler
Denying California voters an opportunity to see the two in action, Sen. Dianne Feinstein, D-Calif., refuses to debate her Republican opponent, Elizabeth Emken. This is what happens when one party takes over a state
Yet Feinstein needs to be confronted on her disastrous 20 years in the U.S. Senate. During the last 17 years, there has been no increase at all in household incomes. True, Republican Congresses of those years, as well as President George W. Bush, bear a great deal of responsibility.
And in the last four years of President Obama’s presidency, during which Feinstein and her fellow Democrats also controlled the U.S. Senate, U.S. household incomes crashed by 8.3 percent.
But consider this: Since DiFi went to the U.S. Senate 20 years ago, Democrats have controlled the White House 12 years (1993-2000; 2009-2012), Republicans eight years (2001-08).
Democrats have controlled DiFi’s U.S. Senate nine years (2003-04; 2002 — after the Jeffords defection; and 2007-12). Republicans have controlled the Senate 11 years (1995-2001; counting 2001 as Republican before the Jeffords defection; and 2003-06).
And Democrats have controlled the U.S. House of Representatives six years (1993-94; 2007-2010); while Republicans have controlled the U.S. House 14 years (1995-2006; 2011-12).
So, Democrats have had plenty of opportunity to fix the economy. In particular, in 2009-10, they controlled the whole kit and kaboodle: the presidency, the House and the Senate with a filibuster-proof supermajority of 60.
Democrats could have done anything they wanted. They could have cut the deficit to zero; instead we’ve had four years of $1 trillion-plus deficits. They could have reduced the national debt; instead they zoomed it up to $16 trillion. That’s $16,000,000,000,000.00.
The Democrats keep blaming Bush. Fine. He was a disaster. But he’s been gone four years.
Ronald Reagan inherited an economy worse in many ways. If you’re old enough, remember 13 percent annual inflation and 20 percent interest rates? The “misery index” — inflation plus unemployment — was way over 20 percent. Yet within two years of the Gipper’s inauguration, the economy was humming with growth above 5 percent.
And Democrats keep demanding that “the rich” pay more in taxes. They don’t tell you that, for them, “the rich” are those making $250,000 a year, including S-corporation businesses. These are the small businesses that are the engine of jobs growth. Due to the vagaries of the tax code, these corporations are charged at the personal tax rate. So jack up the “personal” rate and you take away the profits small businesses use to expand and create jobs.
I’m not a fan of Mitt Romney at all. And his tax cut plan doesn’t make any sense now that he says it will be “revenue neutral.” But one way he scored big time in last week’s debate with President Obama was by emphasizing that America needs to cut taxes to stimulate growth.
Feinstein probably figures that, in a debate with Emken, the same topics would come up. And DiFi might do as badly as the president — or worse. The president can’t avoid debates. DiFi apparently can. Maybe we need an initiative mandating debate participation.
So it’s left to me to analyze Emken’s economic plan. It’s actually pretty good, with some caveats. At least there’s no way it could make things worse than the past 20 years.
The key to economic growth right now is tax cuts — with no offsetting increases like Romney wants (for now). Tax cuts increase economic activity, boosting investments and jobs creation. President Kennedy explained this in the early 1960s, back when Democrats still understood something about economics.
His tax cuts were enacted in 1964 after he was killed, producing a massive economic boom that only ended when his fool successor, President Johnson, imposed a surtax in 1968.
And unlike Bush’s stupid 2001 and 2003 tax cuts, which keep expiring and casting uncertainty over the economy, JFK’s tax cuts were permanent.
By contrast, Emken says:
“I believe tax rates are already too high in this country. And, with the weakened economy, we cannot ask American families to pay more in taxes. I believe we need tax reform that makes our tax structure more competitive against overseas sources. By lowering the tax rates for businesses, corporate investment and capital will return to the country. That will stimulate growth and provide greater tax revenues.”
That’s pretty good. Her policy paper on tax reform goes further:
“For example, Dianne Feinstein joined her fellow Democrats in voting for the “Buffett Rule.” The Buffett Rule is a political gimmick. It promotes “fairness” by making an unfair comparison between income taxes and capital gains taxes. It also distracts from the truth that capital investment is actually taxed at least four separate times under our tax code….It’s no wonder that it seems like the only ones investing in America are the Chinese.”
I would add that Feinstein herself is immensely wealthy. Socking us with higher taxes just keeps the rest of us down, unable to rise up economically and politically.
Emken provides specifics:
* Simplify the tax code and make it flatter and fairer.
* Broaden the tax base by repealing loopholes and shelters.
* Make the 2001 tax cuts and the death tax repeal permanent.
* Reduce the corporate tax rate to make it competitive.
* Provide strong incentives to repatriate foreign earnings by adopting a territorial tax system.
* Create a domestic system that encourages savings and investment in America.
That’s all OK. Except it’s to complicated to close “loopholes and shelters,” and takes up to much political capital. If you reduce rates enough, then the “loopholes and shelters” don’t mean as much.
Tax reform is important, but can wait until a better time. For now, the country needs to get moving again — through simple tax cuts.
What tax rates does Emken want? Right now, the top U.S. tax rate is 35 percent; but that would rise to 39 percent should the Bush tax hikes expire in January, as Obama and DiFi want.
“The international average is 26 percent. The U.S. tax code should not contain any rate higher than 25 percent, with lowest rates reserved for domestic business.”
Excellent. But won’t that increase the deficit? Romney’s problem is that he wants his tax cuts to be “revenue neutral.” Meaning tax cuts for some would be offset by tax cuts for others.
Emken takes a different approach:
“Everything I’ve proposed adds to economic opportunity and market stability, two important factors in job creation and economic growth. Any loss in revenue from the current tax base should be more than offset by the increase in job creation, which provides a greater number of taxpayers. Again, we’re not fighting over small slices of pie; we’re making a bigger pie. I’ve also called for a thorough review of every federal department and agency to see where we can save money. I will work relentlessly to reduce government spending.”
That’s exactly how things would work.
And she’s right, of course, that cuts to government must be made. Anybody who’s ever been in government knows that every department is larded with massive waste.
What agencies would Emken eliminate? Unfortunately, she’s vague here:
“My approach is different. I want a top to bottom review of every agency, requiring metrics that measure results and value for invested tax dollars. Those programs that aren’t producing need to be made to produce. And those that have no possibility of returning value for invested tax dollars should be discontinued. As a cost efficiency expert, I spent a good portion of my career implementing these practices in the private sector.”
But the private sector isn’t the government sector. Government exists to waste.
The best thing to do is to eliminate whole agencies. Otherwise, like cockroaches, the bureaus and their inhabitants just swarm back.
She should start by calling for eliminating the two agencies that Ronald Reagan promised to get rid of in 1980, but didn’t get around to doing because he was busy reviving the economy and winning the Cold War: the Department of Energy and De-Ed, the Department of de-Education. The free market provides us plenty of energy at a fair price; recent increases and distortions in oil and gas prices are caused by government interference.
And ever since the feds took over education policy in the late 1950s, test scores have fallen nationally, the kids becoming dumber by the minute. Programs like Bush’s No Child Left Behind and Obama’s Race to the Top only have made matters worse, with more government bureaucratic strings tied to every dollar “given” to local schools.
Conclusion: A decent plan
Emken’s economic plan is fundamentally sound, favoring pro-growth tax policies that would get the country moving again. As with most office seekers and holders, she doesn’t want to offend constituencies whose federal largess would be cut. But because of the massive deficits and debt, cuts will be coming no matter what.
If taxes are increased, as DiFi and Obama want, the economy would be smashed into another recession, perhaps worse than the last one. The deficits and debt would get even worse. A Greater Depression could hit, as businesses and jobs fled America for China, India and other countries that believe in caring and feeding businesses, instead of stepping on them.
Emken has close to zero chance of winning in November. That’s just the reality of California. But it’s unfortunate that her ideas on the economy, at least, aren’t being heard as part of the policy mix because a U.S. Senator in office too long refuses to step up to the podium and debate.