Post Debt Ceiling Cave: Possible Palin Plan Forward ("Two Cent" Solution?)

With the capitulation of the Congressional GOP all but a fair accompli, the next question beckons: Where do we go from here? Before answering that, I think it wise to assess what Obama and the Democrats hope to accomplish by this so-called budget deal. Then we can consider possible ways to frustrate their plans.

At the outset, one can observe that the GOP has dealt itself a serious, though not necessarily fatal, blow. However, it would be wrong to condemn the TEA Party Freshmen who buckled under the tremendous pressure. The GOP is not just leaderless. Its Congressional leaders are part of the problem. The TEA Party freshmen who voted for the Boehner bill are good people, who made a mistake, and this will soon become clear to them. However, it was their leadership that is principally to blame. The Congressional GOP leaders are not just feckless; they are complicit. The Boehner-Reid-McConnell-Obama compromise was in the can before the Boehner bill was ever brought up for a vote. It was sadly predictable that the Congressional TEA Party freshmen, leaderless as they were, would be roughly as effective as the Confederate Army without Lee. The fact that they were led by quislings who collaborated with the enemy just exacerbated their (and our) predicament. If the next Presidential election supplies this missing leadership, this mistake can be reversed. If not, absent a miracle, the country's decline will become irreversible.

It seems to me that, in the debt ceiling "compromise", Obama and company have achieved at least several of their objectives, both policy and political. From a policy perspective, they have gotten their hands on perhaps 2.5 trillion dollars more to spend and to grow government. Politically, they have tried to drive a wedge between the GOP and the TEA party in hopes of fomenting either a third party in 2012 or, at a minimum, depressing GOP turnout in 2012, both of which can enable Obama's reelection and hold down any more Congressional losses next year. Finally, they have undermined the next President even before she is elected, making her steep hill that much steeper.

But the situation is not hopeless. Make no mistake, however: The defeat of Obama must be accompanied by the election of a leader who is both a resolute conservative and an experienced executive, who has encountered and defeated entrenched interests such as those in DC. The defeat of Obama, by itself, and his replacement by someone as feckless as Romney or as inexperienced as Bachmann would be merely a pit stop on the road to ruin. Romney would do no better as President than would Boehner or McConnell. He would serve one term and yield to someone like Chuck Schumer, who would administer the coup de grace to the Republic. Bachmann has absolutely no experience running anything other than her Congressional office, and the "revolving door" turnover there suggests that she has been less than stellar even at that. The Democrats would use Bachmann's inexperience to hold her in check even in the highly unlikely event she won both the nomination and the Presidency. Sarah Palin is the only option for those who realize that RESOLUTE action is necessary NOW. Romney can never be resolute and Bachmann, whose votes at least indicate steadfastness, has no track record at having ever run anything or even having passed any legislation. In her own way, Bachmann would be as risky as Romney. Too risky given the momentous and time sensitive task ahead.

So where does Palin go from here? In light of this fresh burst of spending and capitulation by the Congressional GOP that owes its majority to the TEA Party (and to her), how should she make her case? In my view, the first tenet of her political manifesto might sound trite, but it is nonetheless central. It is the one element missing in the conservative ranks for the last quarter century It is LEADERSHIP, proven leadership. The GOP needs a President who believes in constitutional conservatism and is able to articulate and to defend it. Governor Palin should frankly indict the GOP leadership for its lack of leadership and its irresolute response to the worst crisis to confront our country since the Civil War. She should analogize the behavior of the GOP elites in Washington to those she vanquished in Juneau and Anchorage. It is a case she can and must make if she is to become the 45th President.

But a platform based upon leadership alone, even when that critical skill is so conspicuously absent, sounds platitudinous, if not accompanied by concrete solutions. Given the hole now freshly deepened by Obama and his friends in the GOP Establishment, how should she reply? Remember that, ideally, a political platform, a policy platform, should not be overly complex or wonkish. If it is easily understood, and commands widespread support, it can yield not just a victory but a mandate. In 1980, Reagan ran on the Jack Kemp 30% Tax Cuts, and these became the fulcrum for his 1980 mandate and subsequent legislative triumphs. In 2012, Palin (and the Country) need not just a victory. If we are to right the Ship of State, we need a mandate.

One of the plans out there which is both effective and appealing, as well as easily understood is the Penny Plan, crafted by another Congressman, Connie Mack of Florida. The Penny Plan cuts one penny from every federal dollar spent.

In a nutshell, The Penny Plan balances the budget by: a) cutting total federal spending by one percent each year for six consecutive years; b)Setting an overall spending cap of 18 percent of gross domestic product in 2018; and c) Reducing overall spending by $7.5 trillion over 10 years.

The Penny Plan would have been an excellent vehicle for the Congressional GOP to pursue in the recent debt ceiling negotiation, but of course, they lacked both the will and the skill to articulate even such a straightforward argument. Given the new burst of spending that will ensue from the Boehner-Reid, is the Penny Plan no longer a viable option? In short, is the new gap in spending sure to result from the "Boehner Reid" deal too wide for the Penny Plan to close? Perhaps.

I suggest a variation of the Penny Plan that will not just focus on spending restraints but on tax reduction as well. A one dimensional "green eye shades" approach which focuses only on spending cuts will necessarily be less effective, both politically and practically, than a positive, growth oriented approach. In lieu of the original Penny Plan, Palin should propose a variation: "The Two Percent Solution" or "My Two Cents" for short. Instead of one cent cut from every federal dollar, the cut would be two cents, with one cent being used to close the yawning deficit and the other being used to reduce tax rates across the board. The resulting explosion of economic growth, with corresponding tax revenue, might even close the gap sooner than would the original Penny Plan. Such tax cuts would also stop the coming inflation in its tracks in much the same way as the Reagan cuts arrested inflation thirty years ago. The Tax Cuts would sweeten any pain associated with the cuts, and tax credits could be targeted to alleviate the relatively small number of true hard luck cases that would result.

In short, the Penny Plan can easily morph into "My Two Cents" or the Two Percent Solution, which will attack the federal leviathan like a giant set of pincers, shrinking the lard and in its place, expanding the private sector. It is a win/win for conservatives--an easy to understand (and difficult to attack) solution that can deliver a mandate and thus become law. Like Kemp Roth three decades ago, it merely needs a thoroughbred who can ride it a cross the finish line. After eight years of Sarah Palin's "two cents" the country will be sounder than ever.

Thank you for posting such a simple yet profound commentary on the philosophical differences of the Democrats and those that are attempting to steer the Republicans and our nation away from (further) peril.

Worth repeating-

Does it strike anyone else that this next presidential election feels less like an election
and more like two opposing countries fighting for victory?

Obama’s idea of America is positively un-american (collectivist, socialist, transnational).
The Republican mavericks (no, not the RINOs) are channeling our founding fathers,
fighting for individual rights, less government, and our unalienable rights endowed by our Creator.

The battle is for America, exceptional, sovereign and free,
vs. America, unexceptional, transnational, statist.

This isn’t so much an election but a fight for America.
The Individual vs the State — it’s a non-violent civil war.

I think Palin should support this plan for REAL economic recovery:

1. We MUST reduce the size of government in general--government spending squeezes out the private sector and that can have really bad effects on the economy. In addition to passing the One Percent Spending Reduction Act of 2011 (H.R. 1848/S. 1316), we need to aggressively audit every government agency for bureaucratic overlap, agency bloat and obsolete/unneeded regulations and do the following:

a. Merge agencies to reduce bureaucracy size. For example, why do we need separate agencies for Social Security, Medicare, Medicaid and other social service agencies when it could all be handled by ONE agency instead?
b. Reduce the size of bureaucracies in general. With modern computer technology, do we really need so many people to run agencies anymore?
c. Remove obsolete and unneeded regulations. Many regulations on the books no longer apply today, and many regulations cost more to implement than the savings they were supposed to offer.
d. Privatize certain agencies. Do things like air traffic control and running Amtrak need to be done by a government agency?
e. Phase out a lot of agencies in general. Too many agencies just add complexity and their mission could be handled by state or even local agencies at far lower cost.

2. Income tax reform should RIGHT NOW be at the top of the agenda. The current income tax system has become a huge impediment to the economy, when you consider the following problems:

a. You have around 35,000 tax lobbyists trying to tweak the tax code to help or punish even as little as ONE taxpayer.
b. The result is the Internal Revenue Code (IRC) plus additional rulings that is around 70,000 pages of code so complex that even the Internal Revenue Service has trouble figuring out much of it!
c. Because of its complexity, the Tax Foundation estimates the current cost of compliance per year now exceeds US$300 BILLION per year. Some economists estimate the compliance and economic opportunity costs of the tax code per year is over US$500 BILLION per year!
d. Because of the 35% top rate (among the highest in the industrialized world), too many individuals and businesses are involved in tax avoidance schemes by taking advantage of tax loopholes. That explains why millions of jobs, thousands of factories, hundreds of corporate headquarters, and possibly as high as US$14 TRILLION in American-owned liquid assets are "offshored" for tax avoidance reasons, with the economically devastating result of increased unemployment in the USA and too many banks short on liquidity.

Since everyone across the political spectrum wants more taxpayers and everyone to truly pay their fair share, the solution is simple: overhaul the tax code to reduce yearly compliance costs, lower the tax rate to a single under 20% rate, and get rid of just about all the complicated credits, deductions, exemptions and preferences in the Internal Revenue Code--the plan proposed by Steve Forbes originally back in 1996 and described in a book he wrote in 2005. Under the Forbes tax plan, we get the following advantages:

a. The compliance cost per year is far lower, freeing up over US$200 BILLION per year for more productive economic activities.
b. The poor will no longer be subject to income tax, since we now offer a generous US$13,000 per adult (in a two-adult household) and US$9,000 per child initial household exemption for earned income.
c. Above that, all earned income will be subject to a 17.5% income tax--easily among the lowest rates in the world for a G-20 country.
d. We eliminate the alternate minimum tax, estate tax, and additional taxes for being married or living in a registered domestic partner (RDP) relationship.
e. We eliminate double taxation such as including bank account interest, capital gains and stock dividend payments, which encourages American residents and businesses to keep as much of their savings and capital investments in the USA as possible. That could mean millions of jobs, thousands of factories, hundreds of corporate headquarters and the vast majority of that US$14 TRILLION sitting in foreign financial institutions return to the USA, at once lowering the unemployment rate (e.g., creating a far larger base of taxpayers!) and making financial institutions in the USA whole again.
f. If we still have payroll taxes for Social Security, we can drastically cut the rate to under 3% or even lower, since private citizens can now create their own financial "nest egg" for retirement and/or medical bills tax-free, lowering the demand for Social Security and Medicare.
g. With the drastically simpler tax code, corporations will find far less need to spend a fortune to lobby for additions to the IRC or engage in expensive, highly-complex accounting schemes in order to lower the tax burden. Corporations would rather pay a low-rate corporate income tax with a far simpler filings than having to lobby for highly specialized tax breaks and/use complicated company incorporation schemes, both of which waste time and money (I've read just the yearly tax filings for General Electric would fill almost a 53-foot long truck trailer!).

So what are we waiting for even now?

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