Aired-out uproariously on Saturday Night Live, “Deflate-gate” has been a national fixation since word broke that the New England Patriots used under-inflated footballs in their Super bowl birth-clinching victory over Indianapolis. The alleged cheating controversy has even pumped up the lovability of the oft-despised Seattle Seahawks.
However, Think Again if you believe Deflate-gate is merely hot air. Though overblown, Americans’ disquiet reflects our fairness instinct and commitment to equality of opportunity – the ideal that all competitors in the race of life, no matter their status, can succeed on a level playing field.
Sensing a slanted NFL field, Seahawk Richard Sherman questioned the close relationship between NFL commissioner Roger Goodell and Patriot owner Robert Kraft, calling it a “conflict of interest.”
Sherman’s unease resonates in an America increasingly distrustful of society’s umpires. President Obama spoke to this anxiety in last week’s State of the Union address. “This country does best when everyone gets their fair shot, everyone does their fair share, and everyone plays by the same set of rules,” he declared, labeling this “middle-class economics.”
Yet the story of our five-year-old recovery is how poorly working Americans have fared. With workforce participation at forty-year lows, “America’s wealth gap between middle-income and upper-income families is the widest on record,” Pew Research recently reported. From 2010 to 2013, household incomes fell for all except the most affluent 10 percent, a 2014 Federal Reserve survey revealed, with the bottom 40 percent suffering disproportionately.
So while Wall Street, Silicon Valley and Washington boom, the rest of America suffers crisis levels of job insecurity, economic immobility and government dependency, with a record 50 million living in poverty.
That’s because our economy’s playing field is askew, warped by a cronyist system -- long in the making -- that is neither “middle-class economics” nor Thomas Jefferson’s ideal: “a wise and frugal government, which shall restrain men from injuring one another, which shall leave them otherwise free to regulate their own pursuits of industry and improvement.”
Free to pursue their individual life objectives, American entrepreneurs -- and immigrants fleeing societies where one’s start pre-determined one’s end -- transformed an agrarian backwater into human history’s greatest economic wonder. Between 1800 and 2007, economic well-being (real GDP per-capita) increased 32-fold in America compared to 14-times in Great Britain and 5-times in India.
It’s not a miracle; it’s the free market where rivals meet in open competition, generating a continuous stream of innovation, choice and value. In return for pleasing customers and being good corporate citizens, entrepreneurs earn profits.
As government has grown, so have its anti-competitive powers, corrupting the free market with corporate cronyism -- the incestuous relationship between Big Government and Big Business that rewards political connections over competitive excellence.
Our tax code is a cronyist masterpiece, allowing well-connected individuals and big companies like GE to lobby for, win and exploit tax breaks, rendering their tax bills negligible and affording lawmakers unending contributions.
Equally distortive are corporate welfare programs sold as economic saviors -- the 2009 stimulus, cash-for-clunkers, farm bill, bailouts, Export-Import Bank loan guarantees and Dodd-Frank “Wall Street reform.” Each benefits well-connected private companies, forcing Americans who “work hard and play by the rules” to subsidize elites who don’t.
Then there’s cronyism’s granddaddy, Obamacare, “the product of an orgy of lobbying and backroom deals,” according to Steven Brill, whose new book “America’s Bitter Pill” details how the $3-trillion-a-year health industry’s largest stakeholders – drug and medical device companies, hospitals, insurers – profited, at taxpayers’ expense.
When profits accrue to those with the most to invest in politics -- and the most to lose in the free market -- wealth and opportunity shift from ordinary people to the government and its friends. That’s why Americans struggling to maintain living standards must contend with ever-increasing prices in government-controlled sectors -- housing, health, and education.
Most worrisome, the small business sector, which generates two-thirds of new jobs, is languishing. Unable to grow in a market that protects large corporations from competition, and disproportionately burdened by an explosion of regulatory red tape, small business deaths now exceed business births for the first time in the Brookings Institution’s thirty-plus-year history of data collection.
So who are the greedy Gordon Gekko’s? Those who prudently risk hard-earned money to continuously deliver life-enhancing benefits – iPhones, 3-D printers, medicines, refrigerators – or cronies who relegate competitors, consumers, employees, and investors to the sidelines of a rigged game?
To protect our freedom and broadly share prosperity, shouldn’t we disperse power away from economic leeches, returning it to economic producers whose raison d'être is the fulfillment of needs and desires?
Think Again – It’s human nature to want competitive advantages -- whether tax breaks or deflated footballs. That’s why a free society needs referees with only enough power to assure fair competition, not so much that they become self-interested players in the game.
Imagine a 4th of July tradition like Hollywood’s where each year the Oscars pay homage to fallen stars. Liberty-loving Americans would fete public servants who’ve honored Thomas Jefferson’s rule to “leave no authority existing not responsible to the people.”
Might celebrating trustworthy stewards inspire Americans to Think Again about our founders’ insights, ingraining a culture that prizes democratic accountability and lawful government, the one that transformed our risky political experiment into history’s freest and most prosperous society?
We’d be celebrating two recently passed stalwarts who put country and constitutional order before party: Senator Howard Baker, the Senate Watergate Committee’s ranking Republican who famously asked “what did the President know and when did he know it,” and Johnnie Walters, President Nixon’s IRS commissioner, who refused to target his “enemies list.”
Like our Founders, Baker and Walters understood that where equality under the law goes, so goes freedom. Therefore, the greatest threat to civil society and human potential is a powerful, deceitful and unaccountable government where the few rule the many.
That’s why the Founders designed a liberty-preserving system that fragmented and checked government power among equal, competing branches, conferring ultimate authority upon the people -- not our representatives.
Respectful of Jefferson’s rule, unlike many in today’s “Ruling Elite,” it’s doubtful Baker or Walters would stomach the IRS targeting Americans for their political beliefs, or the evaporation of email evidence critical to congress’ investigation -- called “a conspiracy theory” by the White House.
Journalistic sleuths Woodward and Bernstein know that government accountability derives from an active media and an informed citizenry. In comparing the IRS and Benghazi scandals to Watergate, they criticized the media for abandoning its constitutionally protected watchdog role, appearing instead to protect the government from Americans.
Public servants may arrive eager to drain Washington’s cesspool, but after harnessing governmental power and dispensing money and favors, they discover it’s a hot tub made inviting by politicians, bureaucrats, public-sector unions, lobbyists, donors, and the media.
Our greatest challenge -- and the biggest threat to the world’s oldest (and shortest) constitution -- isn’t a left versus right tug-of-war, but a struggle to wrest power away from those who collude at the citizens’ expense.
Incentivized to invest in influence instead of innovation, Big Business (currently enjoying record profits) can buy access to trillions in spending, tax and regulatory favors. The result is a heavily indebted citizenry and a stagnant economy warped by cronyism, as evidenced by the 2.9 percent plunge in first-quarter U.S. GDP -- the worst non-recession contraction in over 40 years.
Not surprisingly, the small business sector that accounts for two-thirds of net new job creation is suffering as “business deaths now exceed business births for the first time in the thirty-plus-year history of our data,” according to a new Brookings Institution report on declining business dynamism.
While Wall Street and Washington boom, the rest of America suffers crisis levels of income stagnation, underemployment, economic immobility and government dependency, with a record 50 million living in poverty.
Yet as the American Dream slips beyond reach for ordinary citizens, those who oppose the Ruling Elite are labeled extremists, proving George Orwell’s adage that “In a time of universal deceit, telling the truth will be a revolutionary act.”
Consider last month’s Mississippi Senate run-off that spoilsman Thad Cochran narrowly won, thanks to crony donations and promises to keep the gravy train running, unlike his “extremist” opponent.
But who are the extremists? Those who advocate free markets, equality under the law, fiscal responsibility, constitutional adherence, in God we trust, and peace through strength – the campaign platform of David Brat, Majority Leader Eric Cantor’s vanquisher – or the Ruling Elite who subvert these guiding principles?
Though distressed Americans clamor for law, order and security on our southern border, slack immigration-law enforcement has accelerated unlawful migration. Exacerbating the lawlessness are lawmakers like Nancy Pelosi who called the deluge of illegal immigrants an “opportunity.”
Unfortunately, the opportunity is at the expense of working Americans, considering all employment growth since 2000 went to immigrants (legal and illegal), the Center for Immigration Studies reported.
Meanwhile, with Congress requiring border security prior to any amnesty, President Obama intends to act alone, as he did in 2012 when he indefinitely suspended deportations of 550,000 alien youths, granting them work permits.
Commenting on Obama’s intentions following his twelfth unanimous Supreme Court rebuke for federal power over-reach, constitutional law professor and Obama-voter Jonathan Turley explained, the President “can’t say the solution to gridlock is you simply have to resolve it on my terms.”
Having overthrown King George’s unfair and arbitrary rule, our Founders established an America of, by, and for the people – not Ruling Elites -- stipulating that presidents “shall take care that the laws be faithfully executed.”
Think Again – wouldn’t a shared allegiance to our constitutional order be the best way to realize a more perfect union, for “ourselves and our posterity?”
In his 1980s comedy routine, Yakov Smirnoff celebrated America’s free society and equality before the law, joking: “In America you can always find a party. In Russia, Party always finds you! In America, you break law. In Soviet Russia, law breaks you!"
In the wake of scandals involving the abuse of governmental power, Americans must Think Again about Smirnoff’s ironic word plays. As we’re learning, the ruling Party can find and break you – despite constitutional protections.
Today, our federal government is the nation’s largest spender, debtor, lender, employer, contractor, property owner, insurer, healthcare provider, and pension guarantor. What it doesn’t directly control, its unchecked bureaucracy can ban or mandate. Moreover, the Justice Department’s wiretapping of journalists and the demotion of Benghazi whistleblower Gregory Hicks at the State Department have impeded the watchdog media’s ability to assure a free flow of information between the people and our government. Even New York Times reporters aren’t getting calls returned.
Meanwhile, large swaths of America are in no mood to party -- especially the Tea Party -- after getting trapped in the government’s dragnet and subjected to personally invasive, banana republic-like scrutiny. Along with other conservative, pro-Israel and religious groups, their First Amendment rights -- freedoms of association, speech and religion -- were systematically abridged by the most feared agency of the government, the IRS.
After unfairly applying tax-exempt laws and divulging personal files to media site ProPublica, Americans worry the IRS can’t be trusted to impartially and confidentially administer 47 new healthcare provisions and 18 new taxes. Mistrust spiked after learning the IRS’s Obamacare office is led by the same manager who oversaw and ignored abuse in the tax-exempt entities office. Adding fiscal insult to political injury, revelations about the IRS’s lavish spending culture – especially its $4 million employee boondoggle – prompted Jay Leno to suggest we close the IRS, not Gitmo.
Though government officials acknowledge the IRS’s “inexcusable” and “inconsistent” application of the law -- and notwithstanding their apologies for the “unprecedented” abuse of power -- many Americans are gleeful that political groups with which they disagree were muffled, as video-blogger Caleb Bonham discovered when inviting students in Boulder, Colorado to sign his gigantic thank you card to the IRS. Ironically, students in Bonham’s viral video cheerfully endorsed the harassment and intimidation of fellow citizens, unmindful that coercive government could one day crash their party.
Quick to call limited-government types devils incarnate, and inspired by politicians for whom there can be no honest difference of opinion, hyper-partisans are willing to commit fellow countrymen to an administrative Star Chamber, simply because they identify with different values. But nothing is more destructive to our social fabric and antithetical to America’s founding principles than the abuse of federal power to stifle dissident opinion, as Smirnoff knows and our founders feared. That’s why our founders devised a system to protect the very liberties that are currently under assault.
Defending limited government and our system of checks and balances, James Madison penned this famous argument: “What is government itself, but the greatest of all reflections on human nature? If men were angels, no government would be necessary. If angels were to govern men ... controls on government would (not) be necessary. In framing a government, ... you must first enable the government to control the governed; and in the next place oblige it to control itself."
Clearly, our government is out-of-control, as recent revelations of government over-reach, excess and incompetence testify. The federal bureaucracy has morphed into a government of special interests, by the bureaucrats, and for the political class. Occupy Wall Street meets the Tea Party at the intersection of their contempt for a government that routinely presses its massive thumb on the scale of justice, picks winners and losers, and gives sweetheart deals to well-connected cronies.
As law professor Jonathan Turley described in an eye-opening Washington Post op-ed, the administrative state has grown so powerful and independent, it constitutes a fourth branch of government whose impact on citizens’ lives is larger than the other three branches combined. Composed of 15 departments, 452 agencies, and 2.8 million unelected and inaccessible bureaucrats, it’s less transparent and more unaccountable than other branches. “We cannot long protect liberty,” Turley concludes, “if our leaders continue to act like mere bystanders to the work of government.”
This fourth branch is our founders’ nightmare, and an assault on their constitutional principles: government by consent, separation of powers and equal rights of individuals. To preserve the system that is the source of our flourishing and the bedrock of our culture, we’ll need “a new birth of freedom,” as Abraham Lincoln yearned, so that “government of the people, by the people, for the people, shall not perish from the earth.”
Think Again. We wouldn’t want to be like the USSR where, Smirnoff says, comedians could crack jokes about leaders -- but only once.
“The higher up in the tree the monkey goes, the more of his backside that shows,” goes the maxim. It would be hard to climb higher than Warren Buffett, the world's most celebrated investor. However, as the namesake of the Buffett Rule that imposes higher tax rates on the wealthy, Buffett and his backside dangle precariously “out on a limb.”
Residing atop Buffett's tree is New Jersey Gov. Chris Christie, known to deliver the best rhetorical broadside, probably because of his broad backside. Last week, Christie buffeted Buffett, forcing him to Think Again.
After two years of traumatic budget austerity, Christie's 10 percent tax cut for all New Jerseyans is central to his fiscal revival plan. Designed to stimulate economic growth, job creation and entrepreneurialism, Christie expects Jersey's economic pie to grow so more “haves and soon-to-haves” generate more tax revenue. After eschewing Buffett's Tax, Christie challenged Buffett to put up or shut up by writing the government a check, to which Buffett conceded, “It's sort of a touching response to a $1.2 trillion deficit, isn't it? That somehow the American people will just all send in checks and take care of it?”
Perhaps unwittingly, the “Oracle of Omaha” revealed the hard truth: No reasonable amount of taxation can address the catastrophic levels of spending, deficit, debt and doubt that plague Americans.
Even the 49.5 percent of Americans who aren't currently paying federal income taxes — a status for which they're wrongly disparaged since other taxes they pay support government (state, payroll, property, sales, gas) — know that increasing tax rates on high earners won't “take care of it.” Incredibly, confiscating the taxable income of America's millionaires and billionaires would only yield $938 billion, enough to run the government for three months.
Ominously, the nonpartisan Tax Foundation estimates the Buffett Rule could raise $40 billion annually, chicken feed compared with our deficit and bullish considering the United Kingdom's new wealth tax generated less revenue from top earners than before its implementation.
Most insidious, a large majority of America's small businesses, the sector responsible for creating two-thirds of all new jobs since 1996, file individual (not corporate) returns, thus ensnaring them in the Buffett Rule. Imagine the surprise of the technology entrepreneur who wants to expand her business but finds herself in Buffett's tax class!
The dirty little secret is that to reduce the deficit or avoid spending cuts, we'd need a “soak the middle class” strategy. That's because 98 percent of America's taxable income is in households that earn less than $250,000. As Buffett admitted, “The purpose of the Buffett Rule is not to close the deficit gap.”
So why promote the Buffett Rule if it's economically injurious and fiscally imprudent? Because in an election year, budget gimmicks and fairness illusions trump growth, job creation, tax revenue and economic logic. This isn't tax fairness; it's tax farce.
The million-dollar question is, What is fair? Is it fairer to equitably divide a stagnant or shrinking economic pie or to grow the pie so everybody gets more, albeit unevenly?
Since first implementing the income tax a century ago, we've agreed on the latter while operating the industrialized world's most progressive tax system. According to 2009 IRS data, Americans with incomes less than $100,000 paid an average rate of 8 percent while those making more than $500,000 averaged 25 percent. Furthermore, the top “1 percent” currently pay 38 percent of America's income taxes while the top “10 percent” pay 75 percent.
But as Buffett notes, “You can do pretty dumb things when you've got a big checkbook.” The real problem isn't that Americans (rich or not) pay too few taxes; it's that government is so over-extended, it's transferring hundreds of billions of dollars to the affluent. Why should a farmer making $2.5 million be eligible for farm subsidies? Should Buffett be entitled to the same Medicare and Social Security benefits as those without corporate jets? Should wealthy backers of green energy be entitled to billions in below-market loans whether or not they're political donors?
As the president's bipartisan Debt Commission recommended, wealthy Americans shouldn't get benefits they don't need nor tax preferences that distort and undermine our economy. But withdrawing voters' goodies isn't smart politics when you're trying to secure electoral majorities. Conversely, it's politically wise to distract voters from current realities like the following: One in six Americans lives in poverty — the most since tracking began in 1959; government dependency is at an all-time high; and the percentage of Americans with a job is the lowest in decades.
Imagine the possibilities if Buffett turned his attention to the challenges of income stagnation. He already knows that American prosperity derives from entrepreneurial activity and the incentives that inspire it, having once said, “You can change behavior by incentives, but you can't usually change behavior by sermons, although people try every Sunday.”
Think Again, Warren — that's good advice.
In a Russian joke, there are two friendly farmers, Boris and Ivan. Both are prosperous, though Boris owns chickens and Ivan doesn't. When a genie offers Ivan anything he desires, he ponders his wish and orders, “Kill Boris' chickens!”
As Americans imbued with entrepreneurial spirit, a tradition of social mobility, and a sense of fairness and morality, we're bemused by this joke. Why didn't Ivan aspire to own chickens himself, or cows? Doesn't Ivan realize he's hurting everyone's standard of living by depriving everybody of eggs and chicken meat? Why deny opportunity to shopkeepers, butchers and restaurants — and all their employees?
By living in a zero-sum world where one can only profit at the expense of others, Ivan can't comprehend (as Americans do) that a neighbor's prosperity can enhance our lives, raise our standard of living and create economic opportunities for more people. Ingenious billionaires who developed the automobile, laptop, Facebook and iPhone were rewarded because they improved society's standard of living, not by clawing a fortune out of society's guts.
If you believe this “beggar-thy-neighbor” mentality doesn't exist in the U.S., Think Again. Economic distress creates fertile ground for “the politics of envy” allowing opportunistic politicians to distract us from real problems by accusing wealthier Americans of not paying their “fair share” and by bashing selected (poll-tested) industries. However, the “soak-the-rich” narrative is dangerously divisive, socially corrosive, economically detrimental — and untrue.
The Organization of Economic Cooperation and Development studied 24 economies and concluded “Taxation is most progressively distributed in the United States.” Here, the wealthiest 10 percent (individuals and small businesses) making more than $92,400 per year pay three-quarters of the nation's income taxes, while half of Americans pay none and nearly 70 percent receive more government benefits than they've paid in.
Social justice doesn't require such a progressive system, though it allows society to express compassion for its neediest. The question is: At what point does forced redistribution of income as a means of social policy destroy individual initiative, becoming economically detrimental and socially unjust to all strata of society?
Given our economic straits, we're there. According to IRS data and based on current government spending levels, even if the government instituted a 100 percent tax on both corporate profits and incomes above $250,000 per year, it would only yield enough revenue to run the government for six months. That's because government spending has swollen to 24 percent of GDP from 18 percent in 2000.
Despite these facts, politicians promote resentment to create sympathetic voting blocks, pointing to widening income gaps between rich and poor. However, Americans don't begrudge our neighbor's success; we crave it, relying on social mobility to achieve it. While acknowledging the need for a sturdy social safety net, we know instinctively what IRS data proves — the vast majority of “the poor” do not remain poor in America.
Like an elevator, Americans ride the income ladder, from one statistical category to another. Three-quarters of Americans whose incomes were in the bottom quintile in 1975 were also in the top 40 percent during the next 16 years, according to the Federal Reserve Bank of Dallas. IRS data shows that incomes of taxpayers in the bottom quintile in 1991 rose 91 percent by 2005, compared to those in the top quintile whose incomes rose only 10 percent — those in the top 5 percent actually declined by 26 percent. So much for the “rich getting richer and the poor getting poorer.”
Though tax-rates (and loopholes) influence economic behavior, government revenues correlate more with economic growth. One hundred years of IRS data show the wealthy avoided higher tax-rates and supplied less tax revenue when marginal rates were higher. Irrespective of marginal rates (which have ranged between 92-28 percent since 1952) government revenues historically hovered around 18 percent of GDP. Additionally, when rates were lower, GDP growth was higher.
Therefore, America's goal should be to generate economic growth to create more jobs, meaning more taxpayers and more government revenues to pay off our debt. This requires fiscal discipline and comprehensive tax-reform including the elimination of tax loopholes and subsidies for the politically favored, and globally competitive tax-rates. Australia, Canada and Sweden just instituted similar measures resulting in material economic improvements. Why can't America?
Without such measures, the dirty little secret is that the money to pay for our bloated government (and $14.3 trillion in debt) must also come from the middle-class and future generations. That's not only an economic problem, it's a moral one when those without a voice are deprived of economic opportunity.
Abraham Lincoln encapsulated America's notion of fairness saying, “That some should be rich shows that others may become rich, and hence is just encouragement to industry and enterprise. Let not him who is houseless pull down the house of another; but ... build one for himself.”
Those who practice class warfare (and Ivan) should Think Again.
I didn't “Occupy” Wall Street, though I spent enough hours working there that a sleeping bag could have come in handy. I can attest to one of the protesters' claims about Wall Street bankers: While most are good and ethical people, they are supremely money-oriented, and, like the bear that sniffed out a Payday in my trash, they'll take the path of least resistance to find theirs.
However, the profit motive is not a bad impulse, and countries with economic systems that ignore it suffer worse economies. In our system, the accumulation of profits is an important metric of success, which is why Steve Jobs' pride peaked the day Apple's market value surpassed Microsoft's — his business model won.
So unless protesters want to do away with our capitalist system (as some might), blaming Wall Street bankers for ransacking our economy is like shooting the bear that ransacked my garage. Both merely followed their instincts. Rather than rage at Wall Street and demand that government have a bigger role in our lives, the protesters should Think Again — do an about-face and march to Washington, where the misguided policies that undermined our economy were hatched.
That would be the impulse of protesters if they had read “Reckless Endangerment,” the bestselling book by Gretchen Morgenson, Pulitzer Prize-winning business reporter for The New York Times. Morgenson and her co-author, Joshua Rosner, share the protesters' outrage. They wrote this book to expose “a crowd of self-interested, politically influential, and arrogant people who have not been held accountable for their actions.”
Contrary to the false narrative that Wall Street led the way in subprime lending, the authors place blame squarely on the government sector. The calamitous (though well-meaning) Homeownership Strategy, enacted during the Clinton administration and continued by President Bush, required banks to make loans to lower-income borrowers. Additionally, Fannie Mae (the government-sponsored mortgage finance agency, or GSE) forged partnerships with mortgage originators like Countrywide, from which it bought mortgages, and with Wall Street banks like Goldman Sachs, which repackaged and sold them.
According to the authors, “what few have recognized is how the partners in the Clinton program embraced a corrupt corporate model … devised by Fannie Mae.” “Reckless Endangerment” details how “Fannie Mae perfected the art of manipulating lawmakers, eviscerating its regulators and enriching its executives.” It's the story of “how watchdogs who were supposed to protect the country from financial harm were actually complicit in the actions that finally blew up the American economy.”
The chief villain in this story is Fannie Mae, which capitalized on the political cover provided by affordable housing goals (as well as government ties and generous political donations) to “build itself into the largest and most powerful financial institution in the world.” Essentially, taxpayers unwittingly channeled the agency billions of dollars a year to finance a campaign of self-promotion and self-protection, enriching Fannie Mae's executives as well as its political patrons.
Meanwhile, Wall Street banks were drawn to the mortgage market like a bear to trash, seeing Fannie Mae's soaring profits, stock price and executive compensation. Aided by credit agencies' erroneous assumptions that housing values wouldn't decline, the housing bubble continued to inflate. The few brave enough to criticize these government policies were effectively silenced by well-funded, self-interested and sometimes vicious opposition from the “public-private housing machine.”
When the weakest mortgages began to default in 2007, the housing market crashed along with the financial sector, resulting in the Great Recession, from which we have yet to recover.
The sad reality is that the riskiest loans absorbed by Fannie Mae (no documentation/no equity) originated after 2005, the year Congress tried and failed to pass legislation that would have curtailed the agency's financially destabilizing practices. Hence the financial crisis wasn't caused by deregulation, as false narratives purport, but by Congress' failure to regulate Fannie Mae and other GSEs.
You'd think policymakers would have learned from this catastrophe. Yet Morgenson concludes that the so-called Dodd-Frank bill — sponsored by U.S. Sen. Christopher Dodd and Rep. Barney Frank, “two of the most strident defenders of Fannie Mae” — fails to alleviate future threats to taxpayers. As is the case with most regulation, its primary impact has been to increase the cost of doing business, costs which are usually passed on to consumers.
The income inequality the Occupy Wall Street protesters decry results from this crony capitalist system that allows policymakers to distribute economic favors to special interests in the form of bailouts, preferable tax treatment and favorable regulations. Conversely, capitalists like Steve Jobs who rely on free markets, private financing, American ingenuity and hard work, create more prosperity for more people.
Most Americans don't need to Think Again. We prefer capitalists like Steve Jobs to “crony capitalists” like Fannie Mae, whose government-abetted ransacking of the economy is the root cause of Americans' despair.
Back in September when President Obama was arguing for his third stimulus, he pronounced America soft and said we lacked a competitive edge. At the same time, the NFL cognoscenti were declaring Tim Tebow an NFL bust despite being a first-round draft pick. Remarkably, Tim Tebow and the U.S. economy are showing signs of resurgence.
The news that the U.S. unemployment rate fell from 9.0 to 8.6 percent in November (though due largely to job seekers exiting the market) is as surprising as Tebow’s 7-1 record since becoming the Broncos’ starting quarterback. Tebow’s late-fourth-quarter magic and five come-from-behind victories (three in overtime) have rocketed the Broncos from worst to first in their division, earning Tebow the confidence of coaches and teammates, and the adoration of fans.
If only America’s private-sector “quarterbacks” were liberated to call their own plays and scramble like an unleashed Tebow, America could win the economic equivalent of the Super Bowl — GDP growth of 4.5 percent and unemployment of 6 percent.
If politicians were as wise as Tebow’s coach, they’d formulate strategies to get business owners off the sidelines. They could start by reducing excessive regulations that, according to the Small Business Administration, cost the economy $1.75 trillion in 2008, more than individual and corporate income taxes combined — and that’s more than 11,000 regulations ago. In stronger economies, businesses are better equipped to tackle runaway regulators, who often view them as the opponent. Now, the 22.9 million Americans who are unemployed, underemployed or too discouraged to look for employment are consigned to the injured reserve list.
As politicians play political football with our fate, they demonstrate greater concern for the next election than for the next generation. If politicians were truly interested in growing the economy, creating jobs and paying off the national debt, they wouldn’t propose micro-measures like the temporary extension of the Social Security payroll tax cut. While hardworking taxpayers welcome savings, this temporary cut is minimally pro-growth and further erodes Social Security’s solvency. Furthermore, offering current benefits financed by faux spending cuts or never-to-materialize revenues is the very accounting gimmickry that has undermined America’s fiscal stability and credit worthiness. How many Americans know that the so-called “Budget Control Act of 2011” that raised the debt ceiling actually increases spending by $830 billion over current expenditures?
We know that to recover fiscal stability we must get taxpaying Americans back in the game. Six percent unemployment by 2014 requires an additional 14 million jobs, or 400,000 each month (compared with the 120,000 added last month). This implies an annual growth rate not seen since 1999 and triple this year’s 1.5 percent.
Meanwhile, like the Broncos’ fans after the team’s dismal 1-5 start, Americans lack confidence. A recent Rasmussen poll shows that only 18 percent of Americans believe today’s children will be better off than their parents, perhaps because 68 percent of Americans believe government and big business work together against their interests.
This is where the tea party meets Occupy Wall Street — at the intersection of their complaint that the economic game’s officiating is unfair, as though a touchdown counts for more points if you’re from the favored team. Both movements want to reform a system that allows special interests to lobby for politicians to have more power to manage the economy, thus enabling politicians to enact favorable laws and regulations or allocate money for these special interests. When special corporate interests keep profits but share losses with hapless taxpayers, those without political connections suffer unfair competition. The result is a crisis of legitimacy that corrodes social trust, undermines effort and hurts our most vulnerable.
The most poorly officiated segment of our economy is the energy sector. It should be national policy to promote affordable energy, which is the lifeblood of any vibrant economy. But after 25 years of backward energy policies, Americans are unaware that we have more recoverable oil than the entire world has used in 150 years and the world’s largest holding of natural gas, oil and coal resources, according to last week’s Institute for Energy Research report. Allowing development of American resources would lower prices throughout the economy and promote energy independence, job creation and American competitiveness. It also would generate billions in tax revenues — considerably more than an anti-growth surtax on “millionaires and billionaires.”
If job creation and deficit reduction were really policymakers’ top priorities, they’d study North Dakota, where in 2011 the energy boom generated 20,000 well-paying jobs, a $1 billion budget surplus and America’s best unemployment (3.5 percent) and growth (7.1 percent) rates.
Throughout America’s history, our private-sector quarterbacks have demonstrated the tenacity, skill, self-discipline, confidence and faith that put Tebow back under center. If allowed on the field, America’s “gamers” will prove that not only aren’t we soft, we’re winners, like Tebow.