It's Our Money, Not the Government's

Steve Czonstka

Okaloosa GOP SCM

4554 Redbud Trail

Niceville, FL 32578-8768

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tmezonk@cybertron.com

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The Difference Between Thine and Mine

By J.T. Young on 9.16.10 @ 6:08AM

The President's budget reform panel is being encouraged to sniff for smoke in the midst of flames. At its latest public meeting it was told that tax breaks are "backdoor spending." There is a two-fold problem in accepting such an equivalence. First, the nation's fiscal predicament is not any so-called "backdoor spending," but uncontrolled "front door" spending. Second, not only are the two not quantitatively comparable, they are not qualitatively so either.

The budget reform panel, officially named the National Commission on Fiscal Responsibility and Reform, is akin to a fire marshals' convention in a burning building. How hard could it be to follow the flames to an inferno? In the case of the federal budget, the government is spending a quarter of all America produces -- the highest peacetime level in U.S. history.

Still, at its latest meeting, outside witness Maya MacGuineas, of the Committee for a Responsible Federal Budget, identified so-called "tax expenditures" as "the most important area of the budget to reform." She went on to state that it was her organization's belief that all stipulations applied to spending should apply to such tax breaks too.

This is no less than ignoring the fire in search of the flammable.

First, it is important to understand what tax expenditures are: exemptions within the regular tax code. These allow individuals to pay less in taxes than they otherwise would -- such as the mortgage interest deduction. They are tax breaks, in other words.

From an economic standpoint, tax expenditures have their detractors because they use the tax code to intervene in the market. The market itself should decide where investments and spending go, not tax breaks that encourage one course over another. In their opinion, the goal should be for neutrality between decisions.

From a tax policy perspective too, there are critics. They believe the goal should be the broadest, fairest, flattest, and simplest system possible. Exceptions mean taxes must be higher elsewhere, in order to raise the same amount of intended revenue.

With so many reasons to question them, it is easy to denigrate them. So why then seemingly defend them? Because it is all too easy to make a fundamental mistake in equating them with government spending. And that error opens the door to an even more serious one.

Admittedly, it is easy to mistake tax expenditures for spending from a fiscal standpoint. As a subtraction from the ledger's revenue side, their effect is akin to an addition to the ledger's spending side.

It is from the qualitative perspective where tax expenditures and spending are significantly dissimilar. Tax expenditures amount to allowing someone to keep more of the money they have earned. They keep a person's money with its earner.

Federal spending is the use of someone else's money by the federal government. It is giving someone else's money to another person. Regardless of how well-intentioned, federal spending remains the distribution of the general taxpayer's money to another individual.

The use of one's own money and the use of someone else's money are not the same thing.

If tax expenditures are to be examined as part of a broader budget reform proposal -- and there are certainly reasons to do so -- any revenue saved should be set aside for reducing the underlying tax rates. The last thing an elimination of tax expenditures should be used for is offsetting more federal expenditures.

This is why the distinction between tax expenditures and federal expenditures is so important. Blurring their sharp distinction only makes it easier to continue the current fiscal fiasco: the government's use of others' money as if it were the government's.

Federal spending is our fiscal problem, but even this is symptomatic of a larger philosophical one: the inability to distinguish between "thine and mine." Without that distinction, there is no theoretical brake on federal spending. The government can simply continue to arrogate more of the nation's resources to itself and its own self-defined better intentions.

To fix the nation's fiscal problems, we must control its spending. To control spending, we must recognize that the money is not government's, but taxpayers'. And to do that we must acknowledge that taxpayers have a greater claim on their money than the government ever can.

If we are going to talk of reform, we must at least start from a common understanding, and an accurate one, of what real reform entails. This can not be done, if we fail to properly recognize what should be the first fundamental principle between a government and its citizens.

J.T. Young served in the Department of Treasury and the Office of Management and Budget from 2001 to 2004 and as a Congressional staff member from 1987 to 2000.

17th Amendment:Big Government

History Lesson 2010

By Ross Kaminsky on 9.7.10 @ 6:09AM

When Colorado Republican Senate candidate Ken Buck briefly (and temporarily) suggested support for allowing state legislatures rather than the public to select U.S. senators, he stuck his well-known bovine digestive refuse-covered boots into the messy civics lesson that is the 2010 election.

For the first time during my 25 years of following politics, people who have the poor taste to bring up (in public!) the Founders, the Constitution, the Declaration of Independence, natural rights, and basic precepts of good government are no longer automatically judged to be wacko fringe extremists and likely members of "militias," nor automatically tagged with the perennial establishment insult of "libertarian" -- being called which has always been my own version of Br'er Rabbit being thrown into the briar patch.

The American public, with minds largely uncluttered -- just how the left wants you -- by a basic education in what used to be called "civics" (then "social studies," and now "comparative Native American basket weaving philosophies -- see footnote on page 273 for information on George Washington"), is learning the importance of fundamental American precepts the hard way: by living through government of, by, and for people who dislike, distrust, and completely misunderstand those precepts.

The day after Mr. Buck expressed his position on legislatures selecting senators, he retracted that position and has restated his current position -- leaving the election of senators in the hands of the public -- multiple times since. The Democratic Senatorial Campaign Committee ("DSCC") nevertheless ran an ad calling Buck's idea "radically different," saying Buck wants to "rewrite the Constitution" and "end our right to vote."

The message of the DSCC is that Ken Buck, a mainstream conservative Republican, is "extreme." But the presumption of their message is that Americans are too ignorant of our own history to know that Ken Buck's original suggestion represented little more than returning to the system of senatorial selection preferred by our Founders and which was in place for the majority of our republic's history.

In particular, the United States Constitution in its original form said in Section 3, Clause 1 that "The Senate of the United States shall be composed of two Senators from each State, chosen by the Legislature thereof…" It was not until the 17th Amendment, passed by Congress in 1912 and ratified in 1913, that "chosen by the Legislature" was changed to "elected by the people."

The DSCC's ad is doubly dishonest: It says that Buck holds a position which they know he doesn't hold, and they portray the position as radical even though it represents the system which was in place for 55% of the time since our Constitution was adopted. Unfortunately, the DSCC is rightly betting that few who see the ad will know this history (or that Buck doesn't support the repeal of the 17th Amendment.)

What people should -- but mostly won't -- learn from the DSCC's ad is nothing about Ken Buck and a lot about the impact of the 17th Amendment. It's not as if the small handful of (Republican) candidates for federal office who have suggested its repeal will be able to get more than a 5 second discussion on the issue from John Boehner. (OK, 5 seconds is an exaggeration since Boehner's likely response of "What planet are you from?" can be scornfully delivered in two seconds flat. I timed it myself.) But even the mention of the idea seems to scare the DSCC -- as it should, more than it should scare any other group on the planet.

The 17th Amendment is a direct attack on federalism and one of the greatest transfers of power from the states to the federal government, and particularly to Democrat senators, in our nation's history. In a moment of remarkable candor, a U.S. government website states directly that the change was pushed by "Progressive reformers." It's no wonder; they knew exactly what they were doing.

In an important paper on "The History of the Seventeenth Amendment and its Implications for Current Reform Proposals," George Mason University law professor Todd Zywicki makes some key points:

• The Senate was intended "to provide an anti-democratic role under the Constitution, an American version of the English House of Lords designed to check the democratic excesses of the House of Representatives…"

• "Appointment of Senators by state legislatures gave the states a constituent role in the national government and a means to protect themselves from laws emanating from Washington designed to subvert state sovereignty and independence."

• Following the passage of the 17th Amendment, "the 1920s showed for the first time federal intervention in traditional state functions, and the first use of federal grants to the states -- along with accompanying federal control. Moreover, the state governments have more and more been downgraded from independent policy-making bodies to mere instrumentalities of the federal government… Indeed, it is inconceivable that a Senator during the pre-Seventeenth Amendment era would vote for an 'unfunded federal mandate,' thereby requiring state legislatures to raise taxes and spend money on projects they did not devise and for which they receive no political benefit."

(You can hear a Cato Institute podcast on the topic with Todd Zywicki here.)

Even Alexander Hamilton, the leading champion among the Founders of a powerful central government, said (in Federalist 59) that while there is risk to the central government from a system in which state legislatures choose senators, a system which had direct election of senators "would doubtless have been interpreted into an entire dereliction of the federal principle; and would certainly have deprived the State governments of that absolute safeguard which they will enjoy under this provision."

The threads of the original intent -- and why Democrat senators in particular would want those threads shredded -- quickly become clear. Weakening a senator's connection to his state and putting him in a position to buy citizens' votes with other people's money -- standard operating procedure for both of today's major political parties -- erodes any incentive to protect federalism or to fight for limited, low-cost government.

Direct election of Senators turns them into slightly-glorified Representatives, people who work in a body with slightly different rules and who can wait 3 or 4 years before putting on a full-court fund-raising press before their next elections rather than House members who have to shake their tin cup for campaign funds barely 12 months after an election. It's a distinction without a difference, but a real difference is what our Founders intended for good reason.

To be sure, the repeal of the 17th Amendment would not necessarily change much. Even if not required by the federal Constitution to have popular election of senators, most states would simply implement that same policy on a state level -- as many did at the urging of Progressives prior to the amendment's passage. Furthermore, the sad history of the past several decades in which the federal government peddled its opiate of "block grants" and "highway funds" other "free" money to the now-addicted states is something that will require a rather potent budget-methadone treatment that many citizens -- and most politicians -- might not be able to handle.

But just having the discussion about repealing the 17th Amendment -- and I thank Ken Buck for bringing it up while wishing he had the courage to stick with his gut instinct -- represents a valuable service to Americans by stoking a much-needed national remedial civics lesson. When the Constitution becomes a topic for public debate, it forces Democrats and Progressives to explain why they routinely ignore, dismiss, or attack the Constitution with their ultra-expensive Nanny State policies and their faux philosophies of government such as a "living Constitution." And when our Constitution takes center stage in political discussion, particularly when it can be shown that we ignore it at our own peril, America takes a baby step toward relearning the value of our Founding documents and principles. When even Germans are telling us that "America has become too European," the civics lesson can't come a moment too soon.

Ross Kaminsky is a professional derivatives trader, a fellow at the Heartland Institute, and a frequent contributor to Human Events. He blogs at Rossputin.com.

A Fourth Branch of Government

Judges Gone Wild!

By Robert F. Sanchez, JMI Policy Director
“Let the people vote!” That was the media’s hue and cry when the Legislature rebuffed Governor Crist’s plea to pass a constitutional amendment barring oil drilling in Florida waters. As House Speaker Larry Cretul noted, calling an emergency special session was unnecessary. Florida law already bans offshore drilling, and nobody was inclined to change that law anytime soon – especially not while the investigation into BP’s oil spill continued.

Yet that was then; this is now. So, where’s the media hue and cry now that the liberal wing of the Florida Supreme Court has denied Floridians the right to vote on not one, not two, but three proposals that the Legislature had placed on the November ballot?

One proposal would have clarified the contradictory redistricting standards mandated by two petition-driven amendments the Court cleared. Another would have offered property-tax relief. A third would have let Floridians have a say on “Obamacare” and its mandate that everyone must buy health insurance.

Meanwhile, another proposal tentatively scheduled for the November ballot – the amendment the Legislature proposed to ease some of the class-size amendment’s rigid restrictions – is also under attack by the usual suspects, including the teachers union.

Also awaiting the Florida Supreme Court’s eventual scrutiny are two other troubling examples of judicial activism. One is a lower court ruling that a 2009 law modifying the state’s growth-management system is somehow “unconstitutional.” The other is a judge’s ruling that lets plaintiffs proceed with a lawsuit complaining that the Legislature isn’t “adequately” funding education.

Taken together, these rulings suggest an urgent need for revisions in Florida’s civics curriculum. Instead of three branches of government – judicial, executive, and legislative – Florida now has a fourth: an all-powerful entity wherein appointed judges legislate from the bench.

Who Will Lead the Supermajority?

The New American Supermajority

By Peter Ferrara on 9.1.10 @ 6:08AM

The aerial photograph does not lie. Glenn Beck's Restoring Honor Rally drew just about as many people as any other rally ever held at the Lincoln Memorial.

I took the train into town from home in Northern Virginia, packed in like in those Tokyo subway video clips, even though I was late. I marched down to the Memorial from the nearest subway stop at Foggy Bottom, where the D.C. bureaucrats had helpfully disabled the steep escalators from the underground tubes to greet the half a million or more celebrants of liberty on the way in.

From my perspective on the ground, arriving late at about 11:15 (the rally started at 10), I could never get close enough to the podium even to see. But I could hear. And that was all I needed.

On his radio and TV shows, Beck has emphasized economics, political history, and near libertarian political philosophy. He has previously indicated his personal belief in God. But in this speech, he revealed a vision that encompasses the whole Reagan coalition from 1980.

Beck tutored me once again with his insight that the founders grew up in an America where the evangelist George Whitefield crisscrossed the colonies inspiring a national religious revival, that they probably personally heard or read Whitefield sermons, and that this foundation informed their work in later founding America.

Of course, Whitefield himself suffered some moral blindness and shortcomings, as has Beck in his past, as we all have. That is why we all need God. As Beck said in explaining the message of the event:

Saturday's message -- shhh! It's a big secret. I've only talked about it for six months on one of the biggest cable news shows in history and the third largest radio show in America…so…just between us. Don't anyone tell the media: The secret is God…We're running low on personal responsibility. We've got a loss of integrity, a loss of shame in this country, a loss of principles and values. We've lost our way because we have lost God…. And hopefully, we will mutually pledge to each other, our lives, our fortunes, and our sacred honor [as the signers of the Declaration of Independence did]. At least we will begin to look at those things, start to maybe challenge that we haven't valued those things high enough --honesty, integrity, merit, personal responsibility, family, and God. That is why we call it the "Restoring Honor" event.

And that is why the event involved spotlighting those in the military who have earned honor by demonstrating merit, something many in the media also couldn't understand. Beck explained that this is the road to the revival of America: "We have lost our honor. We must restore our honor first, our principles."

But Beck's point about Whitefield made clear to me that the Reagan coalition, which Beck embodies quite well, goes all the way back to 1740, and was the foundation of the American Revolution itself. Indeed, it goes all the way back to the Mayflower Compact.

The 70% Supermajority

Beck kept emphasizing to the crowd, "You are not alone." That is fully documented in Arthur Brooks' brilliant new book, The Battle: How the Fight Between Free Enterprise and Big Government Will Shape America's Future. Indeed, Brooks goes on to make much the same argument as Beck and his Restore Honor rally, but in purely secular, academic, carefully logical terms. Brooks writes:

Whether we look at capitalism, taxes, business, or government, the data show a clear consistent pattern: 70 percent of Americans support the free enterprise system and are unsupportive of big government. By contrast, somewhere between 20 and 30 percent of the adult population opposes free enterprise and prefers government solutions to our problems.

Here's a wow moment from the book. An April 2009 survey of registered voters asked which of the following statements about the role of government comes closer to your view:

(a) Government should promote fairness by narrowing the gap between rich and poor, spreading the wealth, and making sure that economic outcomes are equal.

(b) Government policies should promote opportunity by fostering job growth, encouraging entrepreneurs, and allowing people to keep more of what they earn.

Only 31 percent chose (a), which is the foundational view of the liberal/left. Over twice as many, 63 percent, chose (b), which is a classic formulation of the conservative, libertarian, free market philosophy. And this was at the height of the reign and popularity of Obama's liberal/left regime.

Brooks also recounts that in March 2009 the Pew Research Center asked Americans: "Generally, do you think people are better off in a free market economy, even though there may be severe ups and downs from time to time, or don't you think so?" Brooks reports that 70 percent agreed they were better off in a free market economy. Only 20 percent disagreed. And this was at the depths of the financial crisis, when the American people lost trillions in financial wealth, in their homes and in the stock and bond markets. Brooks adds:

Free enterprise is even more popular than [the terms] capitalism and free markets. In the same Gallup poll mentioned above [January 2010], a stunning 86 percent have a positive image of free enterprise. Only 10 percent have a negative image. Similarly, 84 percent have a positive image of entrepreneurs, while just 10 percent see them negatively.

On taxes, Brooks reports a spring 2009 poll finding that "69 percent of Americans think the top federal tax rate should be 20 percent or lower. Even 62 percent of Democrats think this." A 2009 Pew Values Survey found that "76 percent of Americans believe the strength of this country is mostly based on the strength of American business…. In 2010, Gallup found that 66 percent of American believe that when big business earns a profit it helps the economy, while just 18 percent think it hurts the economy." Also, "51 percent of Americans believe unions hurt rather than help the nation's economy."

On government, Brooks reports a survey which asked, "Overall, would you prefer larger government with more services and higher taxes, or smaller government with fewer services and lower taxes." An overwhelming majority of 69 percent of Americans preferred smaller government, while only 21 percent favored larger government. Moreover, emerging Republican Congressional majorities take note, 63 percent of Americans favor cuts in government spending, with only 14 percent against.

The Moral Foundations of Liberty

But the more fundamental point that Brooks makes is that to win the battle for the future of America, advocates for the 70% majority need to do a better job of advancing their cause. They cannot concede that the left best represents fairness and the true interests of the poor, while focusing only on economic growth and materialistic concerns. They need to go back to the moral foundations for liberty and free enterprise, and explain that free markets best promote true fairness, equality, and human happiness, and the true interests of the poor and working people.

Brooks explains, "The main issue in the new American culture war between free enterprise and statism is not material riches -- it is human flourishing. This is a battle about nothing less than our ability to pursue happiness," which means freedom. But, Brooks adds, "Rarely do we use the aspirational themes necessary to make the moral case for free people and free markets that we know in our hearts is right."

Brooks argues that it is the 30 percent coalition that advances the cold, mechanistic, crassly materialistic view. Just give the poor money, and they will be happy, as will everybody else that matters when we give them money too taken from the rich to attain greater income equality. He explains the moral foundations of the 70% view, saying:

By contrast, the 70 percent majority are New Age radicals. They have simple faith that ingenuity and hard work can and should be rewarded….They know that no amount of unearned money can ever heal the human heart. Money is fine, but it is something else entirely -- something less tangible and more transcendental -- that really brings satisfaction. The 70 percent majority understands that the secret to human flourishing is not money but earned success in life.

People flourish when they earn their own success. It's not the money per se, which is merely a measure -- not a source -- of this earned success. More than any other system, free enterprise enables people to earn success and thereby achieve happiness.

Brooks goes on to explain exactly what is meant by "earned success":

Earned success means the ability to create value honestly -- not by winning the lottery, not by inheriting a fortune, not by picking up a welfare check. It doesn't even mean making money itself. Earned success is the creation of value in our lives or in the lives of others. Earned success is the stuff of entrepreneurs who seek explosive value through innovation, hard work, and passion. But it isn't just related to commerce. Earned success is also what parents experience when their children do wonderful things, what social innovators feel when they change lives, and what artists feel when they create something of beauty.

The point, in other words, is "The big problem is not that unhappy people have less money than others. It is that they have less earned success. Your mother was right: Money can't buy happiness." But the crassly materialistic, redistributionist left misses this point.

Brooks explains the implications of this for public policy:

Knowing as we do that earning success is the key to happiness, rather than simply getting more money, the goal of our political system should be this: to give all Americans the greatest opportunities possible to succeed based on their hard work and merit [Beck's word again]. And that's exactly what the free enterprise system does -- makes earned success possible for the most people. This is the liberty our founders wrote about, the liberty that enables the true pursuit of happiness.

The Equality of Liberty

Included among the moral foundations of liberty is the principle of equality. "But for the large majority of us, this means equality of opportunity, not equality of outcome…. If this leads to income inequality -- above some acceptable floor -- so be it." In other words, the 70% supermajority accepts safety net programs for the truly needy, to ensure that no one suffers in deprivation. But they do not support going beyond this to income redistribution, taking from the successful to give to the less successful just to achieve more income equality. That is just stealing. This is a fundamental, rock bottom principle that we should all promote with more awareness and fervor. As Brooks explains:

The majority believes government should protect the returns for hard work and merit. The 30 percent coalition effectively wants to penalize success…. [But] equality of income is not fair. It is distinctly unfair. If you work harder than a coworker but are paid the same, that is unfair. If you save your money but still retire with the same pension as your spendthrift neighbor, that is unfair. And if you stay in your house and make the mortgage payments even when its value drops but your neighbor walks away from his without recourse, that is unfair.

What most helps the poor, moreover, is not government programs, but free market opportunity and prosperity. Brooks further explains:

Only free enterprise truly addresses the root causes of poverty. Our solutions are not based on a reslicing of the existing economic pie by government officials and bureaucrats, effectively taking money from the well-off and giving it to the poor through punitive taxation and growing welfare. They are based on an expansion of the pie in ways that will increase everyone's share through policies and a culture that creates incentives for Americans, allows them to tap into the generative power of entrepreneurship, and ultimately lets them earn their own success.

In contrast, "Because they do not strengthen culture and reinforce values, American welfare programs have spectacularly failed to end poverty."

Consequently, let us not forget either the broad public appeal of economic growth and empowerment as a political and policy theme, and the common sense appeal of incentives in explaining how that works. Martin Luther King III told the Huffington Post on the day of the Beck rally that his father in 1967 and 1968 "was focused on economic empowerment….We have made great strides, but somehow we've got to create a climate so that everybody can do well, not just some." That is a tailor made theme for the 70 percent Supermajority as well, as the late Jack Kemp demonstrated during his political career.

Moreover, blue collar labor union activists are really just after prosperity for their families as well. It's just that they don't recognize yet that general free market economic prosperity is the best way to achieve their goals. Better explaining how that works could vault the 70 percent Supermajority into the 85 percent Consensus.

A broad explanation of the appeal of free market economics seems to be necessary to win the votes of the whole 70% coalition. Adding the economic growth theme to Reagan's traditional conservative themes seemed to be what promoted the Republicans from the mid-40s in their share of the vote to a long term governing majority. Because of the workings of the British political system at the time, Margaret Thatcher focusing on consistent conservative themes was able to dominate British politics for a record time with only that same mid-40s share of the vote.

This is not a prediction. But with perceptive leaders like Glenn Beck and Arthur Brooks lighting the way, I am expecting to see an authentic American political giant who truly understands the 70 percent Supermajority liberate America in 2012 with their record setting votes. I just note that authoring the introduction to Brooks' book was Newt Gingrich.

Peter Ferrara is director of entitlement and budget policy at the Institute for Policy Innovation, a policy advisor to the Heartland Institute, a senior fellow at the Social Security Institute, and general counsel of the American Civil Rights Union. He served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under the first President Bush. He is a graduate of Harvard College and Harvard Law School.