Friday, July 12, 2013

Defend and Reform: The Need for Spending Reform

     Yesterday, The Weekly Standard and Concerned Veterans for America hosted as part of Concerned Veterans for America's Defend and Reform series, a seminar called "The Need for Spending Reform."  The goal of the series was "defending freedom by advancing reform."  Speakers yesterday included Senator Ted Cruz (R-TX), former Democratic Governor of Pennsylvania Ed Rendell, and Senator Marco Rubio (R-FL) who all discussed the need for spending reform and tackling our nation's debt.  The overarching topic of each speaker was that our spending is out of control and if we continue on the current path, the United States will end up in dire economic straits like Greece.
     Senator Cruz started by looking at the Cold War and observed that nothing rivaled our victory in this conflict in the last 50 years.  He stated President Ronald Reagan's two keys of success against the Soviet Union were moral clarity and economic strength.  President Reagan had condemned the Soviet Union and was adamant about the Berlin wall coming down. Sen. Cruz noted that in our modern era, moral clarity is "sadly, and considerably lacking," pointing to the Egyptian protests against Morsi's "oppression" and against the United States.  In terms of economic strength, Sen. Cruz stated that communism could not keep up with the United States and by putting National Security first, the USSR could not keep up.  According to Sen. Cruz, our greatest threat today is our national debt and we must restore economic growth.  Our economy has not grown more than a percentage point in years said Sen. Cruz and like President Obama, President Reagan inherited a bad economy.  However, Cruz pointed out that President Reagan did not raise taxes but rather simplified the tax code.  President Reagan also cut back on regulations and in 1984, we saw a 7.2 percent GDP.   
     Ronald Reagan is the Republican Messiah of sorts and many conservatives look to him for example.  However, the Republican Party was much different under Ronald Reagan than it is today.  Leaders such as President Reagan and Sen. Bob Dole (R-KS) most likely would not even cut it in today's Republican Party.  As Gov. Rendell pointed out in his speech, Ronald Reagan raised revenues 11 times as president.  The modern Republican Party is afraid of tax increases and Gov. Rendell stated that the GOP must come to terms with this.  Marco Rubio stated that the Republican Party is the pro-economic party and that raising taxes does nothing to quell the deficit.  Both Senators Cruz and Rubio, as well as those participating in the panel discussion which preceded the speakers, mentioned how Republicans are for the middle class.  Panel member Rep. Adam Kinzinger (R-IL), stated that Republicans are for everyone and passing the Paul Ryan budget (The Path to Prosperity) is important.  Rep. Kinzinger forgot to mention the fact that the Path to Prosperity is riddled with deductions and loopholes for the nation's top earners as well as leaving behind the poor which is contrary to what Pete Hegseth, CEO of Concerned Veterans for America, stated during the discussion.  Mr. Hegseth said that crony capitalism is bad and we must close loopholes.  In responding to a question from an audience member during the Q&A concerning media bias, Rep. Kinzinger stated that the media is not on the side of Republicans.  Veronique De Rugy, a Senior Research Fellow at Meratus Center, also responded by stating there is a big media bias against Republicans.  Actions speak louder than words and Republicans have earned unfavorable media attention due to their attacks on women and, more relevant to this conversation, their insistence on leaving behind the middle class.
     Senator Marco Rubio described his problem with the current Administration and with modern Democrats as a fundamental philosophical divide.  He stated that Democrats believe that government is always the solution to our problems.  While government has a role in creating an environment to make life better, government intervention should not be the sole answer.  Specifically, he stated that Democrats take from those who make too much and give to those who do not make enough.  Going back to the Ryan budget, the middle class and the indigent are left in the economic dust while the wealthiest Americans continue to prosper and get wealthier.  Republicans are known for being pro-business, while they say they are pro-jobs and pro-economy. They detest crippling sanctions to protect the environment or lower class Americans as these hurt job growth.  Case in point-the recent legislation which is waiting for Washington D.C. Mayor Vincent Gray's signature. This legislation is set to raise the minimum wage for workers of “large retail companies” - defined as businesses operating an indoor store of at least 75, 000 square feet and whose corporate parent has sales of at least $1 billion-to $12.50 per hour.  Opponents are looking at this as crippling businesses and economic growth because, number one, it hurts businesses to have to increase wages and two, it discourages businesses overseas from doing business in America.  Sen. Rubio stated this as an example of the problem with regulation.
     The main problem in today's economy is the stark economic inequality.  The standard of living is increasing yet wages are not reflecting the correlation.  The thinking behind the proposed D.C. legislation is that lower income families spend locally which means if they have more money to spend, they will invest it back into the local economy.  Wal-Mart is at the center of this controversy. They have three proposed locations for D.C. and the retailer has stated they will pull out if the bill becomes law.  Wal-Mart could stand to make more with the legislation given their "rollback" motto because lower income families with more money would likely buy from them.  It is a risky move but it is one that could have positive economic results on both ends of the spectrum.
     Getting back to Sen. Rubio's point of government being the answer, without government intervention, the economic inequality would continue to rise and the indigent would have no way to compete.  Sen. Rubio also stated that the problem with the modern Democratic Party is instead of being focused on our economy, they focus on guns, redefining marriage, and the weather.  Senator Rubio should tell his party to take a long look in the mirror given their recent track record on abortion. One positive note he made was that congress cannot pass a budget with this philosophical divide.  I could not agree more and the fact that congress has not passed a budget in three years points to the harsh partisan divides within.  In order to get the country on a more prosperous economic path, partisanship must be thrown aside and economics should be thrust to the forefront which is what I have been echoing for months.
     In taking a step backward, Sen. Rubio stated, "I will not pass a continuing [budget] resolution unless it defunds Obamacare."  He stated Obamacare is unimplimentable and this is obvious in the Administration's delay of the Employer Mandate.  Sen. Rubio also stated that he would refuse to raise the debt ceiling until President Obama can show how to reduce the deficit in the next ten years.  He is not concerned with default because he stated a $17 trillion debt is default.  As I have said many times before, defaulting on our national debt is completely irresponsible and has global implications.  Sen. Rubio should take his own advice in putting partisanship aside and come to a resolution in congress' fundamental routine raising of the debt ceiling.  Raising the debt ceiling is much bigger than just partisan problems in the United States and could shake up the global economic state.  Economists and various studies demonstrate that the deficit has declined under President Obama and it continues to decrease.  The CBO has reported that Obamacare would decrease the deficit along with the Senate's controversial immigration bill.  Sen. Rubio also pointed out the need for serious tax reform but noted that the president will never do it.  The president has been championing for a long time how everyone needs to pay their fair share which is why he is asking those at the top to pay a little more.  This can be looked upon as reform or unnecessary government intervention but nevertheless refutes Sen. Rubio's point. 
         So how do we approach economic reform and stability?  Former Pennsylvania Governor Ed Rendell who now is the Co-Chair of the Campaign to Fix The Debt stated we must do something big.  We cannot continue to nibble at the edges and kick the can down the road.  Repealing sequestration is also a must.  Gov. Rendell pointed out that given the drastic across the board cuts of the sequester, it still does not do enough to curb the debt problem.  He noted that we need tax reform and his organization supports Senators Hatch's and Baucus's "Blank Slate" program which sets to look at reform from a "zero base" or from the ground up.  Gov. Rendell stated the costs to the Treasury Department in 1984 due to tax deductions and loopholes was $600 billion compared to $1.4 trillion today.  Gov. Rendell closed by stating that the one song he would play on repeat in the Capitol would be The Rolling Stones' "You Can't Always Get What You Want," pointing to the final line in the chorus, "But if you try sometimes, you might find, you get what you need."
     Entitlements seemed to be the similarity between the ideologically different speakers.  They all believed that entitlements must be reformed.  As Gov. Rendell pointed out, when these programs were created in the 1930's the life expectancy was much lower than it is today.  Now, programs such as Social Security and Medicare are forced to stretch benefits over a longer period and continually increase to retirement age, which is currently set at 67.  To address Sen. Rubio's statement about the philosophical divide, Gov. Rendell said that as much as he likes Senator Chuck Shumer (D-NY), it is irresponsible for him to say he (Shumer) is not changing on entitlements.  Gov. Rendell also asserted his support for Chained CPI, stating that it is a more realistic approach.  Personally, I believe it is just another band aid and is consequential to Gov. Rendell's disdain for kicking the can down the road.  A more comprehensive reform needs to take place.
     The United States does need to cut its spending and reform the tax code.  Globally, there is still a recession especially within the European Union.  Republicans believe that government intervention and austerity is how Europe arrived at their unfortunate situation and Democrats believe intervention keeps interest groups honest.  Trade agreements, such as the blockbuster deal now being negotiated between the United States and Europe, can help curb stability by eliminating tariffs and sharing goods.  The United States must first prioritize the fundamental programs necessary for domestic economic stability (like Social Security and Medicare) and the programs essential to our safety (Defense) in order to draft a preliminary economic policy.  The United States is not far behind in maintaining its foothold as the largest economic power on the planet but we need to get our priorities straight and put partisanship aside first.                                                                 

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