Cut the corporate rate to 25%.For individuals and families, reduce the current seven brackets to two: 15% and 35%
Mar 04 2015
Senator Mike Lee and Senator Marco RubioSix years after the Great Recession officially ended, most Americans can sense that the U.S. economy is still operating below its full potential. Far too many Americans remain unemployed, underemployed or stuck in jobs with stagnant wages and narrow horizons.
Many are beginning to wonder: Is this the new normal?
Feb 02 2015
Jan 28 2015
Senator Mike Lee and Senator Patrick LeahyAmericans routinely are bombarded with news stories about invasive new surveillance technologies. But Congress has yet to pass even the most basic legislation on the issue: a bill to ensure that law-enforcement agents cannot read Americans' private e-mails without search warrants.
After years of frustration and months of feverish work, the Republican Party has finally won back the U.S. Senate, and with it, undivided control of Congress. But no sooner had Tuesday night’s balloon drops hit the floor than Republicans around the country – and especially in certain offices in Washington, D.C. – faced that timeless question of election night winners: Now what?
This is never an easy question to answer, given the requisite balancing act between expectations and realities, politics and substance. And answering it could be especially difficult for the leaders of the new Republican Congress, for two additional reasons.
First, there is the still-strained relationship between the G.O.P.’s Washington establishment and its grassroots conservative base. And second, the party establishment and consultant class chose to de-emphasize Republican policy alternatives during the campaign. So despite that strategy’s apparent success Tuesday night, our new majority cannot claim a sweeping legislative mandate.
But this question needs to be answered, nonetheless. And soon.
As a frequent critic of my party’s strategic timidity - and as incoming Chairman of the Senate Steering Committee, whose job it is encourage bolder thinking and action - I thought it incumbent on me to offer some concrete, early, and hopefully constructive suggestions about how the new Republican Congress might be steered toward unity and success.
As the reader will see, the ideas below are not really policy goals. (I have my own ideas about what our party’s reform agenda ought to be, and I will spend most of the next two years advocating them.)
Rather, these are five suggestions to my Republican colleagues to help repair the dysfunctional legislative branch we have inherited, rebuild Congress’s reputation among the American people, and by extension slowly restore the public’s confidence in the Republican Party.
1. Rebuilding Trust
The greatest challenge to policymaking today is distrust. The American people distrust their government, and Congress in particular. For their part, Washington policymakers seem to distrust the people. And almost as pressing for the new majority, the distrust that now exists between grassroots conservative activists and elected Republican leaders can be particularly toxic.
Leaders can respond to this distrust in one of two ways. One option is the bare-knuckled partisanship that Senate Majority Leader Harry Reid has exhibited for the last eight years: twisting rules, blocking debate and amendments, and systematically disenfranchising hundreds of millions of Americans from political representation.
But this is no choice at all for the new Republican Majority. First, contempt for the American people and the democratic process is something Republicans should oppose in principle. Second, our new Senate majority will be both ideologically diverse and temperamentally independent – unlikely to be as docile and partisan as Senate Democrats have been. And finally, the 2016 presidential primary campaign may include several Republican Senators, whose incentives for differentiation in a crowded field will make internal politics even harder to predict or control.
No, the new Republican majority has neither the institutional credibility nor the cast of characters to expect backbenchers – let alone conservative activists and groups - to unquestioningly follow orders. Rather than resent or deny this fact, Republican leaders should embrace it. We should throw open the doors of Congress, and restore genuine representative democracy to the American republic.
No more “cliff” crises. No more secret negotiations. No more take-it-or-leave-it deadline deals. No more passing bills without reading them. No more procedural manipulation to block debate and compromise. These are the abuses that have created today’s status quo – the status quo Republicans have been hired to correct.
What too few in Washington appreciate – and what the new Republican Congress must if we hope to succeed – is that the American people’s current distrust of their public institutions is totally justified. There’s no misunderstanding. Americans are fed up with Washington, and they have every right to be. The exploitative status quo in Washington has corrupted Americans’ economy and their government, and made its entrenched defenders rich in the process.
This situation was created by both parties, but repairing it is now going to fall to the Republican Party. It’s our job to win back the public’s trust. And that can’t be done simply by passing more bills, or even better bills. The only way to gain trust is to be trustworthy. I think that means we have to invite the people back into the process, to give the bills we do pass the moral legitimacy Congress alone no longer confers.
This openness should probably extend beyond the formal legislative process to the strategy development process, too. Congressional majorities too often approach their work on an ad hoc basis, bobbing like a cork in a creek between reactive opportunism and institutional inertia. But as we have seen in recent years, the leadership vacuums that kind of passivity creates never stay unfilled.
Whatever one might think of their relative merits, recent strategic initiatives led by congressional back-benchers - the “Cut, Cap, Balance” budget plan in 2011, the filibuster letter on gun control in early 2013, the effort to defund Obamacare last fall, and to an extent, even the “Gang of Eight” immigration bill – all represented efforts to fill vacuums created by Republican leaders’ reticence and inaction.
Rather than resist this new reality, the new Republican majority can use it to our advantage.
Republican leaders should embrace a more open-source strategy development model that includes everyone on the front end to avoid confusion, suspicion, and division on the back end. The last four years have repeatedly shown the folly of excluding anti-establishment conservatives from strategy formation – bills pulled from the floor, intra-Conference chaos, back-biting in the press.
Now, with the minority Democrats desperate to highlight such episodes, Republican leaders have every reason to get out in front of every issue, every major bill, every project, and get everyone on board before the train leaves the station.
An excellent example of this kind of approach is that of Sen. Lamar Alexander, likely incoming chairman of the Senate Health, Education, Labor, and Pensions Committee. Sen. Alexander has made no secret of wanting to do a major reauthorization of the federal Higher Education Act. He and his staff have quietly sounded out various higher-ed reform ideas for over a year already. That’s a model all Republican decision-makers should be following, starting immediately.
Inclusive legislative and strategy processes will come with tradeoffs, of course. Leaders will have to surrender some of their institutional power. Conservatives will have to be prepared to accept defeat – fair and square - if our ideas cannot carry the day. Members will have to expose themselves to inconvenient amendment votes. The results of some votes and the fates of certain bills may prove unpredictable. But the costs of an open-source, transparent process are worth it for the benefits of greater inclusion of more diverse voices and views, and for the opportunity such a process would offer to rebuild the internal and external trust necessary to govern.
2. Don’t Forget Cronyism
We’re going to be hearing that word, “govern,” a lot in coming weeks, as in, “Now Republicans must show they can govern.” What is meant by this is passing bills - quickly and with bipartisan support - and having them signed into law, in order to show the country that Republicans can “get things done.”
In this advice, there is much truth, and also a trap.
The truth is that, yes, Republicans should take every opportunity to reform federal law wherever common ground with Democrats can be found. And if good policy makes for good politics, as it usually does, so much the better.
But the trap is that Republicans in fact can’t “govern” from the House and Senate alone — especially without a Senate supermajority. We can clearly articulate our views and advance our ideas, and then see where we can work with the president and congressional Democrats. But we have to do these things in that order. We should find common ground that advances our agenda, rather than let the idea of common ground substitute for our agenda.
If we fail to grasp that, we will be drawn into advancing legislation that is both substantively and politically counterproductive, and that sends the wrong message to the public about our party. For instance, the easiest bipartisan measures to pass are almost always bills that directly benefit Big Business, and thus appeal to the corporatist establishments of both parties. In 2015, this “low-hanging fruit” we’ll hear about will be items like corporate tax reform, Obamacare’s medical device tax, patent reform, and perhaps the Keystone XL pipeline approval.
As it happens, these are all good ideas that I support. But if that’s as far as Republicans go, we will regret it. The GOP’s biggest branding problem is that Americans think we’re the party of Big Business and The Rich. If our “Show-We-Can-Govern” agenda can be fairly attacked as giving Big Business what it wants – while the rest of the country suffers – we will only reinforce that unpopular image.
Insofar as the pent-up K Street agenda includes good ideas, then by all means let’s pass those pieces by huge margins and send them to the president. But a new Republican majority must also make clear that our support for free enterprise cuts both ways – we’re pro-market, not simply pro-business. To prove that point, we must target the crony capitalist policies that rig our economy for large corporations and special interests at the expense of everyone else – especially small and new businesses.
In other words, Republicans should seek common ground between conservative principles and the interests and needs of the general public, not just between Washington Republicans and Washington Democrats. And the search for that genuinely common ground will point to a lot of low-hanging fruit too, even when it comes to the proper relationship between government and business. We could pass legislation winding down the Export-Import Bank or the Overseas Private Investment Corporation. We could – and really, must - eliminate the taxpayer bailouts for big insurance companies in Obamacare’s “risk corridors” program.
Or we could start to break up taxpayer subsidies for the energy industry or large agribusinesses.
Anti-cronyism legislation is win-win for the G.O.P. It is good policy, restoring growth and fairness to an economy that Big Government and Big Business have rigged against the little guy. And it’s even better politics, standing up for the middle class while pinning hypocritical Democrats between their egalitarian talking points and their elitist agenda.
Taking on crony capitalism is a test of the political will and wisdom of the G.O.P. To become the party of the middle class and those aspiring to join it – our only hope for success in 2016 and beyond - we have to change more than our rhetoric. The new Republican Congress does have to get things done, but those things have to be for Main Street, too, not just Wall Street and K Street. A big part of our “governing” test is whether we can stand up to special interests. Leaders like Paul Ryan and Jeb Hensarling in the House, and Marco Rubio and Jeff Sessions in the Senate have made the fight against cronyism a point of emphasis – and it’s sure to be a theme in the 2016 presidential primaries, too
This issue is reaching critical mass on the Right. And as I see it, it’s now a political necessity, another one that we should embrace rather than resist.
In passing anti-cronyism bills, we can either achieve policy wins for economic growth and opportunity. Or we can let the president explain in his veto messages why taxpayers, whose take-home pay is stagnant, should be subsidizing corporations, whose profits have never been higher. That’s a brand-changing debate Republicans can win.
3. Keep it Simple on the Budget
The biggest strategic and legislative question the new Republican Congress will face in 2015 is what we should do on the Budget.
The procedural and political realities of the Budget process demand that, in an era of divided government, it highlight the contrasts between the two parties. (Unless, like the Democrats, you ignore federal law and just don’t do a Budget at all, the better to conceal your true beliefs from the public.)
Come the spring, House and Senate Republicans have to pass a common Budget Resolution for the fiscal year starting next fall. The Budget’s privileged process allows for its passage in the Senate with only 51 votes – which in all likelihood will mean 51 (hopefully 54!) Republicans and no Democrats. This step must be fulfilled to begin the so-called reconciliation process, under which Congress can fast-track a single fiscal reform bill later on – again with only 51 Senate votes.
It’s such a complicated process, and such a delicate political balancing act that to succeed, the Republican establishment and conservative grassroots should come to an agreement very early on the broad parameters of what the Budget must entail.
Arguing over specific spending levels, cuts, programs, and reforms at this point is probably unwise. Rather, we should try to agree on a handful of principles that all Republicans can agree on and not try to have the budget alone substitute for everything Congress needs to do.
The three most obvious Republican consensus principles – to me, anyway - are that our budget should:
1. Balance within ten years (without accounting gimmicks),
2. Not raise taxes, and
3. Repeal Obamacare.
These goals comprise the closest thing our party has to a mandate in the wake of this election, and my guess is that every House and Senate Republican is already on record supporting them.
If we want to avoid an ugly establishment-grassroots battle next spring, Republican leaders and Budget Committee leaders would do well to reach out to all wings of the party to get buy-in on a framework like this, and only then begin the sausage-making.
There are rumors around Capitol Hill that some Republicans don’t want to repeal Obamacare in the budget process. They would prefer to pursue something else – corporate tax reform, for instance – where bipartisan cooperation may be more attainable. They want to use budget reconciliation to “get a win.”
But this has things backwards, it seems to me. President Obama and many Democrats have already voiced some support for corporate tax reform. Any plan that could get the president’s signature wouldn’t need to be done via reconciliation, because such a bipartisan compromise could easily get 60 votes in the Senate. The whole point of reconciliation is that it allows the majority one chance to pass something with only simple majorities. For Republicans in 2015 – not as a matter of ideological purity but of practical coalitional unity - that one thing has to include repealing Obamacare. Corporate tax reform – and much else – can be pursued in other ways.
4. Fund It? Fix it.
One of the biggest traps Republicans and conservatives fall into is any debate about budget “cuts.” When you stop for a moment and think, blindly “cutting” the federal government’s budget is not a very conservative approach to governing. After all, the conservative critique of Washington is not that the federal government is a bit profligate, but otherwise efficient and effective with our money. No, the problem with Washington is that it’s comprehensively wasteful, unfair, and dysfunctional. It is, in a great many areas of policy, trying to do the wrong things and doing them in the wrong ways.
Just spending less on a misguided program doesn’t get you any closer to a real solution than just spending more on it. If the program is dysfunctional – if it doesn’t do what it’s supposed to do, and what it’s supposed to do is worth doing – fix it. Fixing a leaky faucet is not an arbitrary “cut” in one’s water bill – it’s repairing a broken system so that it only costs what it must.
Republicans can approach federal reform the same way. We can make a commitment in coming years not merely to cut big government, but to fix broken government, which is the more difficult but far more important work.
For instance, we know for a fact that the federal highway trust fund wastes money: on bureaucracy, on special interest giveaways, on projects that are purely local and can be managed by state and municipal governments. Therefore, when the time comes next spring to reauthorize the federal highway program, the Republican Congress should insist on making the system at least a little bit better – rather than just “finding the money” to fully fund a legacy system we already know doesn’t work.
I along with several other conservatives have proposed a plan to permanently reform the highway program; I also know that President Obama is unlikely to sign it. Republicans shouldn’t accept the president’s veto threat as the end of the negotiation, however, but the beginning. If he wants infrastructure money, he should accept some structural reforms to give states more flexibility and let gas tax revenue go further.
Similarly, Head Start is a program that the Obama Administration itself has found does not work. Decades of rigorous analysis have shown that it does not yield lasting benefits for children in need. So, rather than spend less money on exactly the same broken system – and merely disserve fewer poor children - Republicans should start to fix it – to better serve more children, at lower cost to the taxpayers.
Sen. Tom Coburn has fought for years to clean up wasteful aspects of the Defense Department budget that have no bearing on national security. Sen. Dick Durbin and I have introduced a bill to reform federal criminal sentencing guidelines, which would save taxpayers $2.5 billion over ten years.
Crumbling public support of Common Core should force action on federal K-12 grants. The Ebola outbreak demands serious reprioritization at the Centers for Disease Control.
The annual appropriations process should take up this approach, too. We should put an end to “omnibus,” all-or-nothing spending packages, and instead insist on consideration of each appropriations bill in regular order – with hearings, amendments, and specific votes. This is how the Constitution protects Americans from waste and exploitation, after all. It’s also the only way Congress can hope to rein in the Obama Administration’s unprecedented abuses of power – by withholding funding from corrupt bureaucracies.
Indeed, the entire congressional budget-and-spending process is due for a comprehensive overhaul. But at a minimum, Congress should only fund reformed programs. (Only in D.C. would this suggestion be even remotely controversial.) If the president rigidly resists intelligent, surgical reform based on thorough oversight, then we could turn to across-the-board cuts, as we did in 2011.
These are not heavy lifts or ideological crusades I’m describing. They only seem novel because it’s been so long since we’ve had a functioning legislature. My modest proposal is that if there is a good reason for Congress to fund a program, that in and of itself is a good reason to continually improve it.
5. Ryan-ize the Committees
Ironically (or not, if you know how Congress works), the most important policy development in the Republican Party in the last decade was not undertaken by party leaders in the House, Senate, or the White House. In fact, formal party leaders largely discouraged it.
Instead, that work was conducted by Congressman Paul Ryan when he became the ranking Republican on the House Budget Committee in 2007. Ryan instructed his new committee staff to think big, to transcend the short-termism that plagues Congress and develop solutions to long-term problems. Ryan and his staff dove deep into America’s structural budget shortfalls and the long-term challenges to our entitlement programs and economy.
The end result was what Ryan called his “Roadmap for America’s Future.” It called for major reforms to our tax system, our entitlement programs, our health care system, and across the federal government. It was controversial, of course. The immediate reception was predictable: Democrats trashed it and most Republicans ran for cover. But in time, people on both sides of the aisle were forced to admit that the Roadmap was a serious document. It warranted a serious debate, and it has gotten one ever since. When Republicans took back the House of Representatives in 2011, some of the broad outlines of the Ryan Roadmap became de facto positions of the Republican party – positions on issues Democrats still try to pretend don’t exist.
For all the well-deserved plaudits Ryan gets for his brains, the Roadmap – whatever one thinks of it - was really an achievement of his guts. He had the courage to take his plan into the arena, and withstand criticism, even from his allies. That is, he did what all politicians say we want to do – and succeeded.
So the fifth step to a healthy Republican majority in the 114th Congress is to use congressional committees to begin developing the agenda for the 115th and 116th and 117th Congresses, too. We should “Ryan-ize” the committees, for lack of a better word, encouraging our chairmen to think big. House and Senate Republicans should make it part of the job description of “Chairman” that each committee – and ideally, each subcommittee – propose at least one major, fundamental, long-term policy overhaul each year.
These reforms could not be passed in this Congress, of course. And conservatives are rightly suspicious of “big bill” legislating at all anymore. But such proposals would serve the valuable purpose of identifying long-term goals that nearer-term, incremental proposals can move policy toward. They would be outlines, not thousand-page bills, and they would help shape the small bills and gradual steps necessary to advance a conservative vision of government.
America’s health care, energy, higher education, telecommunications, security, and criminal justice needs (to name just a few) appear to be in the midst of transitions, nearing tipping points that will help define our nation in decades to come. In such a moment, it’s not enough to ask ourselves, “What can we pass this year?” without first asking – and investing every possible resource into answering – “How can our needs be met in the 21st century?”
Government itself is one of the prime candidates for this kind of thinking. Most systems we use to provide government services were designed decades ago, before the tech and telecom revolutions that have changed the way Americans do almost everything else. In twenty years, will we need, say, a Government Printing Office or Internal Revenue Service in anything like their current forms? If disruptive innovations continue to personalize and localize the economy, will centralized, monolithic bureaucracies be the right instruments to regulate it? Or is government just as badly in need of some disruptive innovations that would enable market forces, public desires, and longstanding constitutional principles to once again show us the way and make our institutions more accountable?
Of course politicians cannot predict the future, nor can government direct future industries any better than it directs current ones. But we know that our society and our economy have rocketed out in front of our government, and that the bureaucracy in its current form is unlikely ever to catch up. Insisting that today’s leaders look beyond the next news cycle and the next election cycle will benefit the country and the Republican Party in the long run.
The only way to move incrementally in the right direction is to know which way the right direction is. Long-term reform projects will lay down markers for the Party while identifying opportunities for innovation in the nearer term.
The above suggestions represent dramatic departures from Congress’s status quo, but that’s the point. The new Republican majority cannot indulge in fantasies of a mandate or public contentment with its political institution.
Everything about American life today is becoming more decentralized, open-source, localized and personalized. Everything, that is, except government. An increasingly customizable economy and diverse social networks of mini-communities will not long tolerate the innate incompetence of clumsy, self-serving, Big Government. Since the end of the Cold War, the American people have experimented with every conceivable combination of partisan control in Washington – presidents, Houses, and Senates of both parties.
In that time, the costs of the staples of middle-class life – housing, health care, education, child-rearing, and retirement security – have risen, unabated. Yet take-home pay is stagnant and jobs are increasingly insecure. We are not getting this right.
But the cliché that Washington doesn’t work is not right, either. Washington does work, for Washington. For many years, Congress has worked perfectly well for so-called “stakeholders” on Wall Street, K Street, and Pennsylvania Avenue. The challenge for the new Republican majority is to put Congress back to work for Main Street — to make Washington work for America.
The status quo is failing. So leaders need to seek for strategies and tactics outside the status quo. The new Republican Congress cannot be led according to the old ways of hierarchical deference, or appeals to institutional trust.
But just because Republican unity cannot be imposed doesn’t mean it cannot be achieved. There are other paths to unity and cooperation and shared success, including the path that the Republican Party already embraces in America’s free enterprise economy and voluntary civil society.
What I propose, then, is an agenda of empowerment – an internal Republican agenda of empowerment to complement our external one. Let Congress operate less like a 19th-century industrial mill, and more like a 21st-century open-source network.
The media wants to criticize the G.O.P.’s diversity and independence as disunity and weakness. But this criticism says much more about the critics than about us. It’s like saying in 1999 that Borders Books would rout Amazon, or saying today that taxi cartels are “stronger” than Uber. In today’s world, individual and community empowerment are strengths for organizations who know how to use them.
Transparency, equality, diversity, and innovation – these are not abstract values, but practical strategies that our new majority can use to unite the Republican coalition, revive public trust in Congress, and put the federal government back on the side of the working families and communities our broken status quo is leaving behind.
Tuesday, Republicans won a great victory.
Now what? Deserve it.
Op-ed originally published by The Federalist: Mike Lee's Plan to Fix Congress
Two simple income-tax brackets: 15% and 35%. End the marriage penalty and increase the child tax credit
Sep 23 2014
Senator Mike Lee and Senator Marco RubioToo many Americans believe the American dream is slipping away for them and their children. They see their cost of living rise while their paychecks remain stagnant. They see an economy that benefits stockbrokers but not stock clerks. They see the ladder of economic opportunity being pulled farther up and out of their reach.
One of the most disheartening trends in America today is the steep and relentless increase in the cost of higher education. As almost everything else in our economy has gotten better and more affordable, tuition at public four-year colleges has nearly quadrupled since 1982.
The hardest hit by these skyrocketing costs are middle-income families who struggle to pay those prices out of pocket but don’t qualify for needs-based assistance. Meanwhile, the changing economy is making post-secondary education more important than ever.
Today, most students and families’ only option is federal student loan programs, which offer some temporary relief but lead to decades of debt. And for students who never acquire the skills necessary to succeed in today’s economy—because they leave college early or because they pursue a major that doesn’t prepare them for the job market—this debt can become overwhelming.
So far, the federal government’s only response to this catch-22 is to marginally reduce the interest rate on student loans.
But instead of asking how Congress can help students pay off exorbitant loans, we should ask how Congress can reduce the cost of higher education so students won’t have to go so far in debt.
It all starts with recognition of two important facts. First, in today’s society, getting a four-year college degree is not the only way to obtain the knowledge and skills necessary to start a successful career. For many students, apprenticeships or occupational training programs make more sense than a bachelor’s degree.
Second, in recent years educational entrepreneurs and innovators have used new technology to redesign the traditional educational model—through online courses, for instance—making post-secondary cheaper and easier than ever before.
Unfortunately, federal law ignores both of these facts. Our current system makes it harder and more expensive for students to access alternatives to the traditional college track. The primary roadblock facing these students is our outdated, inefficient accreditation system, which is made up of various non-governmental agencies that determine which educational institutions or programs are eligible for federal student-loan money.
Under current law, students can access federal loans and grants only if they attend schools that are officially “accredited.” But for a school or occupational training program to acquire this stamp of approval—and thus be able to admit students who are paying their tuition bills with federal loans—it must go through a review process conducted by faculty members of already-accredited schools.
This is a classic case of the regulated becoming the regulators. Expensive degree-issuing colleges and universities get to decide who joins their elite club, and they have a strong financial incentive to lock out new, more affordable educational models that could be a better match for some students.
This lack of competition is a primary driver of rising tuition, which gives too many students an impossible choice—crippling debt or limited opportunities.
We believe there is a better way.
We have introduced the Higher Education Reform and Opportunity Act in both the House of Representatives and the Senate. The HERO Act will allow states to experiment with their own accreditation systems. Under our plan, states could choose to accredit alternative education providers such as apprenticeships, specialty schools, professional certifications, all the way down to individual courses. This way, students who have been locked out of the current system would be able to use federal student loans and grants to gain access to the skills they need at lower prices on a schedule that works for them.
Our reforms don’t touch the traditional accreditation system, which works well for existing universities. It creates a new, parallel system that opens doors for the millions of low- and middle-income and non-traditional students the current system leaves behind.
Many would benefit from education alternatives to traditional brick-and-ivy institutions, and we owe it to our students to give states the opportunity to develop these options. The HERO Act is an important first step towards ensuring that higher education is affordable and accessible and gives our students the resources, skills and education to succeed.Op-ed originally published on The Daily Signal
May 05 2014
Today America faces a large and growing Opportunity Deficit. Up and down our once-flourishing economy, a new and unnatural sclerosis is taking hold. For millions of working families of or aspiring to the middle class, the American Dream is slipping out of reach.
This Opportunity Deficit presents itself in three principal ways: immobility among the poor, trapped in poverty; insecurity in the middle class, where families just can’t seem to get ahead; and cronyist privilege at the top.
On the first two fronts there is some good news. A new generation of conservative leaders is emerging to meet these growing challenges. These reformers understand that it’s not enough to just cut big government. To restore equal opportunity to all Americans, we also have to fix broken government.
That’s why they have already proposed a range of principled, positive reforms to repair our welfare, prison, job-training, tax, energy, and education systems.
But as crucial as this work is, it remains incomplete. Compounding lower-income immobility and middle-class insecurity is America’s crisis of crony capitalism, corporate welfare, and political privilege, in which government twists public policy to unfairly benefit favored special interests at the expense of everyone else.
From subsidies and loan guarantees to tax loopholes and protective regulations, cronyist policies come in a variety of forms, but they all work in the same way: making it easier for preferred special interests to succeed, and harder for their competitors to get a fair shot.
In a cronyist economy, economic power is redistributed, not from the rich to the poor, but from the politically disconnected to the politically well-connected. Profits come from serving congressmen instead of customers, and the innovation and opportunity that define free enterprise start to sag.
In such an economy, increasingly built on connections instead of competitiveness, it’s no wonder we see record corporate profits and jaw-dropping gains among elites, but slow growth, stagnant wages and limited opportunities for everyone else.
Given the scope and consequences of America’s Opportunity Deficit the only option for conservatives today is a clear and simple zero-tolerance policy toward cronyist privilege of any kind.
With deep roots and powerful friends, the policies that contribute to America’s Opportunity Deficit will certainly not fix themselves.
That’s why those same reform-oriented conservatives in Congress have already begun to write and advocate for an anti-cronyist agenda—from Rep. Paul Ryan’s work to strip special-interest privilege from the budget, to Senator Rand Paul’s regulatory reform that would improve federal agency accountability, and Rep. Mike Pompeo’s bill to end federal subsidies in the energy sector.
I am also working with Senator Marco Rubio on a pro-family, pro-growth tax reform proposal to eliminate special-interest privilege from the corporate code and level the playing field for small and large businesses.
This new anti-cronyist Conservative Reform Agenda, while still a work in progress, is an exciting development. For too long Republicans have been complicit in the proliferation of cronyist policies. If we are to win back the trust of the American people—and we must—a zero-tolerance policy toward special-interest privilege has to be our starting point.
Moreover, eliminating cronyist privilege is essential to get the economy growing again by creating opportunity and driving down the inflated costs of many of the staples of middle class aspiration and security: housing, education, health care, and child-rearing.
Anti-cronyist reform should never be confused with the cheap, ugly populism of class warfare. We want successful Americans to succeed. All we ask is that they earn their success on a level playing field, subject to the judgment of the market – as truly successful Americans always have.
A conservative agenda to get right on cronyism will be good for the economy, good for the country, and, above all, the right thing to do.
May 01 2014
Most Americans know that our revolutionary history began when a handful of brave patriots tossed crates of tea into Boston Harbor to protest unfair taxation. But what they might assume incorrectly is that our forefathers did so in response to increased taxes.
In fact, the Tea Act of 1773 actually lowered taxes on imports. What truly offended the colonists was that it only lowered them for one corporation, the politically connected East India Company, giving it an unfair, artificial advantage over smaller, local American competitors.
Thus, not only was the American idea hatched in protest to a government that was too big and too intrusive, but also protesting a government that was willing and able to unfairly benefit favored special interests at the expense of everyone else.
Today, it’s commonly known as “cronyism” and represents a uniquely malignant threat to American exceptionalism.
Cronyism simultaneously corrupts our economy and our government, turning both against the American people. It forces American families who “work hard and play by the rules” to prop up, bail out, and subsidize elite special interests that don’t. It empowers and enriches the few by disenfranchising the many.
Like a black hole, cronyism bends the economy toward the state, inexorably shifting wealth and opportunity from the public to policymakers.
The more power government amasses, the more privileges are bestowed on the government’s friends, the more businesses invest in influence instead of innovation, and the more advantages accrue to the biggest special interests with the most to spend on politics and the most to lose from fair competition.
But once profits depend on serving congressmen instead of customers, the interests of the elite diverge from those of the nation.
Cronyism has created a warped economy, increasingly built on connections instead of competitiveness. We see corporations posting record profits and jaw-dropping gains among elites, but slow growth, stagnant wages and limited opportunities for everyone else. Except, of course, in the Washington, D.C. area, home to six of the ten wealthiest counties in the United States.
That is not to say that anti-cronyism should be equated with – or descend into – the cheap, ugly populism of class warfare. We want successful Americans to succeed. All we ask is that they earn their success on a level playing field, subject to the judgment of the market – as truly successful Americans always have.
Cronyist policies come in many shapes and sizes, but the upshot is always the same: making it easier for favored special interests to succeed and harder for their competitors to get a fair shot.
There are direct subsidies, like those that are supposedly necessary to protect family farmers but overwhelmingly go to the top 10% of recipients.
There are also indirect subsidies, like the loan guarantees issued by the Export-Import Bank, which unnecessarily risk taxpayer money to subsidize well-connected private companies that are perfectly capable of securing private financing anywhere in the world.
There are complicated tax code carve-outs and loopholes, as well as complicated regulations, which are all tools the government uses to collude with big business to erect giant walls that guard against free-market competition.
And then there is Obamacare, truly a cronyist virtuoso’s masterpiece.
The president’s signature achievement privileges certain corporations by penalizing Americans who don’t buy health insurance from them, subsidizes the purchase of those products, protects those corporations from true price competition and market innovation, exempts special interests like labor unions, government employees, and large corporations from various mandates under the law, and may even guarantee those corporations’ survival — even if they lose money — through an open-ended taxpayer bailout.
Cronyist policies violate the conservative principles of free enterprise, equality of opportunity, and the rule of law. It’s time we stand up for economic fairness and fight back against special-interest privilege.
For three years now, establishment leaders have challenged anti-establishment conservatives to accept political reality, engage the politics of addition, and produce a viable plan to make principled conservatism appealing and inclusive — to grow our movement into a majority.
Well, here it is: a commitment to economic fairness and competition at the top of our economy to help restore jobs, growth, mobility, and opportunity to the poor and middle class.
There is a direct line from our forefathers on Griffin’s Wharf in Boston Harbor to where we stand today. They had the courage to challenge a government that was too big and too intrusive, but also unfair. The result was the creation of an America of, by, and for the people. Our challenge today is to reclaim it.