Five Ideas for a Second-Term Mandate
The campaign for the presidency has come down to two rival ideological visions for the United States. John Kerry wishes to create a middle-class entitlement society, where the government offers free health care, free child care and free college tuition to tens of millions of working-class Americans. In a sense, he is offering to America the mythical and alluring free lunch. How will Republicans combat this demagogic and Socialistic vision of an America in which government becomes the central force in our lives? The answer is to offer a nobler counter-vision elevating the bedrock American principles of freedom, opportunity and prosperity. America is not Europe–nor should we be. President Bush has spoken eloquently lately of creating “an ownership society.” This means pursuing polices that expand home ownership, stock ownership, and new business creation–to foster a nation of capitalists. The idea is that as more Americans become shareholders and gather wealth, their dependence on government will shrink. The White House has unveiled this attractive, pro-growth vision of 21st Century America, but so far has described only in broad-brush strokes the actual policies it entails. If Bush were to articulate a concrete second-term agenda starting with his speech at this week’s Republican National Convention, however, it would benefit him in two ways. First, a conservative economic agenda would help solidify and energize his conservative base. Karl Rove has spoken many times of the fact that some four to six million conservatives failed to vote in the excruciatingly close 2000 election. Conservatives might wonder if a Bush victory is really a conservative victory if there is no mandate for an economic agenda that promotes freedom, prosperity and smaller government. Secondly, Bush needs a mandate to succeed legislatively in a second term. Without an agenda, there is no mandate. So here are five ideas for the Bush campaign that would excite conservatives and advance the theme of an ownership society: 1. A FLAT-RATE CONSUMPTION TAX: Bury the IRS tax code and advance a flat-rate consumption tax. Our antiquated and unnerving tax code is an obstacle to prosperity. From Russia to Estonia to Hong Kong, flat taxes are taking hold. Bush is taking baby steps toward a flat tax by cutting dividend and capital gains taxes, lowering income-tax rates, and phasing out the death tax. But why not end the tyranny of our tax system in one fell swoop? Why not end the failed experiment of the income tax entirely and have a national consumption tax, paid half by businesses and half by consumers? This would do away with tax forms, benefit domestic manufacturers, maintain worker financial privacy, make April 15th just another day, and terminate the IRS. No nation on Earth could come close to competing with American businesses if our firms were liberated from the shackles of the income tax. 2. PRIVATE SOCIAL SECURITY ACCOUNTS: Offer young workers private investment accounts for Social Security. Every worker should be permitted to put aside as much as half of their payroll tax payments into a privately owned IRA account. These private accounts, according to economist Peter Ferrara of the Institute for Policy Innovation, would earn workers about two to three times higher returns on their money than what Social Security promises–and Uncle Sam almost certainly won’t even be able to keep those promises. Voluntary private accounts for Social Security would give tens of millions of young workers a golden entry ticket into the ownership society. Perhaps 80% to 90% of Americans would instantly become shareholders. This plan would essentially privatize the largest federal program and help put Americans on the road to becoming pension millionaires as they build up nest eggs of real wealth. 3. TORT REFORM: Disarm the trial lawyers. Baseless lawsuits are to America’s economy what termites are to wooden homes. They undercut economic growth, slow innovation, and raise prices of almost every product from health care to jungle gyms. In its brilliant report, Trial Lawyers Inc., the Manhattan Institute estimates that the net annual cost to Americans of frivolous lawsuits approaches $500 billion. Americans pay the equivalent of a 5% trial-lawyer tax on the goods and services they purchase. In the health care sector, costs are inflated by about twice that amount thanks to medical malpractice suits that benefit a few patients who win the lottery and the trial bar, which earns hundreds of millions of dollars on other people’s misfortunes and then funnels a share of that money in the form of campaign contributions to left-leaning Democratic candidates. Tort reform would include caps on judgments, the end of joint and several liability–which often means that a firm that is only 5% responsible for an injury must pay as much 100% of the damages–reasonable caps on legal fees in cases where the government is the plaintiff, and “lawyer free” products, allowing consumers to buy products at cut rate prices, by waiving the right to sue. 4. RESTORE BUDGET DISCIPLINE: We need a new budget act in America. Bush has abjectly failed to control federal expenditures, in part because we have a budget process that rewards spending. A new budget act that includes line-item veto power, a tax and expenditure limitation measure, supermajority vote requirements to raise taxes, and sunset provisions on government programs would help restore fiscal restraint in Washington. 5. SCHOOL CHOICE: Offer school vouchers to create an education system that truly “leaves no child behind.” The evidence mounts that vouchers, charter schools, opportunity scholarships and other measures that offer parents and students an exit strategy from the monopoly public school system can raise academic achievement. America simply cannot compete and win in the coming decades against the Chinese, Indians, Russians, and Europeans if we condemn our kids to second-rate schools. School choice is not only means of providing educational excellence but also of promoting civil rights for black, Latino, and poor white children stuck in failing urban schools. Bush proposed vouchers in his 2000 campaign, but dropped the idea when Ted Kennedy howled in protest. Now is the time for him to resurrect the issue for a second-term mandate. At the Republican convention this week, President Bush has an unmatched opportunity to contrast his vision for an ownership society to the Democrat’s vision for a society where more Americans are dependent on government. The President should do this by using his acceptance speech to spell out in bold terms a program that includes a less oppressive tax system, federal budget control, school choice, private Social Security retirement accounts and tort reform that leads to better health care and lower prices on goods and services across the American economy. The nation–but especially conservatives–will be listening, Mr. President.