Congressman Mike Pence (R-IN), chair of the House Republican Conference, addressed the Detroit Economic Club on Monday. It was the same day President Obama rolled out his proposal to reduce the deficit by about 1%, through a freeze on the salaries of civilian federal employees. Pence had some larger ideas on his mind.
The gentleman from Indiana takes a dim view of the bailouts which have given the government so much control over the private sector. “In September 2008, when the Bush Administration proposed that Congress give them $700 billion to bail out Wall Street, I was the first Member of Congress to publicly oppose it. I didn’t think we should do nothing, I just thought it was wrong to take $700 billion from Main Street to bailout bad decisions on Wall Street. I warned that passing TARP could fundamentally change the relationship between the government and the financial sector and so it has,” Pence told his audience in Detroit. “Taxpayer funded bailouts are no substitute for economic policies that will create real consumer demand. I have no doubt that American automakers and autoworkers can compete and win in a growing American economy. To restore American exceptionalism, we must end all this Keynesian spending and get back to the practice of free market economics… The free market is what made America’s economy the greatest in the world, and we cannot falter in our willingness to defend it.”
As a matter of fact, General Motors was competing reasonably well in automobile sales, prior to the government takeover. It wasn’t until 2008 that Toyota surpassed it as the world’s largest automaker, and both companies experienced declining sales that year, as the global auto market contracted. Toyota actually posted the first operating loss in its history in 2008. The big problem for General Motors was an unsustainable business model, in which paying fabulous union salaries and benefits became the primary reason for its existence. Soaring labor cost killed GM, more than declining sales.
This is the model for statist economies around the world. “Free” markets require flexibility. Suppliers and consumers must be able to react to changing conditions. Risk must carry the promise of reward, and the possibility of failure. Unyielding entitlements and crushing tax burdens combine to form a layer of ice around businesses and their customers. No one would have been willing to buy GM cars at the price they needed to charge, in order to make their business model work.
Bailouts don’t “rescue” capitalism. They transfer resources from taxpayers to politically favored constituents. The much-ballyhooed public sale of GM stock earlier this month profited unions far more than taxpayers, or especially the private-sector investors who owned shares of General Motors before the government takeover.
Pence told the Detroit Economic Club that he favors limiting federal spending to no more than 20 percent of our Gross Domestic Product, an essential first step to ensuring other fiscal restraints are not magically transformed into tax increases. He recalled the words of Ronald Reagan: “No government ever voluntarily reduces itself in size.” The acolytes of the total State have attempted to write this concept into our language, by calling endlessly increasing government “progressive”… which implies that making government smaller would be “regressive,” the agenda of Neanderthals desperate to “turn back the clock.”
After stressing the importance of maintaining the Bush tax cuts to “end the uncertainty that is stifling investment, innovation, and growth,” Pence made a bold call for radical tax reform. “The best option, the most pro-growth option, is a flat tax. I believe it is time that America adopted a flat tax and scrapped the current system once and for all.” Besides inflicting vast compliance costs on American corporations and individuals, our insanely complex tax system is a means of control. It uses a network of subsidies and penalties to shape both economic and political decisions. It is a system the government uses to purchase political support for its agenda. Its punitive effects have become more important than revenue generation, as we can see from the furious resistance of socialists to tax reductions that have been historically proven to increase Treasury receipts. A flat tax would represent a massive reduction of government power… which would mean a massive infusion of liberty.
Pence cited the absurd new tax filing requirements of ObamaCare as an example of government regulations run wild. “Take the requirement from ObamaCare that businesses must file with the IRS a form 1099 for any purchases from a vendor for goods or services over $600 in a year. Seriously, that is in the law. Of course, this is ridiculously burdensome and just adds to the red tape that small businesses face across the country. It should be repealed immediately.” A vote on repeal was scheduled for Monday night in the Senate.
Pence says that “to renew American exceptionalism, we must recognize that our present crisis is not merely economic, but moral in nature… As we promote policies to restore American exceptionalism, we must also reaffirm our nation’s commitment to the values that made our prosperity possible.” On the gigantic scale of a four trillion dollar central government, economics is morality. Entire populations have suffocated in the loving arms of the welfare state. It only takes a few generations for the moral corrosion of dependence to wreak havoc on the intended beneficiaries of socialism. America’s destiny will not be found in a musty cocoon of bailouts and welfare programs.
The nation stands at a crossroads, an intersection of opportunity and requirement for its people. The two are incompatible. One replaces the other. We cannot believe in ourselves, and also believe in a State empowered to manage our lives. The very rhetoric of “hope” Barack Obama used in his presidential campaign implies a weak and dependent populace. “Hope” is passive. People determined to command their own fates do not sit around and wait for someone to rescue them. We can choose to accept risk and hardship… or we can settle for whatever the State sees fit to provide, in a world where winners and losers are chosen in advance, and the fruit of enterprise is stolen to purchase immunity from consequence.
In the conclusion of his remarks in Detroit, Mike Pence made his own choice clear: “I choose the West. I choose limited government and freedom. I choose the free market, personal responsibility and equality of opportunity. I choose fiscal restraint, sound money, a flat tax, regulatory reform, American energy, expanded trade and a return to traditional values. In a word, I choose a boundless American future built on the timeless ideals of the American people. I believe the American people are ready for this choice and await men and women who will lead us back to that future, back to the West, back to American exceptionalism. Here’s to that future. Our best days are yet to come.”
Sign up to the Human Events newsletter