Chris Christie’s Economic Agenda Is Just Common Sense

WASHINGTON – New Jersey Governor Chris Christie, a likely Republican White House contender, laid out his fiscal and economic reforms plan in a speech in New Hampshire and in a WSJ op-ed piece. (My Plan to Raise Growth and Incomes, May 12, 2015).

Controversial list?

What is remarkable in the list produced by Christie is that the common sense solutions he proposes are not already operational. And, even more remarkable, how can this list be controversial, here in the United States of America, the most successful capitalistic economy the world has ever known?

Christie’s plan

Well, what does Christie say? Enact tax reform. First of all, drastically simplify the federal tax code, now a 70,000 pages long monster that most people will never read, let alone understand. Reduce the tax rates, with the maximum at 28%, and eliminate most deductions normally inserted into the tax code through the pressure of  lobbyists hired by special interest groups. Make it easy for the average American to file his/her taxes. By the same token, reduce corporate tax rates from 35% to 25%, so that we are at least in line with what our major international competitors charge.

And, while we are at it, reduce suffocating regulations so that they ensure safety and public health, without trying to dictate every single component of any business activity. Hyper regulation delivers no benefits. In fact it effectively kills some existing businesses, while discouraging the creation of new ones.

Another major component of the Christie strategy is energy. Favor domestic production by eliminating the obsolete ban on crude oil exports, a legacy of the 1973 OPEC oil embargo. And also have Uncle Sam promote more energy supplies from North America. Therefore approve the Keystone XL pipeline that will allow more Canadian oil to reach the Texas refineries. Yes, better to buy oil from Canada, an old ally, than to rely on supplies from OPEC countries.

Boost R&D

And, finally, encourage new investments in R&D, because basic research has been and should continue be at the foundation of the American “Innovation Machine”.

Historically we have been ahead of other countries in innovation because we used to invest more in research. Therefore we often are the first to break barriers, invent new things. Besides, America developed an effective patent protection system and a network of venture capitalists that allows inventors to plug into financing opportunities, develop their products and benefit financially from their intellectual efforts.

Now all this is becoming less effective, in part at least because the federal government ceased to be the main driver of basic R&D, that is important research not tied to immediate commercial applications.

A simple recipe

So, there you have it. Modernize and simplify the federal tax system. Reduce out of control regulations to a sensible minimum. Enhance domestic and hemispheric energy production, and boost research.

Revolutionary ideas from yet another fringe politician? Well, no. This is pretty elementary stuff. In fact, this is“Capitalism 101”. This is about creating and sustaining the basic building blocks of the “enabling environment” in which private sector-led growth can take place.

This is what teach in emerging markets

The irony here is that what Christie outlined in his speech and in his WSJ piece is precisely what armies of Western economic development consultants go teaching around the world to the governments of emerging countries eager to join the main stream of the developed world.

Now, if low taxes and minimal regulations constitute sound policy advice for Ghana or Cambodia, how can any of this be even remotely controversial in America –the country that used to be the land of pure capitalism? Once again, consider that what Christie suggested is truly basic stuff. The bare minimum –I would add– that we need to have in place in order to have a performing, competitive economy.

We no longer believe in capitalism

And yet, sadly, and all this is controversial in America because there has been a profound cultural shift. This is no longer the land of pure capitalism. This has become the land of government administered programs whose major goal is to correct the iniquities of capitalism.

Redistribution…

Now the focus is no longer on ways to grow the pie. Now politicians get elected by promising that they will push for redistribution policies that will make sure that the existing pie is more equally divided. And when the President does not have the votes in Congress that will pass the legislation he wants, he will instruct the bureaucracy to implement his policies aimed at promoting equality and social justice through more regulations.

Look, it is alright to discuss increased inequality. But the smart way to address it would be to focus on ways to increase access to real opportunity for those who do not have it. The focus on redistribution, while government bureaucrats regulate everything to death is not at all smart. In fact, it is suicidal, as the decline of most of Western Europe shows us.

…does not work

And we also have evidence right here, at home. The US economy is anemic. Productivity is low, and average middle class incomes have been stagnating for decades. Besides, 50 years of supposedly well-crafted anti-poverty programs produced negligible results.

Capitalism delivers

And yet, a common sense, pro-growth agenda like the one proposed by Chris Christie these days makes the headlines, while it is considered radical by many.

Unfortunately, too many Americans have forgotten that, whatever its shortcomings, capitalism is the only economic system that delivers growth. Everything else, and I mean this literally, failed.




The Tea Party Has Become An Ideological, “Anti-Everything” Group – The Republican Party Needs A Strong Message Of Opportunity And Inclusiveness – Chris Christie Could Articulate It

By Paolo von Schirach

November 11, 2013

WASHINGTON – At the very beginning, the Tea Party insurgency had some real merit. But now it has become a motley crew of “anti-everything” libertarians mixed with social conservatives profoundly out of step with the minimum standards of modernity. Anti-abortion, anti-gays, prayers in schools, guns for everybody principles will get you some votes; but not enough to win national elections, or even statewide contests as Virginia has shown. 

A good start

The Tea party Movement had a good start as a grassroots rebellion against ever-growing government and its exploding cost. The Tea Party activists could claim that their advocacy for limited government and low taxes was and is in keeping with basic American principles and traditions. “This is America and not France. We believe in the private sector and in a modest safety net for the truly disadvantaged. The rest is unnecessary welfare paid out to voters, so that they will kep re-electing unprincipled politicians who will keep the gravy train going, even though they know full well that this will cause higher debt and eventually fiscal disaster.”

Now the Tea Party is the anti-everything movement

But now this “small government” platform has become a bad mix of strident politics and ancient conservative values that as a minimum do not resonate with the broader public, while in too many instances (take abortion) they are perceived as deliberately offensive. The worst thing is that the Tea Party adherents seem to be “anti-everything”, while they are unable to rally large constituencies around programs “for something”.

Beyond that, their anti-spending platform is very thin on detail. It is easy to pick examples of stupid, wasteful and poorly conceived public spending. However, the problem is that the bulk of federal spending is about entitlement programs,  and not about funding for –say– “artichoke research in Iowa”. The Tea Party people are really disingenuous when they claim that most of America’s fiscal issues are about eliminating the classic mix of “fraud, waste and abuse”. As for a well thought Tea Party entitlement programs reform plan that would take care of the elderly while bending the spending curve, we have not seen any of that.

Bad tactics

And then we have the additional problem of bad tactics. The attempt to repeal Obamacare “by force”, through a government shutdown is an indication of political stupidity. Most conservatives agreed that it was a bad idea. But the Tea Party people in the House pushed for it anyway, with disastrous political results.

And now, in case we needed more lessons, we have the defeat of Ken Cuccinelli in the Virginia gubernatorial race. While Cuccinelli in the end did much better than expected as he could capitalize on the Obamacare launch debacle, Cuccinelli’ lost in large part because his strident socially conservative themes alienated women, minorities and young voters. How on earth can anybody run against women in today’s America, as they are now more than 50% of the voters? Only die-hard ideologues want to fight again over abortion, contraception, and then prayers in school, gay rights and more.

Of course, if your goal is to fight for your principles, you have every right to do so. But if these principles constitute the platform of the Republican Party, then it may as well forget about winning major elections.

Chris Christie can lead

And this brings us to Chris Christie. He sailed to a triumphant re-election as Governor of New Jersey. In a sense, he is a new and improved, truly  personable Mitt Romney, minus the Mormon faith and the Massachusetts health care reform (too close to Obamacare) issues. In a word, he is a non ideological reformist who promotes pro-growth policies. Christie combines in a nice way a combative spirit, charisma and pragmatism.

That said, it would help him immensely if his “style” (and this is not to deny that there is real substance  in Christie)  could be enshrined in a new, principled, easy to understand policy framework that would outline the goal of making America into an “Opportunity and Inclusiveness Society”. The Republican Party would gain a great deal by having a convincing national leader convincingly reasserting its credentials as the political force championing a modern Opportunity Society. Not a Welfare Society; but an America in which the private sector and government work together to enable people to become smart and strong, so that many more of them will make it on their own.

Smart, inclusive conservatism

This is not about hand outs, special subsidies or tax relief. No, this is about a serious effort to modernize public education so that it will provide a real foundation for competing in this globalized economy. This is about simplifying  regulations and the tax system, so that it will be easier to start a business and hire people. This is about an energy policy aimed at capitalizing on the huge advantage created by America’s low cost natural gas. At the same time, it would be great if the Republicans could articulate a  sensible immigration policy reform that would provide a path to legal status for millions of illegal immigrants while  making it easy for smart would-be immigrants who bring their talent, energy and entrepreneurial spirit to America. 

Christie can do all that, this way leading a GOP revival.

 




In 2012 Democrats Will Run as Defenders of the Welfare State – Beyond Spending Cuts, Republicans Have to Make a Case That Small Gov. Works Better – Examples from Indiana, New Jersey, Virginia

[the-subtitle ]

By Paolo von Schirach

May 26, 2011

WASHINGTON– The Republicans just lost NY-26. This used to be a safe House seat in up state New York. This defeat happened largely on the basis of the Democrats’ strong opposition to the Medicare radical reform plan presented nationally by the Republicans. True enough, Democrat Kathy Hochul did not win by a huge margin, (only a 47% plurality), while Republican Jane Corwin was hurt by Jack Davis, a third party candidate claiming a Tea Party allegiance, who syphoned off 9% from the Republican vote. Karl Rove commented in The Wall Street Journal that it was this unfortunate combination, and not the Medicare issue, that cost the Republicans this safe seat.

Medicare the issue?

Well, the Democrats have an entirely different reading. As they put it, it was all about “Medicare, Medicare, Medicare”. The Republicans –this was the message– want to take it away from you, the Democrats want to keep it for you. The emerging conventional wisdom is that this New York state upset is an indication that the Republican plan for Medicare is so scary that even conservative voters lean towards the Democrats. Repeat the NY-26 results nationally and you got another major electoral upset in 2012, with the Democrats retaking the House.

Difficult to make national extrapolations from one House race. But I believe that the Republicans need to do a lot more work to convince the general public that: 1) Radical Medicare reform is absolutely necessary, as the system will be broke soon; 2) Their reform plan is the way to go. So far, I see no indication that they know how to do this. I also see no Middle America appetite for a radical overhaul of such a key retirement benefit. Very simply, nobody “sees” the federal deficit; for most its is still an abstraction. Everybody “sees” very tangible Medicare benefits.

Pundits think that the Republicans have a strong platform

But some pundits think instead that a GOP bent on serious fiscal reform has excellent electoral chances. Daniel Henninger of the WSJ, (The Building Blocks of a GOP Agenda,May 26, 2011), gives an upbeat prognostication about future Republican success on the basis of spending cuts implemented at the state level by capable Republican Governors such as New Jersey Chris Christie, Indiana Mitch Daniels; and now newly elected John Kasich in Ohio and Scott Walker in Wisconsin.

Henninger’s point is that these elected officials are working to shrink bloated and unaffordable state governments in order to recreate fiscal health as the necessary precondition to restore the fundamentals for economic growth. Downsizing government and reducing taxes are going to be the building blocks of a national political agenda to be embraced and carried forward by whoever the Republican nominee to run against Barack Obama in 2012 will be.

Fiscal rigor, no taxes is not enough for a national agenda

This is all well and good. I am totally in favor of re-establishing fiscal sanity. Looking at our monstrous yearly deficits and at the accumulation of more and more federal debt, we should all be in favor of cutting spending, including entitlements reform, as most of the federal money goes to entitlements.

That said, I am extremely skeptical that “the fiscal probity theme” is enough to build enthusiasm around a Republican platform. Cutting spending is absolutely necessary. But this cannot be the core of a governing platform.

True enough, Ronald Reagan run on a similar platform in 1980, “Get the government off the back of the people”. But at that time it got traction because it was bold and new. And the issue was not the deficit. The issue was a conservative revolutionary wave that wanted to do away with liberal thinking.

The Reagan Revolution was different

Reagan could say that he was the reformer that would dismantle the oppressive machinery of the state in order to unleash the productive potential of millions of Americans. This was new talk. And it sounded intriguing. By slashing and killing the federal monster, Reagan could restore the American Dream to its proper station and glory. And so he won in 1980 and again in 1984.

But at that time all this neo-liberism –and indeed the first version of neo-conservatism– were all new. The Republicans appeared to be the party of new ideas. The Reagan/Conservative Revolution was about a deep rethinking and reappraisal of the role of the state and especially about debunking the liberal conventional wisdom asserting that “Big Government” is good that had been accepted for decades as “the truth” by the larger part of the American cultural establishment.

We cannot repeat the Reagan experience, it will not be new now

The point of this historic reference is that we cannot do a Reagan Revolution again, because we have already done it once. And, by the way, whatever the faithful may claim, it did not work as advertised. The Federal Government was not defeated by Reagan. Whereas tax cuts, without matching spending cuts, gave us the first taste of large federal deficits. And then the Revolution was diluted. After Reagan it was George H. Bush. But he lacked the credentials of a believer. And then 8 years of Bill Clinton, to be followed by George W. Bush who could not be considered a disciple of Ronald Reagan. He allowed profligate spending without any regard for deficits. And finally, under Republican stewardship we have had the most colossal financial disaster since the Great Depression shaking any confidence in the Republicans ability to run anything at all.

Ronald Reagan looks awfully far away, after all what happened, and his model and legacy hard to recreate. And, most fundamentally, Reagan’s small government ideas –at the time– looked new, revolutionary and exciting. The painful cuts proposed by his current would be Republican disciples look just painful.

A national platform needs an invigorating plan

While fiscal rectitude may be a good currency at the state and local level, at the national level Americans want to believe in someone who says something new and energizing. Small government and no new taxes alone just will not do it.

Not to mention the fact that, as things are shaping up, while Obama will have to defend his record, now he is also the self-appointed defender of the welfare state against the insane and mean spirited attacks of the Republicans. This is a bonus handed over to him by the House Republican budget blueprint.

Fiscal rigour versus populism

Sensible people should recognise that the Republicans are serious about fixing public finances, while the Democrats are demagoguing on this, using scare tactics to convince people that if the GOP wins it will throw widows and orphans in the snow, just to save a penny, while giving tax brakes to their millionaire friends. If you think that people will see through this attempt to muddy the waters and choose the sensible economic rebuilding platform proposed by the GOP, I think you are a real optimist.

Magic trick: show that small government really works better

The real magic trick that the Republicans should be able to produce, on the basis of real facts, is that their smaller, streamlined government really works better. Yes, lean Government under competent stewardship delivers higher quality services at a lower cost. Yes, you can be lean, and smart and capable and truly serve the public interest, all at the same time. Can such a case be made between now and November 2012?