Financing Government
Taxes
Education
Economic Policy and Jobs
Social Security
Immigration
Environment
Reproductive Rights
Separation of church and state
China policy
Drug policy
Iran
Medicare
I know what I have to say on this topic won’t be popular, but someone needs to tell the truth and it might as well be me.
My tax policy teacher in law school was fond of the saying “There’s no free lunch.” We have to pay for those things we need and decide are most appropriately provided to each other through our government.
Current expenditures should be paid out of current income. Taxes must match such expenditures plus the amount needed to reduce any accumulated national debt. To pay current expenses, an increase of about 5% to 9% of GDP will be required (our current tax base is about 15% of GDP). A change of this size requires that tax rates not only be allowed to revert to rates prior to the Bush tax cuts, but actually be increased.
To bring expenditures into line with revenues at current tax rates we would need to pick two of the following four categories to eliminate completely: defense, Social Security, Medicare, all other spending (including infrastructure such as road and other transportation, basic research, and veterans benefits). I believe this is unrealistic.
In fact, certain categories of spending, particularly education, research, and infrastructure have such enormous long-term benefits that they should be increased substantially instead of reduced — fortunately we could double or triple the expenditures for each without really adversely affecting the overall budget since they comprise so small a part of the current budget. (For a detailed breakdown of expenditures, see http://www.cbpp.org/cms/index.cfm?fa=view&id=1258)
While some economists argue debt can be maintained indefinitely in a growing economy, I believe that the existence of such debt can limit needed flexibility in times of difficulty. Thus I believe that the target cumulative national debt should be zero, and any amount in excess should be amortized over an appropriate period out of current revenue.
What is the appropriate period for amortization? It is the expected period of benefit. For example, for spending needed to stimulate the economy during a down portion of the business cycle, it might be the expected length of the overall cycle, which, depending on other regulatory policies, might range from five to 20 years or longer. For spending on infrastructure and education, it might be 20 to 50 years, so that those receiving the benefits of the spending share part of the cost.
We have accumulated over $15,000,000,000,000 (fifteen trillion) in debt, primarily over the past 20 years, as those who wanted things but didn’t want to pay the price passed that price down to us. Some was investment; much was current spending that should have been paid out of current income. While it won’t be fun, it is essential that we amortize this debt burden, which requires taxes in addition to those that would otherwise be required. At present interest rates, this would require about $960 billion in additional tax revenue each year, or an increase of about 6% of GDP.
Thus total tax revenue, to accomplish this goal, will need to be approximately 27% of GDP, an amount more nearly approaching our historical tax burden.
As unpleasant as this is, not dealing with the reality of the situation will be worse.
Our income tax system is overly complex, and impossible for all but trained tax professionals to understand. In addition, over the past 20 years, tax policy has increasingly been skewed toward valuing capital more than labor, and shifting wealth from the lower and middle classes to the wealthy.
In order to remedy these problems, the Internal Revenue Code should be simplified and made neutral regarding choices of economic activity. Income derived from capital and labor should be treated identically. Rates should be progressive, since those with more income benefit more from our society. Everyone should pay some taxes. Taxes should pay for expenses enacted.
Why should income generated by having money be subject to less taxes than income generated by work? Both are essential, and it is a myth that investment won't take place without the incentives. It will just be more careful investment. I would abolish the capital gains rate and special rate applicable to dividends, and subject all income to taxation at the same rate.
All individual deductions and credits should be eliminated, and substantially reduced rates applied to gross income, ranging from 5% to 35%.
Businesses doing business in the United States should be taxed identically to individuals, but with taxes based on gross income originating in the United States, less the cost of producing that income. The only additional deduction should be for dividends or similar distributions paid to U.S. citizens, since that income would be taxed at the individual level—eliminating the so called "double taxation" of corporate earnings
A constitutional amendment should be proposed providing that tax rates be coupled with expenditures, so that rates are automatically adjusted to provide sufficient revenue to provide funding for amounts spent, plus an amount sufficient to amortize the cumulative national debt over a 20 year period, except in times of war or national emergency declared by two-thirds vote of both houses of Congress with the concurrence of the President.
The estate tax, while generating a relatively small amount of revenue, is a tax imposed so we don't have a strong consolidation of wealth (as in Mexico). We should have policies that allow everyone to start on as nearly an even playing field as possible. There will still be disparities of birth, education, and social capital, but not vast chasms of wealth. I am in favor of a lower amount exempt ($1 million per person seems appropriate, indexed for inflation) from estate taxes, with steeply progressive rates applicable over that amount with a maximum marginal rate of 80% over $10 million for inter-generational transfers.
Access to education is an essential and primary factor in the creation of opportunity for all members of our society. We should provide a way for each individual to work toward accomplishing of greatest aspirations and fully developing their talents. Education does not provide benefits only for the student, but instead provides benefits for the broader society, economically, as we make wiser decisions, and through an enhanced quality of life.
We should fully support higher education at the federal level. This support should take two forms:
The current individual burden imposed by funding through student loans is unconscionable; many students leave school owing $40,000 to $80,000 or more. This imposes an undue burden on the student, since the economic benefits of education flow to the entire society, not just the student. Accordingly, we, through government, should bear more of the burden.
If elected, during my first term I will seek to expand the Pell Grant program so that each student is eligible to receive an amount equal to 70% of the average total cost in fees, tuition, and room and board at public universities.
While I support excellence and full-funding of public education at the K-12 levels, I do not believe that the federal government is the appropriate source for either funding or standards at this level, in accord with the principle that decisions should be made and resources raised as close to home as possible.
The coming scheduled reversion in student loan interest rates to 6.8% has drawn much attention over the past week or so. President Obama has proposed continuing the temporary reduction to 3.4% by continuing additional subsidies to lenders, Student Loan Interest Rates Loom as Political Battle, and today Mitt Romey agreed with the idea Mitt Romney backs extension for student loan rates.
Under the current way student loans are structured this proposal has a significant cost: "The Congressional Budget Office has estimated that a one-year freeze on the interest rate for subsidized Stafford loans would cost $6 billion."
Republican leadership is opposed to the extention: "Extending the low rate would be too costly, Mr. Kline said. “We must now choose between allowing interest rates to rise or piling billions of dollars on the backs of taxpayers….Mr. Kline, who earlier this year called the interest-rate hike a “ticking time bomb set by Democrats,” said he was exploring other options in hopes of finding a solution that served borrowers and taxpayers equally well."
I propose such an option, an option that actually provides additional revenue to the government, and a reduction of the cost to taxpayers, while reducing borrowing costs for all those owing student loans.
The U.S. government can currently borrow money at slightly less than 2%. We should simply work together through government to refinance all outstanding student loans, which would allow a permanent reduction in interest rates on such loans to 3%, allowing one percent for administrative costs and additional revenue. The process would be simple: the federal government would issue debt in an amount equal to the outstanding student loan debt, and would directly refinance all such debt with the proceeds.
Instead of costing taxpayers over $36 billion per year, there would be net revenue of approximately $10 billion per year that could be reinvested in education programs at no expenses to taxpayers, or once administrative baselines were established, could be used to rebate interest payments.
That's what I call a common sense win-win solution that serves borrowers and taxpayers equally well!
Trickle-down economics does not work. It didn't work in the 20th century, and it is not working now. Giving more to the wealthiest among us simply increases financial assets, without an increase in jobs and real assets.
Direct fiscal stimulus is an essential component of maintaining stability in a modern economy. While the Federal Reserve can do a limited amount by indirect action through the financial system, direct government action through stimulative spending is necessary.
Most of the time this type of spending is funded with borrowing by virtue of the circumstances in which it occurs. Since it is funded with borrowing, the activities undertaken should provide benefits as long as or longer than the expected period of repayment. In addition, the expenditures should go to those who need them most, and will actually spend them in order to stimulate the economy as well as building benefits for the future. Appropriate expenditures include infrastructure, including roads, bridges, public transportation, communications, and education. These are the types of activities that provide benefits over the long term.
Many of these types of improvements from Depression work projects we still use every day in our parks, bridges, and roads. Such assets are consumed over long periods, so it is not inappropriate to pay for them over long periods.
When elected I will work to increase expenditures for education, transportation infrastructure, and basic research, as a primary component of stimulative government spending. Such improvements will also improve our long-term economic development and competitiveness.
Social Security provides the only economic security in old age for the vast majority of the U.S. population — for more than two-thirds of those 65 and over, Social Security provides half of their income, and it provides 90% of the income for more than one-third.
It is an insurance program, not an investment program. As such, it shifts part of the risk of the future performance of the economy from the individual to the public as a whole, not just for old age, but for disability and children surviving a parent. It is essential to the economic security of the vast majority of the population and cannot be replaced by a private system. Privatization does not provide the insurance element of the system.
While we hear much about the purported underfunding of social security in 10 years, 20 years, or 30 years, it is a problem easily solved. Appropriate funding is dependent both upon appropriate tax rates, and the growth of the U.S. economy. At present, Social Security can be made sound by simply eliminating the cap on the amount of earnings subject to the tax, which should be done immediately.
In addition, however, income from investments is not taxed in the Social Security system. As discussed with respect to other taxes, there should be no discrimination in our tax system based on the source of income. All income, not just wages, should be subject to the Social Security and Medicare taxes. Such a change would allow full funding of the system, and allow a reduction in the applicable rate for wage earners.
An alternative (but not complete) solution to full program funding has been proposed: reducing or eliminating benefits for those with sufficient economic resources. I am opposed to complete elimination of benefits for anyone. Reduction on a progressive basis to some minimum (perhaps 50% of full benefits based on earnings), however, might make sense, since the risk insured against is not only getting old, but getting old without adequate resources for support.
We, or our ancestors, are all immigrants. Legal immigration should be open to all those who wish to do so, subject to exclusion only of those with criminal convictions (other than traffic violations and the like) in their country of origin. This is true particularly of those having college or advanced degrees, but anyone who wants to immigrate to the United States to work hard and succeed in a way they cannot in their home country should be encouraged, not shunned. Economists tell us there is no limit to the work to be done, of value to be added. This is another way of saying that no one really takes a job from another person, since there is continually more to be done. If this were not true, wealth would not accumulate over time.
As an initial policy, I would work for unlimited issuance of renewable two year work visas on application, subject only to the criminal conviction exclusion. Upon completion of 16 quarters of contribution to the social security system and no criminal convictions, those holding work visas could be granted permanent residence upon application (without quotas), and citizenship five years thereafter.
In addition to strengthening our economy, such a policy would avoid many of the abuses attended in the current system of wide-spread use of illegal immigrant labor. Those without legal status cannot be assured of receiving the benefits of workplace standards, fair labor practices including payment of the minimum wage, and appropriate recognition of their civil rights. Such accountability would significantly place immigrants upon a fair playing field with citizens, leading to market decision based upon willingness and capacity to work, not labor abuses.
Since immigrants tend to be younger, this policy would also strengthen the age distribution needed to support social services as the baby boomers age and become unable to support themselves.
As anyone who has ever looked at a picture of earth from space can tell, we live in a very small home in the middle of a very inhospitable universe. Over 99% of all species that have ever existed are extinct. Genetics tells us that at one point climate change and adverse environmental conditions came to within approximately 6000 individuals of wiping out humanity as well.
Environmental preservation is not about the earth -- it will do just fine -- it is about people. Will we take actions that improve our health, or will we take actions that cause sickness and shortened life? Will we take actions that have the potential to disrupt food supplies, or will we assure that actions to improve that food supply are taken in a responsible and cautious way? How will we choose to enhance our quality of life?
I believe that through government we must require those making decisions to bear the full cost of their decisions. If we do not, we will make destructive choices. These destructive effects may be current, or take a long time to see. By acting together, we impose rules that require those receiving benefits to pay the costs, so that when we make market decisions we are comparing apples to apples instead of apples to orangutans.
For example, a problem of particular importance to the 32nd district: how do we choose to produce the electricity we all want and need? In the absence of governmental action, some types of power generation, such as coal, are much cheaper, but produce emissions that adversely affect the health of many and appear to be accelerating adverse climate change, while others, such as wind and solar power, avoid these costs but are more expensive.
I am in favor or market based solutions that require full incorporation of all costs associated with decision-making. Thus, with respect to the simple example posed, I am in favor of requiring coal plant operators to fully mitigate emissions and capture all carbon produced, so that those who choose to purchase electricity produced from coal pay the full costs of that production.
Obviously, there are many other categories of costs and benefits to be considered when making such decisions. By application of this principle, we can identify and work to reconcile the many and varied considerations in every such choice, allowing the free market to decide which choices are best.
What we do about having, or not having, children, and what we do in the bedroom, is simply private, and outside the appropriate scope of our use of government.
I am whole-heartedly and unequivocally in support of a woman’s right to choose whether to carry a pregnancy to term, within the bounds set out in Roe vs. Wade. Contraception is a private matter entirely between a woman and her physician, and others close to her that she may choose to consult, as are all other treatment decisions.
The right to privacy in such decisions extends to all aspects of the physician-patient relationship.
We believe in a marketplace of ideas; you may advocate for yours, I may advocate for mine, and each individual is free to choose between them, or create another path. Beliefs that reflect moral, ethical, or religious choices must not be imposed on others through government.
Counseling or other medical procedures intended to advocate for a particular moral, ethical, or religious stance, mandated through government, violate fundamental boundaries of government action, and are wrong. Those who advocate for such tread a dangerous path: if it is appropriate to use government to prohibit or attempt to dissuade the individual from a given action on such grounds, it is equally appropriate to persuade or to require that action on such grounds. Both are wrong.
Of course, individual choice may be constrained if such actions impose on the rights of another person. This line can be difficult to determine. Roe draws a reasonable line: in essence, before a potential person can survive on their own, they have no rights, after they can potentially survive on their own, they acquire the rights of a person.
As the father of four, I know that the choice of whether to have a child or not has enormous implications. Each woman I have known who has faced the choice of whether to continue or terminate a pregnancy has made that decision carefully and deliberately, never casually, regardless of the decision made.
Do we want to tell each other what that decision should be, using government, or should that decision be left to each individual? I believe the individual should choose, and will work to prevent any restriction on that individual right to decide.
Jesus articulated the principle of separation of church and state when he said “Render to Caesar what is Caesar’s, and to God what is God’s.” Not until the United States came into being eighteen hundred years later, however, was the principle incorporated as a basic tenet of government and fundamental freedom.
It is so fundamental that it is the first right enumerated in the Bill of Rights: Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof…
The legitimacy of government is based on our mutual agreement to work together through government, not on the right to rule being ordained by any deity. As today, at the time our country was founded, there were many views of the divine, the role of the divine in human affairs, and what constitutes right relationship with the divine. These we recognize as matters of conscience, not to be forced upon anyone, but of individual choice.
Our country is special in having as a foundational principle tolerance of many beliefs in the context of one civil society, and that it is not appropriate to impose our particular beliefs on others using government. It is a great strength; one that has allowed a diverse people to live together and bring into existence a vital, creative, fundamentally peaceful society that remains the envy of the world.
Separation of church and state is a uniquely American invention. It has served us well, and will continue to serve us well. I will work to see that it does so.
China's rapid growth, economic policies, and large population present a challenge to U.S. foreign policy. How should we deal with China?
The U.S. should deal with China as an honorable opponent, not a potential enemy. If properly managed, the U.S. relationship with China can provide benefits to each as China rapidly increases its population’s standard of living and increases its use of the world’s resources. If improperly managed, competition for resources will lead to confrontation rather than cooperation and mutual benefit.
It is important to remember that China has over 3000 years of recorded history, leading to a very long-term perspective. In contrast, our political system seems to have difficulty focusing on something other than a current political battle or the next election. China’s long-term perspective is supported by a philosophical understanding of the universe in ebb and flow and actions taken in accord with the times.
In dealing with China, we must overcome this handicap of short-term thinking. As any chess or go player knows, actions taken with only short-term benefits in mind may lead to severely negative consequences.
Accordingly, I believe that our dealings with China should be governed by the following principles:
One example of the differing approaches to long-term goals is the difference between U.S. and Chinese policy on the development of outer space.
Over the past 20 years the United States has surrendered a generation-long competitive lead in the ability to deliver people and other large payloads into low earth orbit and beyond. We have repeatedly articulated goals of expansion from low earth orbit to the moon and beyond, with the resulting potential productive use of resources found in space, and then abandoned these goals in the interest of short-term savings. We first abandoned the ability to reach the moon, and then abandoned the ability to deliver humans to low earth orbit. We have developed no plan for regaining those capabilities, only the hope that private enterprise will do so.
China, on the other hand, has undertaken systematic development of the ability to deliver people and equipment to space, including development of a crewed space station, with the stated long-term goal of a permanent crewed base on the moon. They currently have the ability to launch crew into low earth orbit, dock with launched modules, and work outside the vehicle, with further development planned toward a human visit to the moon by 2020—all abilities we worked hard to build in the 60s, 70s and 80s, and we have given up.
For our children's sake, we must find the vision to focus not only on short-term questions, but on long-term goals, and how to accomplish them.
The lesson of Prohibition is clear: criminalizing possession of things a substantial part of the population desires simply leads to the expansion of organized crime as a delivery mechanism. Unfortunately, for the past 40 years we have ignored this lesson as we have engaged in the “war on drugs.”
Again, we see the same result: the expansion of violent organized crime not only in the United States, but throughout the world. Our war on drugs directly led to civil war in Columbia due to the cocaine trade, has funded terrorism through the opium trade in Afghanistan, and the growth of organized crime cartels in Mexico as a delivery channel into the U.S. market, threatening border communities in the U.S. as well as throughout Mexico.
In addition, it has provided a pretext for shrinking our right to be secure from unreasonable searches and seizures and the scope of what is considered private action, since by its nature drug use is not typically public activity, but conducted in private, and cannot be determined without invading the private sphere.
These destructive effects are a direct result of the illegality of drugs.
The solution is simple. I would support the repeal of all laws related to the possession or use of drugs, retaining only those laws applicable to the safety and effectiveness of drugs claimed to have a therapeutic effect.
We should simply declare the war on drugs over.
This position results from three principles: the least government consistent with the civil society is best, each person must accept responsibility for him or her self, and that the decision-maker should bear the consequences of his or her decision.
Use or non-use of drugs is a personal, private matter unless it produces behaviors that endanger others. Such behaviors, of course, should be legally prohibited.
Once again we are faced with repeated calls to use sanctions and preemptive military force to preclude Iran from obtaining nuclear weapons. Such a course is not in our best interest.
The U.S. should undertake diplomatic efforts to obtain a verifiable agreement with Iran not to develop nuclear weapons. In the absence of such an agreement, it is unlikely that Iran can be prevented from developing such weapons. The knowledge base required to develop weapons is mature and accessible. Fortunately, the actual manufacturing and assembly of devices and required nuclear materials is extremely difficult.
North Korea’s development of a nuclear weapon teaches us that sanctions are not likely to be effective in keeping Iran from joining the nuclear club. Accordingly, I do not believe sanctions are appropriate. Sanctions are simply likely to enhance a perception on Iran’s part that such weapons are necessary for its defense in the face of a hostile Western world.
Diplomatic efforts toward a lasting reduction in tensions in the Middle East and resolution of the conflict between Israel and Islamic states are an essential component of U.S. policy in the region.
Military force should not be used unless there is a direct, credible, verifiable threat of the imminent intent to use such weapons against the U.S. or its allies.
Medicare is directly in the path of two problematic trends: an aging population and shrinking worker base, and rapidly escalating healthcare costs.
Over 89% of Americans over age 65 are covered by Medicare. At present, approximately 46 million Americans receive Medicare benefits. By 2020, just eight years from now, that number is expected to increase to 61 million, with a further increase to 78 million by 2030. Currently there are approximately 3.7 workers supporting each beneficiary; by 2030, that number will decline to approximately 2.4 workers.
As discussed regarding immigration policy, we should encourage immigration to expand the base of active workers in the country, and reduce the average age of workers. In addition, investment in infrastructure, education, and research will enhance the productivity of those who are working, increasing the total available resources. These measures alone, however, are unlikely to fully offset the declining worker base.
In addition, medical care expenditures are increasing at a rate substantially in excess of that of general inflation and growth in the economy. Total healthcare spending as a percentage of gross domestic product has increased from 6.5% in 1960 to over 17% in 2009, and is expected to reach nearly 20% by 2019.
Controlling costs has two elements: the prices we pay and the scope of services provided. Both must be addressed. I address cost in more detail in my general discussion of health care.
In the context of both Medicare and care for those under 65, however, we need to engage in a serious dialogue regarding the scope of services we choose to provide to each other through public funding, and those services that will only be provided if an individual can afford the cost. We may choose as a society to provide unlimited healthcare of the highest quality to all citizens through public funding; this will be expensive and will require higher taxes. We may choose to limit those services in some way, whether by ability to pay, as we do now, or through an active, intentional balancing of costs and benefits to the individual and society.
These are extremely difficult questions — there are no easy answers.
I would actively engage in an effort to develop such a dialogue, toward the end of developing a consensus about what specific healthcare services we will provide to each other through government and how we will pay for them.