Jobs, Taxes, and the Republican Primary

Economic factors are always paramount in presidential elections.  But in a year when the unemployment rates remains above 9% and the Eurozone debt crisis looms, the importance expands exponentially.  With the first Republican primary less than two months away, each of the potential candidates has outlined a tax and jobs plan that will, according to them, bring the United States out of this recession and restore it to its once great position as the only viable superpower.

Mitt Romney, the unflappably stagnant former governor of Massachusetts, introduced his 49 point jobs plan last month in Las Vegas.  It entails cutting corporate tax rates from 35% to 25%, eliminating the estate tax, and extending the so-called Bush Tax Cuts.  He also recommends reducing the regulatory burdens on business by repealing Obamacare and Dodd-Frank (the financial reform bill) and expanding drilling in areas such as the Gulf Coast, the Plain States and Alaska. 

Texas Governor Rick Perry, the unflappably flappable candidate, introduced his tax and jobs proposals in recent weeks.  His jobs plan focuses mainly on increased energy production in oil and natural gas which he states will “unleash 1.2 million American jobs through safe and aggressive energy exploration at home.”  His tax plan proposes creating an opt-in flat tax, meaning those who choose to do so, can have their taxes reduced to a flat rate. 

Former Godfather Pizza Executive Herman Cain, the ever-present attention seeker, has infamously proposed his 9-9-9 plan to reform the tax code.  It would throw out the existing tax code and replace it with a 9% corporate tax rate, 9% individual income tax, and 9% national sales tax.  Cain has not explained his plan much beyond that except to say that his advisors have crunched the numbers and it will be deficit neutral.

Former Utah Governor and Ambassador to China Jon Huntsman (disclaimer, I volunteer on Huntsman’s campaign) has proposed a tax and jobs plan that synthesizes many aspects of Romney, Perry and Cain’s proposals.  He calls for tax reform in which loopholes and deductions for corporations and the rich are eliminated and the base is broadened.  The corporate tax rate would then be reduced from 35% to 25% and the personal income tax would be reduced to flatter, fairer rates of 8%, 14%, and 23%.  He has also called for expanded oil and natural gas exploration, regulatory reform, free trade expansion, and stronger relationships with foreign nations.

Other candidates have made various similar and sometimes outlandish proposals.  Rick Santorum, has proposed cutting the tax rate for manufacturing to 0%, an interesting thought.  Ron Paul has proposed eliminating the Departments of Education, Commerce, Energy, Interior, and Housing and Urban Development.  Michelle Bachmann has not been able to formulate a sentence that does not end with “repeal Obamacare.” 

Many of these proposals are seriously flawed.  Romney’s tax plan leaves the existing tax code, loopholes, deductions, and all, in place allowing for companies like GE to continue to make billions of dollars and pay no income taxes.  Perry’s tax plan also leaves the existing loopholes and deductions in place because those benefiting from them will not choose to opt-in to the proposed flat tax.  Cain’s plan is simply simplistic; as a tax lobbyist I spoke to recently put it, “I have serious questions about a tax policy that can be summed up in a catch phrase.”

 Santorum’s proposal concerning tax rates on manufacturing is intriguing but has little chance of success in Congress.  Paul’s proposals are simply ludicrous; maybe in a perfect world we could do away with five Executive Agencies and be fine, but that is not this world.  Huntsman’s jobs and tax plan was called “big and bold” by Reuters and “as impressive as any to date in the GOP presidential field, and certainly better than what we’ve seen from the front-runners.”  Because of my stake in the Huntsman campaign I will let you decide for yourself.

What is clear is that the Republican candidates for president have displayed many similarities and many differences in these proposals.  The distinctions may seem minute, but they are clear and integral in this time of economic woe.  The candidates now have approximately eight weeks to distinguish themselves from each other and from President Obama.  It should be interesting to watch.  

Putin in Power: Continuity and Complexity

The amiable yet complex diplomatic relationship between the United States and Russia has taken another turn in the last week.  Former Russian President and current Prime Minister Vladimir Putin has announced that he will seek reelection in 2012 to the Presidential office, which he held from 2000 to 2008.

Putin, a former KGB operative and Communist Party member, has maintained a love/hate relationship with the United States during his time in public office. American representatives and leaders have perceived a Cold War attitude from the post-Cold War presidency.

Over the past few years, United States Presidents and President Putin have butted heads over issues such as the unofficial reunification of Soviet bloc countries, the use of natural resources—particularly natural gas—to detach Germany from the Atlantic Alliance, and the Russian invasion of Georgia in 2005 for which former President Bush called the Russian leader “cold-blooded.” 

Putin has also been criticized for instances which many considered violations of human rights.  In 2009, Russian attorney and anti-corruption activist Sergei Magnitsky suffered a gruesome death after being in police custody for 358 days.  In 2003, billionaire Mikhail Khodorkovsky was arrested and charged with fraud, embezzlement and money laundering after giving financial support to multiple opposition parties. 

Putin seems to be attempting to adapt to 21^st century geopolitical realities while remaining a Cold War leader at heart.  Ralph Peters of the Washington Post maintains that Putin is a successful leader in that he has somehow mastered this balance.  “Not one of his international peers evidences so profound an understanding of his or her people, or possesses Putin’s canny ability to size up counterparts.” 

Peters goes on to lay out Putin’s general strategy—which he calls genius—of reconciling the tactics of the Soviet Union and the realities of the current world.  “You need control only public life, not personal lives.”  In other words, the KGB has been replaced by the Press Service.  While the instances mentioned above may prove to be counterarguments to that statement, Putin’s successful reign as President and Prime Minister are evidence of his competent leadership. 

In 2008, Putin was disallowed from running for reelection in Russia due to their mandated term limits.  He was replaced by Dmitry Medvedev who subsequently appointed Putin Prime Minister leading to the belief that Medvedev was merely a puppet of the former President.  Walter Russell Mead, in American Interest, describes Putin’s announced run for president as the “Russian decision to take off the Medvedev mask and put Prime Minister Putin back in the top spot.”

Putin’s efforts to become president once again have put the United States in a difficult position.  There are diplomatic conflicts with Russia and there are personal conflicts with Putin.  But there are also areas of agreement and mutual benefit.  Neither the United States nor Russia wants China to dominate Eurasia.  Neither wants Islamic fundamentalists to destabilize the region. 

Russia, led mainly by Putin, has used its excess of natural resources to gain influence with multiple Western countries.  As Peters states, “seduced by Kremlin policies—from oil and gas concessions to cynical hints of strategic cooperation—Western leaders have too many chips in the game.”  The United States and other Western countries are now dependent on Russia for natural resources, geopolitical stabilization, and United Nations support.  But they must now deal once again with Vladimir Putin.

Putin’s popularity in Russia is more one of image than policy.  According to Peters, he has “renewed Russia’s confidence in the country’s greatness.”  He is loved and admired because he is a nastoyashi muzhik, a “real man.”  A Putin presidency may be great for Russian morale, but is it good for the world?