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? 

9/11, Ten Years Later

Sunday marks the 10^th anniversary of the terrorist attacks on September 11, 2001.  As Christopher Hitchens stated recently in Slate, “10 years ago in Manhattan and Washington and Shanksville, Pa., there was a direct confrontation with the totalitarian idea, expressed in its most vicious and unvarnished form.” On that day, as W.H. Auden put it in 1939, “the unmentionable odour of death/ Offend[ed] the September night.”  

It is important in this time of reflection and introspection to both honor the memories of those lost and contemplate where we’ve been and where we’re going.  Much has changed in the last ten years, both in the United States and abroad; the future success or failure of our country will be determined by the decisions made in the next few months and years. 

In September, 2001 the American economy was recovering from the bursting of the dot com bubble but still remained on a solid financial and political foundation.  The housing and construction industries were booming, corporations were enjoying substantial liquidity, and inflation and unemployment remained low.  Although the 2000 presidential election was as contentious as any in recent history, the government enjoyed a budget surplus and relative bipartisan enthusiasm.

During the Clinton years and the beginnings of the Bush Administration, the United States enjoyed stability in foreign affairs, disrupted only by small-scale conflict in Bosnia, Kosovo, and Iraq. 

But the world has drastically changed in the last ten years.  In technological terms, the United States has almost entirely completed the transformation from an industrial power to an economic system dominated by technological innovations, financial dealings, and hyper-compartmentalized knowledge industries. 

As New York Times columnist Thomas Friedman whimsically stated on Meet the Press, ten years ago “Facebook didn’t exist.  Or for most people it didn’t exist.  Twitter was a sound.  The Cloud was in the sky.  4G was a parking place.  Linkedin was a prison.  Applications were something you sent to college.  And, for most people, Skype was a typo.”

In many ways, the attacks on 9/11 have altered the military fabric of the world in a way analogous to the way technological innovations have completely altered the social fabric of our country.  They are obviously not equivalent in their ramifications, but understanding the extensive challenges we are facing is crucial, else we are deemed to repeat the mistakes of the past.

We are still mired in conflicts of astounding financial and personal cost.  The American political system is in a constant state of gridlock, our bond rating has been downgraded, and the budget deficit has skyrocketed in the past ten years.  We are at a crossroads; our leaders are, at this moment, debating if and how we can break out of this funk. 

Republican presidential candidates, such as Jon Huntsman and Mitt Romney, have proposed their own jobs plans—including capital gains cuts, tax reform, increased drilling and free trade agreements—and President Obama proposed his plan on Thursday.  They have also discussed and debated multiple perspectives on the foreign entanglements in Iraq and Afghanistan.

We can debate amongst ourselves the ideal solution to the issues we face.  Does government have the ability and the responsibility to solve this economic crisis through more stimulus spending, infrastructure projects and education investment?  Does the private sector have the main responsibility and greatest aptitude to create jobs and alter our economic system?  Should the United States completely end its involvement in the wars in Iraq and Afghanistan?

What is unacceptable as a country is to do nothing.  Al Qaeda sought, on September 11, to disrupt and destroy the American military, political, and financial sector while simultaneously inflicting the most significant loss of life possible.  The effects were disastrous, but the fabric of our country survived, for a time. 

Lacking decisive action, our country is on a path toward failure—and by extension victory for al Qaeda—but we still have hope.  Al Qaeda is driven by a totalitarian, anti-American ideal which Hitchens describes as “the big lie.”  Abraham Lincoln commented that “America will never be destroyed from the outside.  If we falter and lose our freedoms, it will be because we destroyed ourselves.”  

Now, ten years after that tragic event, is our opportunity to once and for all declare victory.  The attacks on September 11^th “reordered and distorted the decade that followed” as David Remnick put it in The New Yorker.   The best way we can honor the memories of the fallen and defeat the “big lie” of totalitarian hate is for our politicians to set us on a path toward financial, military and political sustainability in the decade to come.  All that is required is political will.     

Winners and Losers from the GOP Presidential Debate

Wednesday night’s debate was the much anticipated debut of newly crowned Republican front runner Rick Perry.  From the beginning, two things became obvious.  First, it is not only the press but the rest of the Republican field that views Perry as the frontrunner, evident by the constant barrage of criticism from the other candidates.  Second, the main competition, for better or for worse, is and will continue to be between Perry and Mitt Romney.

From the get go, Romney and Perry engaged in a political pissing/spitting contest about their records as governors and their plans for job creation.  Perry touted his record as the 4^th ranked job creator among governors in the United States and Texas’ record as the top job creating state during the current recession.  He then criticized Romney’s record as the 47^th ranked job creator among US governors during his tenure.

Romney responded by explaining the difficulties the state of Massachusetts faced at the start of his term and the positive steps he took as governor, creating jobs at a faster rate than the national average.  He also touted his private sector experience in creating and optimizing companies around the world.  He then pointed out that a large percentage of the jobs created in Texas are the result of their surplus of natural resources, not Perry’s policies or leadership, and that Texas has the highest rate in the country of jobs at or below the minimum wage. 

Jon Huntsman, the former governor of Utah and perennial voice of reason, chimed in that Utah was the 1^st ranked job creating state during his tenure, but that did not detract from the Romney/Perry rivalry. 

By the end of the debate, the hierarchy of candidates became much more clarified.  Romney and Perry maintained and even solidified their position as the top tier of candidates.  Considering the setting and the crowd, they both presented strong arguments in favor of conservative positions on jobs, immigration, health care and defense.  They were both winners of the debate and will now attempt to spin the results more in their own favors using it as a springboard to future debates and appearances in Iowa, New Hampshire, South Carolina and around the country.

Michelle Bachmann and Ron Paul presented strong arguments but failed to make a statement in terms of policy positions or memorable rhetorical flourishes.  Both, in my opinion, did more harm than good.  Paul further reduced himself to the periphery by arguing that the FDA, TSA and Air Traffic Control are unnecessary government agencies.  Bachmann was simply outshined in her conservative, Tea-Party message by Perry who is now funneling her support to his own campaign.

Rick Santorum and Newt Gingrich are most likely on the verge of dropping out of the race.  They simply do not have the financial and electoral support to continue the rigorous process of campaigning for elected office.  Gingrich, by making multiple attempts to claim unity among the candidates and defend against supposed efforts by the media to divide them, gave off the impression that he was above criticizing his fellow candidates and ready to get behind the eventual nominee.  This is not the attitude a real player in the Republican primary should have.

The two remaining candidates, Jon Huntsman and Hermain Cain, are both polling in the low single digits but made positive strides on Wednesday night.  Cain articulated coherent policy positions (whether or not they would be beneficial or passable is another story) and Huntsman continued to position himself as holding the rational middle ground.  Unlike some of the other candidates, however, Huntsman sounded more presidential; he did not stoop to the personal attacks and criticisms like the other candidates did and he made real, useful references to his past experiences as Ambassador and government official in four presidential administrations.  Because of the financial support both maintain, they are likely to remain in the race at least through the New Hampshire primary and have the potential to gain support in the next few months.

Very little was said in the debate that was at all novel.  It was simply part of the process of whittling down the field and creating a coherent message for the coming months.  Tonight is the Democrats’ turn, with President Obama giving his jobs speech, but it’s also opening night for the NFL…