Three Plank Platform

The unrealized book-length project I mentioned in my Overview post was intended to promote a particular set of solutions to our problems in a simple, easy-to-assimilate form in much the same way as that of candidate Herman Cain’s 9-9-9 Plan, while yet having a somewhat different and more all-encompassing set of proposals. It is now up to this blog to perform that function, so it is incumbent on me to at least present the Three Plank Platform to you in this special page.

While it would appear superficially to deal with economic matters, the Platform actually would go a long way toward solving a multiplicity of problems relating to government over-reach and implement a whole host of reforms by its implementation.

It is a three-pronged approach which addresses  three major subjects: taxation, budgets, and money. I advocate a retreat from coercion in taxation by stepping back from the brute force of the income tax to a national sales tax instead. I outline a scheme for getting to a balanced budget in some reasonable time frame, and I include some enforcement mechanisms. Last, unlike almost all the candidates, I insist on dealing with the problem of manipulation of the money supply, suggesting several alternatives which remove human judgement from the picture and provide a stable currency in a way that does not involve the constant inflation to which we have become accustomed.

The document as originally conceived follows:

 

THE THREE PLANK PLATFORM

1. Constitutional amendment to abolish the income tax and the Internal Revenue Service, to be phased out in three (3) years time, and replaced with a national sales tax which is not required to be revenue neutral. Initial sales tax rate not to exceed 15%.[1] No additional sales, excise, value-added or other transaction-oriented or consumption-oriented taxes permitted. No national property taxes permitted. Sales tax rate increase requires 75% super-majority in Congress. Food, housing  costs, and medical care exempt from tax, otherwise no rebates for low income. Everybody benefits from the legitimate functions of government, so everybody pays something. [ Principles which this implements: (1) Set a tax rate which provides reasonably for the funding of the enumerated powers, not the Leviathan government of today; (2) Quit using the tax system to manipulate citizens’ behavior; ( 3) Move away from a highly coercive, confiscatory tax system to a less coercive tax on consumption; (4) Force representatives to prioritize spending within a fixed and limited budget.]

2. Constitutional  amendment to provide for a balanced federal budget for periods of one year or greater; expenditure total to be limited to 18%[2] of GDP. Includes provision for presidential line-item veto on spending items. President required to utilize  this power to balance budget if Congress fails to do so. Changing  expenditure percentage limitation  requires 75% super-majority as above. [ Principles which this implements: (1) Live within your means–don’t spend more than you have; (2) Utilize powers of different branches to enforce provisions; (3) Set a high bar for changes to provisions considered fundamental.] [3]

3. Control over supply of money: Federal Reserve to be abolished and replaced by a gold or multi-metal standard, or, alternatively, its role reduced to administering a multi-commodity or other econometric index with a fixed, legislatively-determined  impartial algorithm which will expand or contract the money supply based on the performance of the aforementioned index. Personal judgement and political influence to be removed from this process. Stated goal to be small, but consistent GDP growth in 3-4% band with absence of periods of negative growth ( “recessions”); no additional considerations, e.g. “full employment”, price “stability”, etc. are to be  goals of this methodology. [Principle to be implemented: Don’t allow the government to continue to do what individuals cannot legally do, i.e. print counterfeit money. This ability serves no one but those in government and the banking cartel.]

(Note: There already exists one such algorithm developed by the well-known economist John B. Taylor, and called by others “the Taylor Rule”—see his book on the recent economic crisis entitled “Getting Off Track, How Government Actions and Interventions Cause, Prolonged, and Worsened the Financial Crisis”. See page 3.)

[1]. The selection of 15% in the text is arbitrary; the actual percentage would be determined before drafting the amendment by an analysis of existing spending in light of the enumerated powers, and setting a rate that would likely accomplish that  permitted level of spending; one expects that the final rate would be in the range of 10-18%.

[2]. Again, the 18% figure is not firm; I chose this because it is approximately the same as the long term trend of federal revenue, and we are saying that expenditures should not exceed the revenue in Plank No. 2. See the figure below. I am indebted to Walter E. Williams of George Mason University for pointing out that a balanced  budget amendment without a spending cap is but an invitation to raise revenue instead of cutting expenditures.

[3]. The constitutional amendments, and in particular the balanced budget amendment must take  special care to avoid what some critics will insist is inevitable—that the judiciary will, by means of construction and interpretation, whittle away at the provisions until they are moot. To prevent this outcome involves extremely careful crafting, and especially, it needs to provide in the body of the amendment various definitions of terms which are otherwise open to interpretation. For example, the balanced budget amendment needs to define up front the terms “budget”, “tax”, “expenditure”, etc. so that it is extremely difficult to weasel out of the amendment’s intentions. This follows the general format for creating an ironclad contract. It would make for wordy amendments, but the results demand it.

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Now I realize that calling for constitutional amendments for Planks 1 and 2, and perhaps even 3, is a tall order, however, it is what qualifies these proposals as radical, as going to the root of the problem. It would be necessary to additionally pass all these provisions in the form of interim legislation, while waiting for ratification of the amendments. It must be the case that these changes, if the necessary majorities can be mustered, be made institutionally in a way that protects against the next generation of Progressive politicians from undoing these reforms.

A thought experiment: what if Romney ( or indeed some other Republican) had espoused such a set of proposals, instead of the insipid and mostly unwise five point program he put forth?

Consider also the following:

Senior Fox News Analyst Brit Hume, speaking on  the Fox News Sunday with Chris Wallace program, July 18, 2010—

“My hunch is that the country is ready in a way that it has never been in my time covering Washington because it is so alarmed about the debt and the deficit that they are ready for somebody with a serious program and it just might turn out that the more serious it is, the tougher it is, even indeed the more controversial it is, the better it will be for them politically. I am not sure that that’s true, but I have a hunch that it may well be, this time…” [italics added]

I believe that Brit Hume’s judgement could well have been vindicated with the right candidate and the will to be more radical…we’ll never know.

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