Sunday, December 12, 2010

Why Constitutional Conservatism Is Ascending

If 2009 was the year of birth of the Tea Party movement, 2010 was the year of ascendancy of constitutional conservatism. In many ways, the movements are the same -- except, perhaps, that the Tea Party is a movement of political activism by people who weren't traditionally activists, and constitutional conservatism represents an awakening about the way back to American exceptionalism.

For conservatives to emphasize constitutionalism is nothing new. The greater emphasis, however, is a bit of branding that helps distinguish them from establishment Republicans who stole the brand "conservative," or those whose policies are constitutionally limited only some of the time.

You know constitutional conservatism is on the right track when the liberal literati (Lincoln Caplan) and dimwiterati (Randi Rhodes) criticize it.

More than ever, people now sense that the country is in decline because America has moved away from its true constitutional structure of government. As stated previously, the Constitution is the law that governs government. It is a limitation on government power as much as a grant of certain power.

It is the limitation part that is the Constitution's core, which is why liberals and the ruling class can't or won't wrap their heads around constitutional conservatism. The Democratic Party, taken over by social Democrats, and the Republican Party, whose leaders like to call themselves Reagan conservatives but became the old Democratic Party, failed to honor the limitations.

Federal agencies were given power to intrude on private property rights in the name of regulation for the public good. Free markets ceased to exist and were replaced by crony capitalism partnered with big government. The nonprofit sector, religious organizations, and other institutions became additional partners with government, and they had little or no regard for the Constitution except as it protected them -- and even then, they were willing abettors in its erosion.

The ascendancy of constitutional conservatism is a result of people's belief that restoring the Constitution is the only way we can save the country from becoming like the European nations.

Gordon Wood's The Creation of the American Republic, 1776 - 1787 is a marvelous depiction of the formation of the American Constitution as a response to the ruling-class nature of Europe at the time. Angelo Codevilla's brilliant book and article, America's Ruling Class, show that we've become much like the Europe of the time of our nation's constitutional creation.

We have watched more or less passively for decades as government has broken the law that governs it. Constitutional conservatives understand that America's exceptional nature is a direct result of the principles of our Declaration of Independence and the structural safeguards of our Constitution. We now understand that many or most of our national deficiencies can be attributed to the government's having broken our paramount law.

The divisions of power created by the Constitution were designed to provide a system of order that protects freedom. As importantly, the divisions of power were intended to protect private property rights and the bounty that flows from private property. The erosion of the Constitution as a strict structure has resulted in a loss of rights that are the key to our moral and financial well-being. A return to American exceptionalism requires a return to our constitutional structure.

Constitutional conservatism means that powers not delegated expressly to the federal government are indeed reserved to the states or to the people, which means that even conservatives must be restricted in the agendas they wish to accomplish at the federal level.

It means that constitutional conservatives will look to scale back government that has exceeded its legal limits -- first by reducing the powers of federal branches and agencies to their rightful places, and then by eliminating agencies not consistent with powers authorized by the Constitution and returning those controls back to the states.

Conservatives, including our best leaders, may not always articulate these notions perfectly, which is why the liberal literati are tempted to be derisive. With the national debt and the decay of our institutions, however, we are insolvent. The solution to insolvency is to restructure. The Constitution provides the structure for a return to exceptionalism.

The steps won't always be clear, certain or without dispute and debate, but as long as the direction is true, it can be done.

Fortunately, discussions of constitutionalism are no longer restricted to the writings of law professors or debates among lawyers. Books like Mark Levin's Liberty and Tyranny and Who Killed the Constitution? by Thomas Woods and Kevin Gutzman helped popularize the notion that the country's current downward path is directly attributable to the deterioration of our constitutional structures and protections.

Americans are reading, discussing, and emphasizing the Constitution like never before. They are, so to speak, forcing it upon elected officials, who despite their oaths to uphold the Constitution, often considered it as an afterthought or inconvenience.

Liberals and social Democrats understand, of course, that constitutional conservatism threatens their paradigm, which is why they attempt to mock it as akin to and, in their world, as dangerous as religious fundamentalism.

This is why we need even more elected officials who articulate the vision of constitutional conservatism and what impact it will have. The 2010 election was a bit of a hastily designed test run. If in the 2012 election conservatives become more facile in their explanations of constitutionalism and how it will help America return to exceptional status, then we will truly see an autopsy of liberalism.



Obama's love-letter to the UAW

Several recent revelations bring home just what a cesspool of crony capitalism the American auto industry has become. The Obama administration and the UAW (Obama's major financial and political supporter) are running the show.

First is the news that the "new" GM walked away from the crony bankruptcy proceedings with a huge tax break -- one worth up to $45 billion. It was revealed in the paperwork filed for its IPO that the Obama administration gave the new GM a sweetheart deal: it will be allowed to carry forward huge losses incurred by the "old" GM prior to its bankruptcy. Of course, the IRS doesn't allow the new companies that emerge from bankruptcy to write off their old losses. But the feds decided to waive that rule for companies bailed out by TARP.

Thus, the new GM will save about $45.4 billion in taxes on future earnings, which may allow it to escape taxes for the next twenty years. This "tax-loss carry-forward" is a huge plum, an asset most of GM's rivals don't have, and one that no doubt led to its artificially high IPO stock price.

This brings up the second revelation: namely, the machinations by the Obama administration during the IPO that consciously helped the UAW make out like bandits.

The UAW was given a big chunk of new GM in the crooked bankruptcy settlement. To be precise, the very monster that drove GM off the cliff -- the UAW -- received 35% of the stock in the new company. With the sale of the stock in the new GM, the UAW earned an immediate $3.4 billion in selling about one third of its shares.

Moreover, if the UAW can get $36 per share for the other two-thirds of its shares, it will walk away breaking even -- meaning it will walk away with its outrageously bloated pension and health care fund fully intact. The taxpayer, on the other hand, hasn't fared well at all.

In fact, the Obama administration screwed the taxpayer just as thoroughly as it pampered the UAW. The taxpayer put $49.5 billion into GM in the bankruptcy, not to mention all the funds shoveled at the company prior to that. The Treasury recouped only a wretched $13.7 billion in the IPO, mainly because the Obama administration -- in yet another unprecedented gift to the union -- announced publicly that it would not sell any more stock for the next six months. This enables the UAW to dump its shares whenever it wants at a much higher price than it could get if the Treasury were also selling. The taxpayers will almost certainly get a lower payout, and they will never recoup their forced investment in these dinosaurs -- all to enable the UAW to walk away made whole.

Screwed even worse were the old secured creditors -- you know, the ones near the front of the line in bankruptcy filings way back when America was governed by the rule of law. The bondholders in the old GM have bonds as useful as scratch paper. (I won't mention the stockholders in the old GM, because stockholders -- who are only the legal owners of a company! -- typically got nothing in bankruptcy.)

The Obama administration car czar, who engineered the crony bankruptcy -- the aptly named Steve Rattner -- claims that the secured creditors would have received nothing in a standard bankruptcy anyway. But his claim is ludicrous on its face: in a regular bankruptcy, the union contracts that caused GM's and Chrysler's failure would have been nullified, and the substantial assets of the companies (plants, inventory, receivables, land, patents, etc.) would have been worth a substantial amount to other automakers and investment companies. The proceeds would have gone to satisfy the bondholders at least to a fair degree.

The third recent revelation about the U.S. automakers was the news that the Obama administration changed the purchasing of vehicles for the federal fleet dramatically; again, apparently to benefit its supporters.

It turns out that the administration itself has purchased a huge, unprecedented chunk of American-made hybrid cars assembled since it took over two of the loser companies. This has propped up the sales of hybrid cars in the face of widespread consumer indifference.



Let's not settle for the big-government status quo


The publication of the findings of the president's National Commission on Fiscal Responsibility and Reform was indeed, as the report was titled, "A Moment of Truth." The report shows we're much closer to the budgetary breaking point than previously assumed. The Medicare Trust Fund will be insolvent by 2017. As early as 2025, federal revenue will barely be enough to pay for Social Security, Medicare, Medicaid and interest on our national debt. With spending structurally outpacing revenue, something clearly needs to be done to avert national bankruptcy.

Speaking with WSJ's Jerry Seib, Congressman Paul Ryan (R, WI) insisted that the deal between Republicans and the White House on the Bush Tax Cuts was not a second stimulus and that the agreement would promote growth despite adding to the deficit.

The commission itself calculates that, even if all of its recommendations are implemented, the federal budget will continue to balloon—to an estimated $5 trillion in 2020, from an already unprecedented $3.5 trillion today. The commission makes only a limited effort to cut spending below the current trend set by the Obama administration.

Among the few areas of spending it does single out for cuts is defense—the one area where we shouldn't be cutting corners at a time of war. Worst of all, the commission's proposals institutionalize the current administration's new big spending commitments, including ObamaCare. Not only does it leave ObamaCare intact, but its proposals would lead to a public option being introduced by the backdoor, with the chairmen's report suggesting a second look at a government-run health-care program if costs continue to soar.

It also implicitly endorses the use of "death panel"-like rationing by way of the new Independent Payments Advisory Board—making bureaucrats, not medical professionals, the ultimate arbiters of what types of treatment will (and especially will not) be reimbursed under Medicare.

The commission's recommendations are a disappointment. That doesn't mean, though, that the commission's work was a wasted effort. For one thing, it has exposed the large and unsustainable deficits that the Obama administration has created through its reckless "spend now, tax later" policies. It also establishes a clear bipartisan consensus on the need to fundamentally reform our entitlement programs. We need a better plan to build on these conclusions with common-sense reforms to tackle our long-term funding crisis in a sustainable way.

In my view, a better plan is the Roadmap for America's Future produced by Rep. Paul Ryan (R., Wisc.). The Roadmap offers a reliable path to long-term solvency for our entitlement programs, and it does so by encouraging personal responsibility and independence.

On health care, it would replace ObamaCare with a new system in which people are given greater control over their own health-care spending. It achieves this partly through creating medical savings accounts and a new health-care tax credit—the only tax credit that would be left in a radically simplified new income tax system that people can opt into if they wish.

The Roadmap would also replace our high and anticompetitive corporate income tax with a business consumption tax of just 8.5%. The overall tax burden would be limited to 19% of GDP (compared to 21% under the deficit commission's proposals). Beyond that, Rep. Ryan proposes fundamental reform of Medicare for those under 55 by turning the current benefit into a voucher with which people can purchase their own care.

On Social Security, as with Medicare, the Roadmap honors our commitments to those who are already receiving benefits by guaranteeing all existing rights to people over the age of 55. Those below that age are offered a choice: They can remain in the traditional government-run system or direct a portion of their payroll taxes to personal accounts, owned by them, managed by the Social Security Administration and guaranteed by the federal government. Under the Roadmap's proposals, they can pass these savings onto their heirs. The current Medicaid system, the majority of which is paid for by the federal government but administered by the states, would be replaced by a block-grant system that would reward economizing states.

Together these reforms help to secure our entitlement programs for the 21st century. According to the Congressional Budget Office (CBO), the Roadmap would lead to lower deficits and a much lower federal debt. The CBO estimates that under current spending plans, our federal debt would rise to 87% of GDP by 2020, to 223% by 2040, and to 433% by 2060. Under Rep. Ryan's Roadmap, the CBO estimates that debt would rise much more slowly, peaking at 99% in 2040 and then dropping back to 77% by 2060.

Put simply: Our country is on the path toward bankruptcy. We must turn around before it's too late, and the Roadmap offers a clear plan for doing so. But it does more than just fend off disaster. CBO calculations show that the Roadmap would also help create a "much more favorable macroeconomic outlook" for the next half-century. The CBO estimates that under the Roadmap, by 2058 per-person GDP would be around 70% higher than the current trend.

Is Rep. Ryan's Roadmap perfect? Of course not—no government plan ever is. But it's the best plan on the table at a time when doing nothing is no longer an option.

Let's not settle for the big-government status quo, which is what the president's commission offers. We owe it to our children and grandchildren to make these tough decisions so that they might inherit a prosperous and strong America like the one we were given.



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The Big Lie of the late 20th century was that Nazism was Rightist. It was in fact typical of the Leftism of its day. It was only to the Right of Stalin's Communism. The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)


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