Monday, May 14, 2012

The New Radicals: Democrats

My new piece at Daily Caller looks at how the Democratic Party’s approach to tax policy has changed over the decades.

The piece was prompted by a recent article from Norm Ornstein and Tom Mann claiming that needed bipartisan reforms are being blocked by the new “ideologically extreme” Republican Party.

Baloney. It’s the Democrats who have changed. The party’s leaders have moved far to the left on economic issues.

As evidence, I point to this Cato Journal article from 1985 by Democrat Richard Gephardt, who was a leader on tax reform. As a free-market guy, I agree with the great majority of what Gephardt said, yet I agree with virtually nothing that modern Democratic leaders say about tax policy.

Regarding ridding the tax code of special breaks, Gephardt says, “I confess that I am not qualified to act as a central planner and I do not know anybody on either committee who is.” Amen!

And Gephardt says, “We in Congress take pride in the free market system.” When was the last time you heard a Democratic leader say something like that?



The Average White Guy Vote

CANTON, Ohio-Rudy is the quintessential average white guy, right down to his last name. "It literally is Guy," he said, laughing at the irony.

Born in New Eagle and raised in Charleroi in Pennsylvania's Monongahela Valley, Guy comes from a long line of Democrats. "My grandfather worked at Corning Glass, my father worked in the mines, the steel mill and finally at Corning," he recalled. "The family always had union ties, and that usually meant a tie to the Democratic Party."

That's no longer true for him, however: "As my life started to improve financially, I realized that unions seemed to be damaging the economy and Democrat legislation always seemed to impact my wallet."

Guy lives in a Canton suburb lively with soccer fields, businesses, car cruises and recycling programs. He has a blended family of six daughters and one son; his wife, Cheryl, is a nurse and a registered Democrat.

His story is not much different than that of those West Virginia Democrats who protest-voted for a convicted felon over a sitting president in last Tuesday's state primary.

The problem for President Barack Obama and down-ticket Democrats on November's ballot is that average white guys aren't just found in West Virginia; they're in Ohio, Pennsylvania, and other states, too, and they can tip this fall's election.

According to Gallup's latest battleground numbers, Obama's main electoral strengths are with voters who are nonwhite, nonreligious, single or postgraduates. Republican Mitt Romney's strength is with white voters, particularly men, those who are religious, and those who are 30 or older.

Romney leads Obama with white male and female voters and does significantly better among men, 59 percent to 32 percent.

Among white women, Romney leads by nine points, 50 percent to 41 percent.

Rudy Guy says Obama has lost his registered-Democrat wife's vote: "Cheryl and I pretty much see eye-to-eye on the Republican Party's legislation direction."

Some Democrats like to portray the GOP as a party of white, middle-class, married Christian men. Interestingly, the president, who ran as someone who would unite the nation, has disconnected with the next largest plurality in the electorate behind women - white guys, men who once were the backbone of the Democratic Party.

These are the men whose skills include fixing the wiring in your home, mining the coal that supplies 82 percent of Ohio's and 48 percent of Pennsylvania's electrical power, and running the small businesses that keep our communities (and other small businesses in them) rolling along.

They make the widgets and fix the computers we use, own the lawn-care companies that tend to our neighborhoods and schools, volunteer as our children's coaches, and attend church probably less often than they would like because of work or community commitments.

They are the sons, grandsons and great-grandsons of European immigrants whose commitment to work, family and God all held equal priority. College either was not an option or was skipped so that they could use their hands and their ingenuity to become gainfully employed.

Many also are employees of what today appears to be the next great economic frontier - the energy industry. Yet, oddly, they are ignored by Democrats, or used by the president to sell class warfare in his re-election campaign.

They did vote for him in 2008 - but the polls suggest they are not coming back this time.

The loss of the average white guy is why you see President Obama devoting so much effort on trying to encourage the college-educated young to vote, said Mark Rozell, political-science professor at George Mason University. "He needs to offset substantial losses among predominantly white, non-college-educated men who are a big component of those left behind by the struggling economy," Rozell explained.

And the quintessential example of that is Canton's Rudy Guy.

"It seems to me that Obama is intent on punishing anyone who is employed with a job over minimum wage," Guy said. "In the last three years, I've seen my spendable income drop, my cost for health-care insurance go up, and my benefits go down.

"Three years ago the question was, 'Are you better off now than when Bush took office?' Most of us weren't. But am I better off today than when Obama took office?"

His answer is simple: "No."



The real solution to high gas prices

In these tumultuous times, Americans seem to have trouble finding common ground. But it’s safe to say that most of us can agree that gasoline, at around $4 per gallon, is uncomfortably expensive.

The law of supply and demand would seem to suggest an effective solution to our problem. An increase in long-term supply would lead to a long-term drop in prices.

But that’s far too cut-and-dried for President Obama. “There are politicians who say if we just drill more, gas prices will come down,” he told reporters recently. That won’t work, he insisted, because Americans “use more than 20 percent of the world’s oil and we only have 2 percent of the world’s oil reserves.”

His preferred approach: greater federal intervention in oil markets.

The president wants to spend more than $50 million to hire more bureaucrats at the Commodity Futures Trading Commission. Obama calls that putting more “cops on the beat.” Here’s the problem with that approach: you can have as many cops as you want, but unless someone’s breaking the law, there’s nobody for them to arrest.

And there’s no evidence anyone is manipulating gas prices.

Last year, for example, the nation’s “top cop,” Attorney General Eric Holder, empaneled a working group to “explore whether there is any evidence of manipulation of oil and gas prices.” Holder hasn’t bothered to release a report, but it’s safe to say that he would have done so if his task force had identified any potential wrongdoing.

Just about every time gas prices go up, lawmakers demand an investigation into “price gouging.” And the results, time and again, come back negative. For example, in the aftermath of Hurricane Katrina, the Federal Trade Commission investigated and “found no instances of illegal market manipulation that led to higher prices during the relevant time periods.” Other federal investigations over the years have reached the same conclusion.

Oil prices go up, and they come back down again. The increases are usually driven by a jump in demand, and the decreases are usually triggered by a jump in supply.

In early 1998, for example, oil-exporting countries ramped up production in the belief that prices were destined to remain high and that they could earn even higher profits by producing more oil. Instead, a recession in Asia led to an oversupply of crude, and the price tumbled to about $10 per barrel.

Over the years prices increased again, until something similar happened four years ago. The rise of China and years of economic growth drove the price of oil higher and higher. Crude topped $147 per barrel in July of 2008. Then, in the face of worldwide recession, it plunged. By Christmas it was as low as $32 per barrel.

So while prices are indeed high right now, it seems likely that, by the time Obama’s extra bureaucrats could even be hired, gas prices will have cycled down again.

In fact, it’s federal intervention that tends to foul up markets. In his book “The Quest,” energy expert Daniel Yergin explains that price controls, implemented under Richard Nixon in the early 1970s, didn’t help consumers.

“They did succeed in creating a whole new federal bureaucracy, an explosion in regulatory and litigation work for lawyers, and much political contention,” he writes. “But the controls did little for their stated goals of limiting inflation – and did nothing for energy security.” Not surprisingly, oil prices tumbled after President Reagan lifted price controls, which he did with his first executive order.

President Obama is certainly correct that drilling more today wouldn’t instantly decrease oil prices. It takes years, after all, to bring a new well online and begin generating oil from it. As former Shell Oil president John Hofmeister puts it, oil companies think in “energy time,” while our national leaders think in “political time.”

By blocking construction of the Keystone XL pipeline and by limiting offshore oil exploration, for example, the Obama administration has shown it’s more interested in rewarding its radical environmentalist supporters than in adding to future oil supplies.

The entire country will pay more for fuel because of those decisions in the years ahead: that’s “energy time.” Meanwhile, attacking non-existent price gougers happens in “political time.” Will voters allow the president to get away with such transparent pandering? Only time will tell.



Employers could save billions by switching workers onto Obamacare (and the taxpayer)

A new survey of Fortune 100 companies finds that the health care overhaul, contrary to the claims of its authors, created some perverse incentives for employers to drop workers from company insurance plans.

Republicans on the House Ways and Means Committee surveyed the top 100 companies about how much they spent on health care -- a total of 71, covering 5.9 million employees, responded. The results suggested it would be far more attractive for companies to drop workers from those plans than keep them.

Even after paying a penalty of $2,000 per employee, the companies stand to save $28.6 billion in 2014 alone by shifting employees to health insurance exchanges governed by strict federal standards. The companies stand to save more than $422 billion over the first 10 years of the law by doing this.

"The penalties for the employers who drop coverage are very low, and the subsidies for the workers in the exchanges are very high," said James Capretta, with the Ethics and Public Policy Center.

If the companies indeed take this step, the move would fly in the face of pledges by the law's backers, including President Obama, that U.S. workers would not lose their employer-provided health plans.

Shifting over to the insurance exchanges, while potentially a hassle for employees who had that decision mostly taken care of at their jobs, might not necessarily be a bad thing. The new exchanges would offer several choices of plans, and workers would get generous federal subsidies -- which only phase out at about $88,000 income.

The exchanges could be attractive to both employers and workers. That is especially true of small employers. Many companies would not want to be the first to drop coverage, but if a competitor did, others might feel compelled to follow suit, causing a snowball effect.

The higher cost of subsidies, though, would fall on the taxpayers.


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