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Affluent Christian Investor | August 23, 2017

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A Party Maverick Like Cruz Or Paul Will Trump An Outsider Like Trump

U.S. Senator Randal Howard 'Rand' Paul

U.S. Senator Randal Howard ‘Rand’ Paul

The Daily Beast’s Michael Tomasky, one of the shrewdest political observers on the center left, recently laid out the key clue by which to solve the biggest riddle of the 2016 race:

The Republican Party has unleashed furies it can no longer remotely control.

The Tasmanian Devil candidate [Donald Trump] who’s obviously tapping into deep right-wing anti-establishment anger and the two other most extreme candidates [Ted Cruz and Ben Carson] combine for 47 percent. The two who in my view you can reasonably call quasi- or comparatively moderate, Kasich and Bush, combine to hit 9 percent.

Add Rand Paul’s voter base to the “anti-establishment” camp (where Sen. Paul belongs). Add in, too, Carly Fiorina. The anti-establishment majority becomes really substantial.

Tomasky declares: “[E]verything we’ve known and assumed about our political divide is now moot, and we’re flying totally blind.”   There is an irony here. Tomasky, in his characteristically Sherlockian way, by noting the anti-establishment numbers, just pulled off our blindfold.

So now let’s make sense out of the phenomenon that has baffled political observers, both players and pundits. To do so first we must dispel a subtle misdirection in Tomasky’s Clue: the assumption that the Republican Party has “unleashed furies it can no longer remotely control.”

Dispel that and here’s what we see: Insider-Outsiders, mavericks like Cruz and Paul, rather than the pure Outsiders like Trump, soon will be taking the presidential lead.

Here’s where Tomasky is misdirected.  The furies were not “unleashed” by the GOP. The phenomenon we are observing isn’t confined to the GOP.  As The Washington Post prominently featured recently focusing on both Trump and the surging Bernie Sanders: It’s not just Trump: Voter anger fuels outsider candidates:

The surging candidacies of Donald Trump and Bernie Sanders are fueled by people’s anger with the status quo and desire for authenticity in political leaders. Across the ideological spectrum, candidates are gaining traction by separating themselves from the political and economic system that many everyday Americans view as rigged against them.

Or as I earlier wrote at Forbes.com:

Many voters consider America to be on the wrong track. CNN reports “just 30% of registered voters nationwide say they feel their views are well represented by the government in Washington, while 40% say they are not represented well at all. That figure spikes among Republican and Republican-leaning voters.”

The phenomenon is bipartisan.  And it is legitimate voter reaction, not the result of toying with sinister forces. The GOP no more “unleashed furies”  — by which Tomasky presumably means the Tea Party and conservative activist base (e.g., me) — than did the Democratic Party unleash Occupy Wall Street.

We unleashed ourselves.  Meanwhile, the impetus behind both movements lingers on, unresolved, ready to reactivate. And here we come.

I participated in both. They were organic reactions by the citizenry against a political establishment that is out of touch both with our interests (prosperity) and our values (fairness).  GOP unleashed? The Congressional leadership routed — in the word of Leader McConnell, “crushed” — the GOP’s populist insurgents at the ballot box in the last Congressional election. That is rather the opposite of “unleashed.”

As an aside, Tomasky’s choice of the word “furies” is beautifully apt. In classical mythology the Furies were “those who beneath the earth punish whosoever has sworn a false oath.” (h/t Homer) We do better to show due respect to Alecto, Megaera and Tisiphon (h/t Virgil) rather than siding with those who have broken their oath to “faithfully discharge the duties” of their offices.   Surely representing the interests and values of those who elected them is of the essence of the oath of office.

The Furies are manifesting, again.  This should not really surprise Tomasky, also a columnist for the New York Review of Books who thus can be presumed to know his Aeschylus.

Cue the primary campaign. The candidates also (more closely than the rest of us) read the polls.  Any of the contenders easily can, at this early date, pick up on the issues really driving voter dissatisfaction. Any contender still can, by presenting credible solutions, rather than simple outrage, preempt the Outsiders.  One will.

The #1 and #2 issues on the mind of the voters are job creation and economic growth.  Gov. Bush seized first mover advantage in demanding 4% economic growth.

Gov. Bush’s declaration came under the rather withering scrutiny of Reuters. Reuters reported 4% as an “off the cuff” notion. It is what Silicon Valley calls “vaporware” — an announcement meant to preempt potential rivals without a real product to back it up.  Gov. Bush also is vulnerable to charges that he relies on his brother’s mandarins and on the George W. Bush Institute.

The record of job creation and income mobility for both Presidents Bush was, to put it kindly, undistinguished.  Reliance on their legacy undermines Gov. Bush’s cred. Gov. Bush can and, if he wishes to win, must be his own man.  He must chart his own course. He can do so without familial disloyalty.

Gov. Christie has presented a “five point plan” to get us to 4%.  Some of his points are to the good.  That said, 4% GDP growth would obviate the need to cut Social Security and Medicare benefits.  So Gov. Christie’s proposed cuts (and proposal to convert our key social insurance programs into welfare) seem antithetical to a growth message.  Christie’s proposals recently earned severe criticism from policy consultant Bob Patterson in the Washington Times for this very inconsistency. What might Gov. Christie have to say about that?

Gov. Walker calls for “upwards to 4.5%.” It would be very interesting to hear how he derived this number and how, exactly, “pulling back on regulations, unleash innovation and technology in this country, repeal Obamacare, use all the abundance of the energy policies we have and have fair and open trade” will produce the demographic and productivity increases to get us to 4.5%.

Jonathan Chait characterized Gov. Huckabee’s 6% as a “crazy number out of thin air.”  Which, of course, it is: entirely speculating on the impact of a national sales tax supplanting the federal income tax.  The “FAIR” tax represents not just another rerun.  It is a rerun of a series that never got beyond its pilot.

Across the GOP field there is a Cargo Cult mentality. The contenders invoke the symbolism of Reagan without appearing to grasp the substance.  Many contenders simply are building effigies to Reaganomics.  Grizzled Reaganites like me still are waiting for the real deal.

Reagan campaigned on reducing income tax rates, a subtly but powerfully different matter than “tax cuts.” Reagan delivered his marginal income tax rate cuts, in spades.   He thus delivered sizzling job creation and across-the-board economic growth.

The core of Reagan’s genius was not “tax cuts.” It was his brilliant re-configuration of the tax code to deliver jobs and economic growth. Reducing the top marginal tax rate from 70% to 28%, as did Reagan, is qualitatively different from reducing it from 39.6% to Sen. Rubio’s proposed 35%, to Gov. Christie’s 28%, or even Sen. Paul’s 14.5% (coupled with his proposed “Business Activity Tax” — a BAT and maybe a VAT — of 14.5%).

I remain profoundly committed to low marginal tax rates. Still, I’m just one vote (one drowned, at that, in a Blue State). The broad (and primary) electorate’s priorities have changed and for good reasons. As columnist Peter Roff has noted we are, in part, victim of our own success.

Reagan’s Kemp-Roth was an across-the-board rate cut. Indexing for inflation also was an across-the-board benefit. These present very differently to voters than, say, cutting the top corporate tax rate. Reagan, by being across-the-board, inoculated himself from charges of “trickle down.” It worked.

We voters, now, are in a long winter of discontent. The past 15 years have seen a bad drift from the “rising tide lifts all boats” ethos of Kemp and Reagan and Clinton (and JFK, who coined the phrase and who stood for, and through his successor delivered, a big marginal rate cut). So, now what?

The real perp behind our continuing economic dwindles is … bad policy of the Federal Reserve, which even the Washington Establishment now acknowledges always gets its forecasts wrong. It is operating by guesswork which it euphemizes as “discretion.” Guesswork (and consistently wrong guesswork at that) is no way to run the most powerful economic institution in the most powerful economy in the world. Period.

Now, a number of GOP presidential candidates are beginning to test the campaign waters on what Nicholas Arnold of the American Principles Project (whose sister organization I professionally advise) called “the sleeper issue of 2016.” Taking on how the Fed is breaking bad is the real deal.

Reagan tackled the Fed too.  It’s time to take it up anew.

Ted Cruz recently was reported on the stump by the Washington Post declaiming: “’What the Fed is doing is dangerous,’ he said at a rally over the weekend. ‘They are debasing the currency with QE1, QE2, QE infinity!’”

Both Sens. Cruz and Paul — the top mavericks — have the pole position as original Senate co-sponsors of the Brady-Cornyn Centennial Monetary Commission.  But it’s “game on” not “game over.”  One of Gov. Bush’s top economic gurus is former Fed governor Kevin Warsh, a prodigy and reported supply-sider.  He surely understands the key importance of the Fed, and good money, down to the molecular structure.  Perhaps he will advise the Governor accordingly.

Other candidates too can stake a claim here. Chairman Jeb Hensarling’s House Financial Services Committee recently approved the Commission legislation and sent it to the floor of the House. Hensarling himself is perhaps the premier thought leader in the Congress in holding the Fed accountable.

This Commission is serious stuff. It is ready made for any candidate, of either party, to endorse and champion as the responsible way to chart the path forward to restoring the American Dream.

A smart candidate will marginalize side issues like anti-immigrant sentiment and go to the root issue of our economic distress. Most marginal issues are but tongue-tied proxy protests for lack of job creation. The root of voter distress is the impossibility of getting ahead to economic security and middle-income affluence through hard work. Call it out: the Fed is killing the American Dream.

Promise to restore the American Dream by setting the Fed straight.  Promise to restore good money, and, with it, abundant and affordable credit and the attendant job creation. That promise, authentically rooted in Reaganomics, is the real deal.

Candidates, whether Outsider, Insider, or Maverick would do very well to crusade on how poor we grow while the Fed breaks bad. They now have the opportunity to campaign on how to restore the American Dream through chartering the Centennial Monetary Commission.

Herein lies the opportunity for the other contenders to preempt “the Tasmanian Devil” and find a furious electorate furiously rallying to their standard.  The GOP will nominate a Maverick who will challenge the Establishment and be more likely than an Outsider actually to deliver the goods.

 

Originally posted on Forbes.com.

 

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