Hatton W. Sumners Distinguished Lecture Series
May 18, 1999
The 20th century has been a great one for big policy ideas, both good and bad. In the bad corner: communism, fascism and socialism, three concepts based on the idea that government is smarter than people. The biggest and baddest was communism. It killed tens of millions of people and crushed the spirits and deprived of opportunity of hundreds of millions more. It kept the world at war - The Cold War - for 45 years, and was the dominating factor of two generations of American foreign policy.
Socialism and its driving wheel, centralized planning, is a bad idea we're not entirely unfamiliar with. From the romantic view Western intellectuals took of Soviet central planning to the pro-government bias of Keynesian economics, America has sipped from the socialist cup from time to time, with uniformly bad results.
Sometimes we stop it before it can cause harm, like President Clinton's plan to socialize American medicine. Other times we embrace socialism; for example, business subsidies to farmers, steel companies, or exporters, which cost money and reduce opportunity. From the welfare system of the ‘60s, to the vast government bureaucracies and regulatory apparatus of the welfare state, big government mostly hurts people. Rather than helping people out of poverty, for example, the welfare system condemned not only them but also their children to ongoing poverty.
But it isn't all bad news.
There have been good policy ideas in the 20th century, too. Winston Churchill's response to Germany's aggression was one. Margaret Thatcher's privatization was another. Ronald Reagan's vision of individualism was a third, with tax cuts, deregulation, and smaller government. And not to be partisan about it, John F. Kennedy also understood that when you cut taxes, you grow the economy. Kennedy's tax cut sparked annual GDP gains averaging 5 percent during the Kennedy and Johnson administrations.
But all this is history. What about the 1990s? What about the current state of ideas? The current economic expansion, encouraged by the good idea that government should keep out of the way, has been good news for most American families. The idea that we must build a missile defense is a good idea of the 1980s whose time seems to have come.
But the ‘90s have seen some bad ideas that have cost Americans opportunities they otherwise could have realized.
The decade got off to a bad start in 1991. When George Bush reneged on his "no new taxes pledge," and brokered a budget deal that sent spending up along with taxes, it set up a stunning Republican defeat for the White House in 1992.
A second bad idea was Bill Clinton's: That military strength didn't matter. Since 1992, we've seen a steady decrease in military preparedness and a constant de-emphasizing of the importance of the military. In real terms, defense spending has fallen every year oaf the Clinton administration.
In 1960, defense accounted for more than 50 percent of all federal spending. Last year it was a little over 16 percent.
So now, in Kosovo, the air force is almost out of cruise missiles and must rely on B-52 bombers that are 40 years old.
The Navy has been forced to scale back operations in the Persian Gulf to carry out its responsibilities in Yugoslavia, because it has no excess capacity to spare.
There's serious doubt that the Army could sustain a ground campaign in the Balkans for more than a few months without straining its already tight manpower beyond the breakpoint.
And it's not as if we can quickly snap back; it takes time to renew production of things like stealth fighters and cruise missiles.
A third political and policy mistake of the ‘90s has been the failure to reform taxes and reduce the tax burden. Ignoring clear evidence of the boom that the Reagan and Kennedy tax cuts provided, we've continued under George Bush and Bill Clinton to increase the tax burden and ignore tax cuts. Americans' tax burden is up 45 percent since 1993. Federal tax receipts as a percent of GDP stand at 21.8%, higher than at any time in history, in peace or war, since 1776. That is absurd. If taxes need to be raised in tough times, they should be reduced in good times when government doesn't need the money.
A fourth political and policy mistake of the ‘90s has been the politicization of the Justice Department. To merely skim the surface: Bill Lan Lee, who can't get Senate approval, is serving as acting head of Justice's Civil Rights Division in violation of the law that says an acting official can't serve more than 120 days without a permanent appointment being made. At one point the acting heads of both the Criminal Division and the Office of Legal Counsel were holding their jobs in violation of the law. Attorney General Janet Reno has ignored recommendations of the director of the FBI and refused to appoint independent counsels to investigate serious violations of the campaign finance laws by both the President and Vice President. The Justice Department isn't even mentioned in the investigation of espionage by the Chinese and whether it has any kind of connection with campaign contributions. The Justice Department has gone to court to oppose prosecution of some campaign finance offenders, and of course to support President Clinton's efforts to prevent testimony in the Monica Lewinsky case by secret service agents and some of Clinton's advisors.
Which brings me to my final example of mistakes in the ‘90s: The abandonment of the conservative agenda. Remember 1994? Big Republican victories, big plans for reducing government, big plans for tax reform, market-based Social Security alternatives, Medicare reform, grand gestures, but no beef. None have come to pass. Indeed, last year's inflation-adjusted increase in domestic discretionary spending was the second largest in 21 years. And Republicans have outspent Clinton two of the past three years.
Yes, there are individual Republicans still making sense and offering solid policy alternatives. But the party as a whole is rudderless. In the words of Tod Lindberg writing in the current Policy Review, "The Republican majority that began with Gingrich's revolution in 1994 is by 1999 leaderless and characterized by qualities nearly the opposite of those with which it began. Triumphalism has given way to fatalism and foreboding; populism to an uncertain sense of where people stand and why they hold the views they do; ideology to doubt about where the nation should be going and how to move it at all."
So as the next decade begins, how do we end this dismal retreat from liberty and opportunity? How can the policies of the next decade be better than those of the ‘90s?
It begins, of course, with leadership.
Let me ask you a question. What's the difference between Abraham Lincoln, Franklin D. Roosevelt and Ronald Reagan on the one hand, and Jimmy Carter, George Bush and Bill Clinton on the other?
Abraham Lincoln was perhaps the strategic president; his presidency was dedicated to the overarching goal of preserving the union. Can a nation "conceived in liberty and dedicated to the proposition that all men are created equal," he asked at Gettisburg, "can a nation so conceived and so dedicated... long endure"? Lincoln knew the answer, and acted accordingly.
Franklin D. Roosevelt, seeing America as "a stricken nation in a stricken world," said in his inaugural address: "this nation asks for action, and action now. Our greatest primary task is to put people to work." He vowed to use the full powers of the federal government to meet the challenges of the Great Depression and forge a new deal for the American people.
Finally, Ronald Reagan ran and governed on an anti-Communist, free-market agenda, proposing to increase the opportunities of individuals by decreasing the intrusion of government. Remember the clarity of the Reagan message? "Your taxes are too high, our defenses are too weak, communism is bad, and I'm going to get the government off your back."
The tactical presidents, on the other hand, offered no such visions or strategies. The Carter presidency was a themeless mix of thoughts, from bemoaning an American malaise to casting the energy challenge as "the moral equivalent of war."
The Clinton presidency has been, in Winston Churchill's phrase, "a pudding without a theme," unless it be muddling choices and avoiding clear decisions. He began with a health-care nationalization strategy, but fell into contradiction and triangulation. From Medicare to Milosevic to Social Security, the pattern is the same: offer no vision, and pursue no strategy, just make the best tactical decisions you can when events force your hand, than live and die by the polls.
In the words of former British MP Winston Churchill - the son of Prime Minister Churchill - "it is the misfortune of the western nations to be led (if one can call it that) by a generation of politicians for whom the four most important words in the English language are ‘focus group' and ‘opinion poll.' Their idea of statesmanship is to lick their fingers to see which way the political wind in blowing, and then to follow."
So isn't it time for a strategic presidency, one that defines its objectives, sets a course, and uses the power of the president and the persuasive forum of what Teddy Roosevelt called the president's "bully pulpit" to move the country toward those goals?
Vice President Al Gore and Steve Forbes seem to come the closest to offering a broad vision of where their Presidencies would lead the nation. Gore's environmentalism, as outlined in his book, Earth In The Balance, reinforced by his advocacy of the Kyoto global warming treaty, would likely be the basis of his presidency. Add in the protectionism of big labor and the economic liberalism of the Left, and you have the vision of a Gore administration. It's not one I'm crazy about, but it is a vision.
Steve Forbes' vision, though very different, is fully articulated as well: Increase the power and opportunities of the individual, lower taxes, school choice and reform Social Security into a market-based retired system.
Your governor, George W. Bush, is enormously popular within the Republican establishment. He is the clear favorite to be nominated at the Philadelphia convention. He has the luxury of a blank slate on which to write his own vision. He has an enormous opportunity, and if he seizes it, he can change the course of the country.
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And there is much to be done. Is there a reason not to cut taxes for everybody, aside from politicians not wanting to give you back your money? A 10% tax cut would produce an average tax reduction of about $700 for taxpayers in the 15 percent bracket and over $1,050 for those in the 28 percent bracket.
Just as important, the economy benefits. According to a Heritage Foundation study, gross domestic product would rise an average of $35.9 billion yearly after inflation between fiscal year 2000 and fiscal year 2009. Total civilian employment would increase an average of 289,000 per year. Personal savings would increase $39.4 billion. The personal savings rate would go from 4.7 percent to 4.9 percent.
Then there is Social Security. The deal Social Security offers the average wage earner entering the job market today is this: As soon as you get out of high school, you start paying $750,000 into the government retirement fund in small, easy-to-meet payments. And when you retire, it will give you $140,000 in return! Is this great or what??!!
In an NCPA study by Boston University Economist Laurence Kotlikoff: An 18-year old starting work today and going until he's 65 will be robbed of $560,000 by the U.S. Social Security system.
While a privatized system would let the new worker earn a decent return on his money, current Social Security will pay baby boomers less than two percent on their investment, gen-exers less than one percent and newborns nothing.
Another policy imperative is school choice. Let me give you just one example that will turn this from a policy wonk to a personal issue.
The winners were announced recently in the Children's Scholarship Fund lottery. There were some impressive numbers: 40,000 low-income students will get $600 to $1,600 a year for four years to attend any school they want, as long as their parents put up an average matching contribution of $1,000 a year.
But here's the key number: Those 40,000 winners were drawn from one-and-a quarter million applicants from 22,000 communities in 50 states. Parents of nearly one of three qualified students from New York City, Philadelphia and Washington, D.C. applied. That means support for choice is a deep as it is wide.
It is an appealing issue to low income families, to black and Hispanic families which are victimized by indefensible public schools, and as Governor Jeb Bush of Florida has just shown, it can be a winning issue for conservative candidates and conservative governors.
The common theme in all these concepts is of course individual liberty - empowering individuals to choose for themselves the course they wish to follow and the policies they wish to adopt for their own families. Individualism is a powerful idea, and a relatively new one in the history of the world.
Facts, as Ronald Reagan once said, are stubborn things. Ideas on the other hand, can be slippery. There are bad ideas, and good ones. A bad idea - communism for example - may grip a nation for decades; while a good one - market-driven economy - may blossom to full flower in a few short years.
Ideas ebb and flow at their own tempo. So when a leadership opportunity arises, we must seize the moment, for opportunities can be fleeting. As Shakespeare wrote: "There is a tide in the affairs of men which taken at the flood leads on to fortune..."We must take the current when it serves or lose our ventures."
Our venture has not prospered in the past few years, so let us rededicate ourselves to its pursuit, take our current when it serves, and lead onto greater fortunes for the cause of liberty.