Friday, April 21, 2006

A Little Recent History...

Essay on 'The Contract with America'
(The following was published in 'Lit' magazine, February 1995 when Mikeweb was known as 'El Ciego')

Not everyone has heard of the Republican party's "Contract with America", fewer know what issues it addresses and fewer still understand all the solutions that it offers. The 'contract' was published last fall in T.V. Guide magazine, with much fanfare by the Republican National Committee, who could smell Democratic blood in the water with the election looming in November. The rest is history. The 'contract', or so they would like to believe, gave the Republicans control of both the House and the Senate for the first time in forty years. It is a well conceived gimmick that gave the Republican party an appearance of solidarity and purpose in the face of Clinton's and the Democrats' perceived lack of focus. Kind of like the N.F.L. vs. Major League baseball.
The major subjects addressed in the 'contract' include: a balanced budget amendment to the Constitution, anti-crime measures, Welfare reform, tax reform, legal reform, changes to Social Security, term limits and unfunded mandate reform. The 'contract' promises to bring these issues to a vote within the first 100 days of this Congress, without promising that they will necessarily be passed. The person most closely associated with the "Contract with America" has to be Newt Gingrich, R-Geo, the new Speaker of the House. Gingrich has left no doubt in anyone's mind as to who is in charge. In his brief tenure as Speaker, Gingrich, a former college professor, has been at the center of a firestorm of activity, controversy and allegations much to the chagrin of many veteran Democrats and Republicans alike. At best, Gingrich is a loose cannon with some good ideas, at worst he's a nutjob who will be more of a detriment than a benefit.
On surface the "Contract with America" seems to have some good points, but upon closer inspection is revealed to be the same combination of Dickensian social ideas and 'wave of the magic wand' fiscal solutions that have been the hallmark of Republican policy and rhetoric for fifteen years. The tax reform and fiscal ideas, particularly the balanced budget amendment, have come under increasing scrutiny by leading Democrats as well as economic experts. The ability of the government to spend more than it takes in, although abused over the last fifteen years, is actually beneficial by helping to smooth out the business cycle. Furthermore, as Sen. Robert Byrd, D-W.V., stated, "Amending the Constitution in this fashion is a major operation on the Constitution. And I don't think we ought to perform a lobotomy... without people being informed of the cost of the operation and the condition of the patient...." The amendment itself proposes to balance the budget by the year 2002. However, Republican leaders, despite prodding by Democrats, haven't been able to offer even general proposals on how to accomplish this. Laura Tyson, chairwoman of the Council of Economic Advisors, has stated that passage of the amendment could lead to "greater volatility" in interest rates and increase "downward risk to the economy". All this aside it seems unlikely that three-fourths of the states would slit their own throats by ratifying an amendment that could cut deeply into the money that they receive from the Federal government.
More fiscal 'magic' in the 'contract' involves reduction of the capital gains tax and indexation to inflation, 'neutral cost recovery' and unfunded mandate reform. Although they seem to be hedging, Republicans amazingly still believe that reducing tax rates will not reduce revenues severely. This time it's 'Laffer-curve VI: the resurrection', I've met the economist Art Laffer, who came up with this disproven theory, and I truly believe he would make a very successful used car salesman. In testimony before the House Ways and Means committee, Professor Calvin Johnson of the University of Texas stated that the 'neutral cost recovery system' plan "involves a number of serious errors" which include scoring the proposal as a revenue raiser when it actually would be "a costly revenue loser". Martin Sullivan of the American Enterprise Institute also testified that the plan would cost about $160 billion over the next ten years while commenting that "you do not need a Ph.D. in economics to know that there is something fishy about this.... " On the other hand, unfunded mandate reform, to hold the Federal government financially responsible for tasks that it delegates to the states, has some merit. Certainly states have been clamoring for it for years. The only problem is that the 'contract' fails to address how this will be paid for. Its fairly simple, either programs are paid for and controlled Federally or paid for Federally and controlled on the state level. If Republicans are looking to shrink the size of the Federal government, this doesn't seem the way to do it.
The bottom line is that the "Contract with America" promises to eliminate the budget deficit, make it harder to relegate costs to the states while proposing various other tax incentives to families and small businesses. The only proposal in the 'contract' designed to pay for all this is a reduction of the capital gains tax. Maybe too many of these Republicans are the type of people who also think pro-wrestling is real. As House minority leader, Dick Gephardt, D-Mo., said January 27 at a meeting of the U.S. Conference of Mayors: "I think my greatest concern about the so-called contract is that if you add it all up... in its totality it causes a further huge hole or breach in our national budget which, last night, we decided by a two-thirds vote that we wanted to balance over the next seven years." To juxtapose this, on February 6, Bill Clinton unveiled his 1996 budget proposal, which proceeded to collect more mud in its first hours than Primus saw all day at Woodstock. Clinton over the last two years has quietly made some progress on the budget deficit and this budget continues realistically and honestly on that hard path. Compared to the gimmickry of the Republican proposals, the choice seems obvious.
The other proposals in the 'contract' are, not suprisingly, popular among voters but by and large treat only the symptom and not the disease. In all fairness, these are the types of solutions that come from both Republicans and Democrats. Killing more citizens with the death penalty and building more prisons instead of giving potential criminals a better education early on and therefore more of a choice. Gutting the Welfare program, instead of providing single mothers with free daycare so they can pursue work, or better yet, an education. Investments in human capital will pay dividends for a long time by producing honest and tax-paying citizens instead of wards of the state. The over-riding symptom is poverty, but the disease is the lack of well paying jobs and this nations growing income inequity. As long as its more profitable to steal, deal drugs or draw Welfare than it is to work at one of the many low paying service 'Mc-jobs' that are available, a certain percentage of people will choose to do so. The next time you ask yourself why so many people are unemployed when you see help wanted signs at every 'Brad-Mc-Stop and-King' out there its because these jobs can barely allow one person to live, nevermind if you're trying to raise a family and as for saving for retirement or a child's education, you'd better keep playing lotto.
In a brief phone interview, Jeff Muthersbaugh, press secretary for Rep. Gary Franks, R-Ct, confirmed that Mr. Franks did sign the 'contract' and is dedicated, as the 'contract' states, to trying to bring a vote the proposals contained therein. He also stated that Mr. Franks' votes on each issue would depend on "the language contained in specific proposals brought to the floor" and whether the proposals are "good for the district and for the state." So far Republicans have to be pleased with the results the "Contract with America" has provided, while the smart ones may still be hedging their political bets. As to whether the Republicans use the 'contract' as a launch pad to the White House in 1996, that remains to be seen. Maybe as the proposals it contains are exposed to the bright light of scrutiny, they will wilt, or maybe not.
For those interested in seeing the "Contract with America" a copy may be obtained by calling the Republican National Committee at (202) 863 8500, just to hear the excitement in their ambitious young voices is worth the price of the call. It can also be purchased for $8.95 at B. Daltons bookstore.
Anyone agreeing or disagreeing with El Ciego's opinions are encouraged to write: Lit Magazine/ 13 Library pl./ Danbury, Ct. 06810.

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