Nothing's the Matter with Kansas

In the first caucus since Romney's departure left the GOP nomination a two-man race, Huckabee beats McCain by a whopping 61 to 22%! (With 3/4 of precincts reporting - exact final tally may change.)

One of the central claims of the book "What's the Matter with Kansas" is that economic conservatives have taken advantage of social conservatives, taking their votes and activism for granted while not actually delivering on the social issues and promoting economic policies that undermine the very family values the social conservatives care about.

Whatever else you might think of this book, today's Kansas caucus proves that social conservatives are not dupes, and they are working hard to wrest control of the GOP away from the country club Republicans who think they can just use and abuse the real foot soldiers of the party.

Mike Huckabee is a great Presidential candidate to represent American families because, unlike John McCain, he combines:

• Rock solid commitment to defending the sanctity of life and marriage;
• Understanding that both tax cuts and infrastructure investments stimulate the economy and the well-being of all Americans -- wise governance is balancing the two;
• Conviction that free markets are generally good, but don't come before families; and
• Commitment to do everything possible to stop the loss of American jobs and national security to illegal immigrants and foreign nations.

McCain has many heterodoxies from the economic conservatives too, but ultimately he is still a country club Republican:

• Supports giving amnesty to illegals, so the rich can continue to support their lavish lifestyles with very cheap labor;
• Has no commitment to supporting pro-life or pro-marriage issues;
• Dumped his first wife after an accident left her less attractive, to marry into wealth;
• Shut down many sources of funding for political activity, making grassroots challenges to the Washington status quo more difficult, and ceding more power to the wealthy lobbyists who expect to buy "access" with $2,300 checks.

Let the country club pundits convince us the race is over? No way! Kansas has spoken, and the heartland Republicans have declared loud and clear: WE are the GOP.

Economic Stimulus II

Jon Kyl demonstrates again why he's my favorite Senator with his wise words about the foolishness of band-aid, short-term measures to address the impending recession. Only two short-term responses make any sense: measures to help prevent foreclosure for families on the brink, and temporary measures by the Federal Reserve to improve liquidity in the credit markets (though the latter needs to be treated with great caution, because too-low interest rates is what got us into this pickle in the first place*).

"Immediate" rebate checks and government spending will not address the real problem, which is that wages for most workers are not keeping up with soaring costs of living necessities such as housing, fuel, and health care. We delayed the effects of this problem for a few years by borrowing against rapidly-rising housing equity, but that well has run dry and set off a domino effect on the economy making things even worse. Rebate checks and government spending ("Keynesian prescriptions" as Sen. Kyl says) are just disproven snake oils for recession. We have to focus on raising wages and lower costs of necessities.

How do we do that? The best way to raise wages is to export more goods and services. Americans are already over-consuming and not saving, so there isn't any room (in a sustainable sense) to raise consumption domestically to improve demand and wages. But there's a rapidly growing middle class in Asia interested in buying things America has to offer. We need to facilitate that by lowering built-in costs in American exports, such as embedded high taxes, health care, and legal liability costs. To the extent the government helps expand demand at home, we should be building up our defenses and infrastructure, and do it in a long-term way that will provide a steady stream of work, not a short-term spike in retail sales.

Lowering health care costs is a two-fer, because it is also one of the big factors causing the economic squeeze at home. Another two-fer is investing in alternative energy sources and expanded domestic energy production to keep energy costs under control, which will also entail new, high-paying technology jobs. On the flip side, we have to be careful about propping up the deflating housing market by lowering interest rates again, because that only makes housing less affordable to anyone who doesn't already own.* Our economy needs to get away from dependency on housing prices to achieve real growth.

Guess what? All these prescriptions are in Mike Huckabee's economic stimulus plan! Check it out, and vote for a rare politician who doesn't fall for the counterproductive urge to "do something now" that will only make things worse in the end.

(I think we've been looking at the wrong Senator from Arizona: Huckabee-Kyl 2008, anyone?)

* If you're not aware of how the Fed's interest rate cuts from 2002-2005 are the chief cause of the housing crisis, I'll post an explanation of that later.

Huckabee's Economic Stimulus Plan

First, a note on Michigan. I'm sad that Huckabee didn't win, as the polls indicated he might a few weeks ago, but I'm glad that Romney broke McCain's "momentum." This should deflate the McCain bubble and give Huckabee a better chance at winning South Carolina on Saturday. It's do-or-die time!

Romney seems to have won Michigan because of his conversion in the past week to the idea that the economy is hurting and maybe the government can do something helpful. In Romney's case, that "something helpful" is promising to shovel billions of dollars to Michigan in corporate welfare while mandating health insurance coverage for every American, thereby saddling the whole nation with similar health care costs as the auto industry. I guess Romney has decided that buying elections with his own money wasn't working too well, and buying an election with the taxpayers' money is cheaper for him and apparently more effective too.

Meanwhile, Mike Huckabee, who has been characterized by certain quarters as an "economic liberal" for having acknowledged the looming economic problems months ago, has put out an economic stimulus plan that addresses the struggles of the entire nation. Called the "Fair Deal," Huckabee's plan is both forward thinking and remarkably, well, conservative in its economic tone.

First off, Huckabee explains that "I know that Main Street, as well as Wall Street, is threatened by a weakening economy. But we are all in this together." Doesn't sound like John Edwards to me...

Principle 1: Strengthen the economic health of middle class families. Eliminate the marriage penalty. Cut taxes on savings. Make the Bush tax cuts permanent. Stem the tide of housing foreclosures. Cut bureaucratic red tape that hampers small businesses. Open new foreign markets for exporting U.S. products and services. (Weird! I don't see anything about capping executive pay or raising taxes on the rich.)

Principle 2: Work with the Federal Reserve to take a balanced approach to stave off recession while not encouraging inflation. (This is the key short-term element of the plan.)

Principle 3: Create jobs by building up the strength of our military, borders, and critical infrastructure. We desperately need to do these things anyway for the safety of our nation. It so happens that getting them done creates new jobs too.

Principle 4: Invest in energy independence. Not just for cars to buy Michigan's votes, but for all forms of energy, to get us off dependence on foreign oil entirely.

Principle 5: Make the tax system more competitive. Of course Huckabee advocates the Fair Tax, but recognizes it will take a long time to get there. In the meantime, reduce counterproductively high personal and corporate income tax rates and eliminate the death tax. (Super weird--he even wants to reduce taxes on the rich!)

The great thing about this plan is that it is balanced and addresses the long-range problems that are causing economic security and the move toward a recession. Some on Capitol Hill are proposing band-aid stimulus ideas, like retroactive tax cuts for 2007 to put rebate checks in people's hands this spring. A rebate check is nice and all (just got one from Sears tonight) but it doesn't address the core insecurity. For families that are really struggling it pays their fuel bills for a couple of months, and then what? For people who aren't as strapped, maybe they'll go out and buy golf clubs like someone I know did with his 2002 tax rebate check, but a tiny, temporary spike in consumer spending isn't going to cause employers to hire more people or give raises or stem the tide of home foreclosures.

Huckabee's plan is designed to address, over the long haul, the core problems of stagnating wages, rising energy costs, and an anti-family tax system. Bravo, Governor! If only our country could get past partisan hatred and pigeonholing to actually enact such sensible solutions!

CEO Pay and Abortion?

Speaking of associative fear-mongering, today's article by Jeffrey Lord qualifies as the stupidest condemnation of Huckabee by association yet. Huckabee has said that there's something wrong with an economy where CEOs make 500 times what many of their workers do, often for running their companies into the ground, and advocates pro-global competitiveness policies designed to help raise wages of the working and middle class. He has never said a word about capping wages of executives. But Mr. Lord simply asserts, with no factual basis, that regretting income disparity = government setting executive pay. From there he spins a fanciful Orwellian tale, in which there are no limits on government power, and in that world it makes sense that the government also has the power to declare a right to kill unborn children. This teaches us... the strange way Jeffrey Lord's mind works.

The associations here are astoundingly irrational. In addition to the original, counter-factual leap into government-set executive pay, there's the the complete contradiction that an all-powerful government invents new individual "rights." A government that micromanages everything subordinates individual rights to the designs of the state. The invention of new "rights" such as abortion is the mark of a political worldview that elevates individual rights above all moral considerations and the general welfare of society. These are completely opposite concepts. (Except that both are embraced by the Democratic party--but that's another topic entirely.) In a command and control society, like China, abortion is not a "right" but a mandate, a tool for achieving government control over population.

Mr. Lord ignores the open and obvious true connection between Huckabee's comments on executive pay and his position (unequivocally against) abortion: belief in the inherent dignity of all human life. As persons made in the image of God, we are not to practice the law of the jungle with each other. Every human being has the right to life, and to fair wages for his or her labor. The point is not to envy the wealthy, but to remind the wealthy of their responsibility to treat their subordinate workers fairly--just as parents have the responsibility to provide for their children.

It seems Mr. Lord's perspective has been so narrowed by party-line politics (Republicans are against abortion and for the law of the jungle in economics; Democrats invent "rights" to abortion, gay "marriage" etc. and criticize income disparity) that he cannot conceive of a political philosophy grounded in human dignity. I hope, for the sake of our nation, that few people share this distorted perspective.

Huckabee - The False Conservative?

Today Robert Novak calls Huckabee "The False Conservative" in the editorial pages of the Washington Post. As I have said before, what scares fusionist "conservatives" about Huckabee is that he is the true conservative, not them, and he demonstrates their economic liberalism (in the classic definition of "liberalism"--meaning completely unrestrained free markets) may not be not necessary to form a governing majority. Novak's article pretty clearly admits this:

The rise of evangelical Christians as the force that blasted the GOP out of minority status during the past generation always contained an inherent danger: What if these new Republican acolytes supported not merely a conventional conservative but one of their own? That has happened with Huckabee, a former Baptist minister educated at Ouachita Baptist University and Southwestern Baptist Theological Seminary. The danger is a serious contender for the nomination who passes the litmus test of social conservatives on abortion, gay marriage and gun control but is far removed from the conservative-libertarian model of Barry Goldwater and Ronald Reagan.

Notice in the last sentence, Novak switches to the term "conservative-libertarian," showing that this is what he really means by "conservative." He also goes on to complain about Huckabee's desire to conserve the environment, saying it is "anathema to the free market." But what's so "conservative" about supporting absolute free markets even when they destroy the environment, families, or civil society?

Novak also calls evangelicals (and really should include practicing Catholics too) an "inherent danger" even as he admits that the Republicans would have been relegated to permanent minority status--probably would have gone the way of the Whigs--if it weren't for Christian social conservatives joining the Party. It sounds like Novak defines "danger" as dropping the libertarian part of Novak's hyphenated-conservatism, rather than the danger of becoming secularist states like Europe that inevitably slide into socialism when all the moral undergirdings that make economic liberties possible are gone.

Thank you, Mr. Novak, for coming clean about exactly where you and your ilk are coming from in your exaggerated criticisms of Gov. Huckabee.

P.S. I've been reading the other encyclicals over the Thanksgiving holiday and will get back to my commentary on Huckabee and Catholic social thought shortly.

Living Wages: Moral and Practical

Continuing my series of blog posts on Catholic social teaching, here is another section of Rerum Novarum:

45. Let the working man and the employer make free agreements, and in particular let them agree freely as to the wages; nevertheless, there underlies a dictate of natural justice more imperious and ancient than any bargain between man and man, namely, that wages ought not to be insufficient to support a frugal and well-behaved wage-earner. If through necessity or fear of a worse evil the workman accept harder conditions because an employer or contractor will afford him no better, he is made the victim of force and injustice. In these and similar questions, however - such as, for example, the hours of labor in different trades, the sanitary precautions to be observed in factories and workshops, etc. - in order to supersede undue interference on the part of the State, especially as circumstances, times, and localities differ so widely, it is advisable that recourse be had to societies or boards such as We shall mention presently [i.e., workingmen's unions and mutual aid societies], or to some other mode of safeguarding the interests of the wage-earners; the State being appealed to, should circumstances require, for its sanction and protection.

46. If a workman's wages be sufficient to enable him comfortably to support himself, his wife, and his children, he will find it easy, if he be a sensible man, to practice thrift, and he will not fail, by cutting down expenses, to put by some little savings and thus secure a modest source of income. Nature itself would urge him to this. We have seen that this great labor question cannot be solved save by assuming as a principle that private ownership must be held sacred and inviolable. The law, therefore, should favor ownership, and its policy should be to induce as many as possible of the people to become owners.

47. Many excellent results will follow from this; and, first of all, property will certainly become more equitably divided. For, the result of civil change and revolution has been to divide cities into two classes separated by a wide chasm. On the one side there is the party which holds power because it holds wealth; which has in its grasp the whole of labor and trade; which manipulates for its own benefit and its own purposes all the sources of supply, and which is not without influence even in the administration of the commonwealth. On the other side there is the needy and powerless multitude, sick and sore in spirit and ever ready for disturbance. If working people can be encouraged to look forward to obtaining a share in the land, the consequence will be that the gulf between vast wealth and sheer poverty will be bridged over, and the respective classes will be brought nearer to one another. A further consequence will result in the great abundance of the fruits of the earth. Men always work harder and more readily when they work on that which belongs to them; nay, they learn to love the very soil that yields in response to the labor of their hands, not only food to eat, but an abundance of good things for themselves and those that are dear to them. That such a spirit of willing labor would add to the produce of the earth and to the wealth of the community is self evident. And a third advantage would spring from this: men would cling to the country in which they were born, for no one would exchange his country for a foreign land if his own afforded him the means of living a decent and happy life. These three important benefits, however, can be reckoned on only provided that a man's means be not drained and exhausted by excessive taxation. The right to possess private property is derived from nature, not from man; and the State has the right to control its use in the interests of the public good alone, but by no means to absorb it altogether. The State would therefore be unjust and cruel if under the name of taxation it were to deprive the private owner of more than is fair.

In other words, it is both a moral imperative and a practical benefit to the State and society to promote wages that are sufficient for a decent family life and the accumulation of savings for all, though not by means of excessive taxation. Today, the Democrats wish to reduce inequality of income and wealth by means of excessive taxation, but this violates the natural right to private property and also increases hatred between the classes. But too many Republicans do not believe in the "dictate of natural justice" that an employer who fails to pay a diligent full time worker enough to be able to frugally support a family commits a grave injustice. Furthermore, they do not champion a frugal lifestyle and personal savings, preferring instead ever more consumption as "proof" of a healthy economy and driver of increasing wealth for those who already own capital.

Mike Huckabee stands apart from both parties on this issue. He isn't afraid to chide executives for raking in 500 times the income of their low-level workers, and outsourcing good-paying jobs overseas. This type of behavior is immoral. But neither does Huckabee advocate a confiscatory tax on the wealthy to change this situation. Instead, he supports a complete overhaul of our tax system (and health care system) to make our domestic businesses more competitive in the global economy, naturally creating more good-paying jobs. Moreover, he proposes that taxes should be based on consumption, increasing the incentives to be hard-working and frugal, since neither work nor savings would be taxed, but excessive spending would be. Huckabee's tax proposal even includes a "prebate" to make sure that all families would not be taxed on the bare essentials of spending--only on spending that goes above the level of necessity.

I would also note that Rerum Novarum suggests workingmen's unions as a preferable alternative to direct State intervention into unfair treatment of employees by employers. However, Pope Leo XIII recognized even then that many unions are not what they ought to be:

Now, there is a good deal of evidence in favor of the opinion that many of these societies are in the hands of secret leaders, and are managed on principles ill - according with Christianity and the public well-being; and that they do their utmost to get within their grasp the whole field of labor, and force working men either to join them or to starve. Under these circumstances Christian working men must do one of two things: either join associations in which their religion will be exposed to peril, or form associations among themselves and unite their forces so as to shake off courageously the yoke of so unrighteous and intolerable an oppression. No one who does not wish to expose man's chief good to extreme risk will for a moment hesitate to say that the second alternative should by all means be adopted.
...
[Many workers] cannot but perceive that their grasping employers too often treat them with great inhumanity and hardly care for them outside the profit their labor brings; and if they belong to any union, it is probably one in which there exists, instead of charity and love, that intestine strife which ever accompanies poverty when unresigned and unsustained by religion. Broken in spirit and worn down in body, how many of them would gladly free themselves from such galling bondage! But human respect, or the dread of starvation, makes them tremble to take the step. To such as these Catholic associations are of incalculable service, by helping them out of their difficulties, inviting them to companionship and receiving the returning wanderers to a haven where they may securely find repose.

Unfortunately, the Christian unions that Pope Leo XIII called for more than a century ago have never materialized. Nevertheless, Huckabee also understands the forces that drive workers to join unions, even if the unions are terribly flawed and often support causes against our Christian beliefs (such as abortion). This is why Huckabee is willing to talk to union members where other Republicans shun them, and warns that unions will resurge unless wages and economic security for workers are strengthened.

Mike Huckabee is right on the mark: living wages are a moral matter, and good for the strength of the nation as well. But the right way to achieve this is not to "soak the rich" with ever more taxes, but to aim directly at boosting wages and encouraging savings.

Right-Sizing the Government by Christian Standards

I have decided to start a series of blog posts based on the Catholic encyclicals addressing issues of economic policy and the proper role of the State: Rerum Novarum (Pope Leo XIII, 1891), Quadragesimo Anno (Pope Pius XI, 1931), and Centesimus Annus (Pope John Paul II, 1991). I have two purposes: to show Catholics how well Mike Huckabee's political positions fit with the teachings of our Church, and to show other Christian supporters of Huckabee a rich intellectual tradition supporting the positions you are embracing.

I will begin with the earliest of these encyclicals. After discussing property ownership as an inherent human right, rejecting class warfare, and explaining the role of the Church in fostering brotherly love between the rich and poor through charitable giving, Pope Leo XIII goes on to say:

31. It cannot, however, be doubted that to attain the purpose we are treating of, not only the Church, but all human agencies, must concur. All who are concerned in the matter should be of one mind and according to their ability act together. It is with this, as with providence that governs the world; the results of causes do not usually take place save where all the causes cooperate. It is sufficient, therefore, to inquire what part the State should play in the work of remedy and relief.

32. By the State we here understand, not the particular form of government prevailing in this or that nation, but the State as rightly apprehended; that is to say, any government conformable in its institutions to right reason and natural law, and to those dictates of the divine wisdom which we have expounded in the encyclical On the Christian Constitution of the State. The foremost duty, therefore, of the rulers of the State should be to make sure that the laws and institutions, the general character and administration of the commonwealth, shall be such as of themselves to realize public well-being and private prosperity. This is the proper scope of wise statesmanship and is the work of the rulers. Now a State chiefly prospers and thrives through moral rule, well-regulated family life, respect for religion and justice, the moderation and fair imposing of public taxes, the progress of the arts and of trade, the abundant yield of the land-through everything, in fact, which makes the citizens better and happier. Hereby, then, it lies in the power of a ruler to benefit every class in the State, and amongst the rest to promote to the utmost the interests of the poor; and this in virtue of his office, and without being open to suspicion of undue interference - since it is the province of the commonwealth to serve the common good. And the more that is done for the benefit of the working classes by the general laws of the country, the less need will there be to seek for special means to relieve them.

What does that have to do with Mike Huckabee? Follow the links in this annotated version of the Rerum Novarum quote to find out for yourself:

Now a State chiefly prospers and thrives through moral rule, well-regulated family life, respect for religion and justice, the moderation and fair imposing of public taxes, the progress of the arts and of trade, the abundant yield of the land-through everything, in fact, which makes the citizens better and happier. Hereby, then, it lies in the power of a ruler to benefit every class in the State, and amongst the rest to promote to the utmost the interests of the poor; and this in virtue of his office, and without being open to suspicion of undue interference - since it is the province of the commonwealth to serve the common good. And the more that is done for the benefit of the working classes by the general laws of the country, the less need will there be to seek for special means to relieve them.

More Evidence the Fair Tax Will Require a Generational Sea Change

The Bureau of National Affairs (BNA) today reports:

House Republicans Could FaceTough Floor Vote on Mortgage BillWhen legislation (H.R. 3648) to exclude from income debt forgiven as a result of a mortgage foreclosure or renegotiation hits the House floor Oct. 4, Republicans could be forced to cast a difficult vote because of the tax increase used to pay for the roughly $2 billion bill.
The legislation would establish a permanent exclusion from gross income of discharged home mortgage indebtedness and pay for it by tightening the requirements taxpayers must meet to exclude gain from the sale of certain residences such as vacation homes and rental properties that eventually are converted into primary residences and then sold.
Currently, taxpayers may exclude up to $250,000--$500,000 if married filing a joint return--of gain realized on the sale or exchange of a principal residence but, under the bill, they would only be able to utilize the exclusion for the time the second home was actually their primary residence.
The legislation also would extend, for seven years, the deduction for private mortgage insurance (PMI), and would modify the qualification tests for cooperative housing corporations.
Republicans on the Ways and Means Committee have repeatedly said they support the concept of helping people during the subprime lending situation, but believe the offset is unrelated to the problem at hand and raises taxes on one group to pay for relief for another.
The issue came up at a Sept. 26 Ways and Means markup, but it did not come to a head that day because the committee approved the bill by voice vote, meaning members did not have to go on the record as supporting a tax increase (187 DTR G-5, 9/27/07 ).
"Republican members will have a difficult time because they don't feel like the pay-for is the right one, but they do feel like the policy of forgiving foreclosure debt is the right one," said Rep. Kevin Brady (R-Texas).

My, my, we're worried about people with extra vacation and rental properties possibly having to pay some capital gains (15%) tax in order to pay for tax forgiveness for people going through foreclosure? If Republicans think this is a "hard vote" then they've really lost touch with making sure tax policy serves the common man, and are more concerned about being "on record" voting for a "tax increase," no matter what the circumstances, that could be attacked by Club for Growth.

From an economic standpoint, the people who bought second homes are a significant contributing factor to those who now face foreclosure, and so is the capital gains exclusion they were expecting to exploit. When falling interest rates in the early 2000's caused house price tags to rise (just as the stock market was falling), a lot of people decided the best place to invest, for both equity and tax reasons, was in real estate. They bought second houses as investments, raising demand and prices. By 2005, 40% of home purchases were second homes!! Because of the rising prices, people who didn't own anything yet found it increasingly difficult to afford their first home, causing them to turn to exotic mortgages and liar loans to try to grab hold of the rising barge instead of falling into the sea of lifelong renting. But of course rising demand can't continue forever when there isn't much real demand for additional places to live, so now prices are falling, and people who couldn't really afford those exotic mortgages are ending up in foreclosure with negative equity. Hence the need for the tax forgiveness.

Now you can say the people in foreclosure should have been more responsible, and I agree. And yet, many of them could have afforded a home on a responsible budget if it weren't for the run-up in price caused by the demand for 2nd homes, not as a place to live, but as a way to make money and shelter it from taxes. So taking away a manipulative tax advantage from some of the people who helped cause the foreclosure crisis makes a lot of sense, the rhetoric of Congressional Republicans notwithstanding.

Under the Fair Tax, there would be no tax incentive to buy multiple properties because you have to pay sales tax on each one, and they don't provide any kind of special tax shelter. One of a gazillion reasons the Fair Tax is a good idea. But how do you expect the Congressional Republicans who are afraid to say "no exclusion of capital gains for second properties actually means no exclusion of capital gains for second properties" to vote for the Fair Tax, which will discourage second-property owners even more?

We need a Club for Citizens' Growth to systematically push out the Country Club Republicans who are more interested in protecting tax shelters for the rich than reducing the size of government and making the tax system fair. But, as I've said before, this is a marathon; a fight that will take a long time to turn over enough people in Washington.

Is the Fair Tax a Good Reason to Support Huckabee?

Yes and No. But it is definitely not a reason to oppose him.

In anticipation of Vertical Day, let me offer some thoughts on an important issue that Huckabee wants to discuss with the American people, while the other candidates avoid it: a pure consumption tax to replace the federal income tax (with features to avoid hardship for the poor and lower-middle class), dubbed the "Fair Tax."

The Fair Tax is fair because it rewards both hard work and savings, no matter where you are on the income scale. It also discourages consumption, because that is what gets taxed. Wall Street would much prefer a flat income tax, which simplifies the system and rewards people who are more financially successful than average, but does not discourage consumption. Wall Street thinks consumption is the number one measure of a healthy economy, because the more you consume (buy) the more profits they make off of you, causing stock prices to rise. But is consumption really a good measure of economic health?

Let's take two scenarios.

• Scenario 1: Joe and Jane each work full time for $40,000 salary each, for total family income of $80,000. They spend $25,000 on day care for their two children, and spend $5,000 a year on commuting costs. Their house payments are $25,000 a year, they spend $8,000 a year on food (eating out frequently and buying pre-packaged food to save time), $3,000 on clothes, and $3,000 on miscellaneous necessities. They pay a 20% flat tax on their income--$16,000. At the end of the year, Joe and Jane have $5,000 more in debt than they did at the beginning of the year, but they consumed $44,000 in goods and services.
• Scenario 2: Jack works full time for $40,000 and Jill stays home with the children and does a little work from home for $10,000, for total family income of $50,000. They spend nothing on day care, and their commuting costs are halved ($2,500). Their house payment is the same ($25,000) but they only spend $5,000 on food because they eat at home more and make more from scratch. They spend the same $3,000 on clothes and $3,000 on miscellaneous. They have only consumed $13,500, far less than Joe and Jane. If they paid a 30% consumption tax on this, that's $4,000 in taxes. At the end of the year, they've put $7,500 in the bank!

Who would you rather be? I think the answer on Main Street would be nearly unanimous (unless you're a woman who really hates staying home with your children -- in which case, why did you have them in the first place?). But Wall Street much prefers Joe and Jane, because they consumed more than 3 times as much as Jack and Jill! There isn't much opportunity for Wall Street to make money off of Jack and Jill because they provide more goods and services for themselves.

This is why the Fair Tax is absolutely right from a philosophical, pro-family and even pro-environment point of view.

Now let's talk about practicalities. If Mike Huckabee is elected President, will he be able to make the Fair Tax law? Sorry to disappoint you, but almost certainly No. Here are some reasons why:

• The President can't make law himself under our Constitution. He has to get a bill from Congress to sign. Congress won't enact the Fair Tax because...
• Under our current tax system, there is a big deduction for home mortgage interest. Houses sell for about 15-30% more than they otherwise would because you're buying a big tax deduction with the house. The Fair Tax does not favor home ownership over renting. Without any tax benefit to mortgage payments, housing prices would likely drop drastically, which would enrage homeowners, i.e. the great majority of voters. The homeowners would "punish" Congressmen who vote for the Fair Tax.
• Congressmen rely on big donations from wealthy people who like to consume a lot themselves, and want others to consume even more to improve corporate profits. The donors would "punish" Congressmen who vote for the Fair Tax.
• Remember how I said that stock prices rise when people consume more? With the Fair Tax, people will consume less, causing stock prices to fall.* The media will declare that the sky is falling because the stock prices are falling, and anyone with a 401(k) won't be too happy either (including a lot of y'all on Main Street). The media and investors will "punish" Congressmen who vote for the Fair Tax.

So are the editors of National Review right when they criticize Huckabee for supporting it? Well, I think they are right that this should not be a foundational pillar of his platform, and I agree it won't be enacted. So what's the value?

The value of talking about the Fair Tax is it starts a national conversation about what our priorities should be. Do we really want to measure our economic good by consumption? Or is that an immoral and unsustainable goal for our society? Is the good of Wall Street really aligned with the good of Main Street? If not, what can we do to get Wall Street more aligned with Main Street, instead of the other way around?

The real genius of the Huckabee campaign is not a slogan like "Fair Tax." It is a conversation about what it really means to govern for the "general welfare" of this great Nation.

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* On further reflection, this is an over-generalization. For companies that have a globally diversified market, they will experience a lower cost of capital and demand for consumption in the rest of the world will more than pick up the slack for lower domestic consumption, resulting in higher stock prices. But for companies that sell goods or services primarily or exclusively to Americans, the lower cost of capital is of little help if consumption demand falls, because the main use for capital is for expanding production capacity. If demand falls, increased supply only makes the situation worse by driving down the price (which can wipe out any profit gains from a lower cost of production). Therefore, it is only the companies with primarily domestic markets that are likely to experience lower stock prices. But you can certainly expect these domestic companies to have a substantial and powerful lobbying presence in Congress.

"Right-leaning" Media Gag on Huckabee?

Since I posted the Top-Tier Huckabee challenge, a lot of other bloggers have started initiatives to get better media coverage for Huckabee, particularly among "right-leaning" outlets such as National Review and certain Fox News and talk radio pundits. One Mom's blog is particularly helpful, linking to contact info for the media outlets and even providing suggested language for a letter.

It is truly shameful that the New York Times covered Huckabee's 63% win at the Value Voters Debate, while NRO completely ignored it (until it received complaints, and then it gave a buried dismissive mention). What is going on here?!

Could it be the Wall Street factor? Huckabee threatens them because he puts the middle class and poor first. He wants more good jobs to stay onshore, which improves the standard of living for average Joes but cuts into corporate profits. (At the same time, he's no class warrior, and spends several pages in "From Hope to Higher Ground" explaining why people who make a lot of money from hard work and risk should not be penalized for that, but should be lauded for the jobs they create.) And a flat tax on consumption scares Wall Street, because they want to be able to consume, consume, consume while hiding behind deferred compensation plans and tax benefits for capital gains. A consumption tax would favor savings (creating competition with them for provision of capital, while simultaneously lowering demand for luxury goods and McMansions) and give them no tax shelters for hiding - except cutting consumption, which is beyond the pale to Wall Street.

Any subscriber to the print National Review knows that they constantly operate in the red and have to take "donations" to survive (though they are not a tax-exempt organization). Perhaps their Wall Street benefactors have put a gag on them? And O'Reilly and Sean Hannity operate out of New York City as well -- is it their Wall Street friends or pressure from Rupert Murdoch?

Hate to be a conspiracy theorist, but that's my best shot at an explanation for why these media sources are ignoring as "irrelevant" a charismatic candidate who is in exactly the same position that Bill Clinton was 16 years ago.

Please prove me wrong by storming the editors' desks until they remove the gag! Head over to One Mom's blog for shortcuts.

It's the Economy Too, Stupid

I was underwhelmed by the debates last night. The only memorable moment was the Huckabee - Ron Paul dust-up, where Huckabee concluded that honor in doing the right thing in Iraq is more important than the Republican Party. And how! This is exactly why Huckabee should be the man running against Hillary in the general election, but unfortunately also why he has a hard time raising the dough and exposure to get the Republican nomination.

I think the main reason the debates were so lackluster is because the questions were designed to highlight candidate positions that we already know about. And apart from the Libertarian Party candidate crashing the event, the answers elicited were mostly remarkable in their lack of differences.

A near-total focus on national security issues is the culprit here. The debate mostly covered immigration and Iraq/Iran, and all the candidates are trying to appear strongest on the same basic positions: defend our borders and we have to finish the job in Iraq to avoid genocide. A few "family values" questions were tossed in, but only to one or two candidates each.

Notably absent: any questions about domestic policy issues such as healthcare, education and the economy. Huckabee pointed this out in his after-debate interview with Hannity & Colmes. Five debates without a single question about education?!?

The housing market, the key repository of middle class wealth, is an absolute mess right now. Homeowners are panicking over falling prices and dried-up demand. Non-homeowners are praying for the prices to fall because housing prices have more than doubled since 1999, while real median income still hasn't recovered to its 1999 level, pricing most people out of buying a first home. The credit crunch and shaky home prices dampen spending and growth in many other sectors as well. This isn't worth discussing?

The percentage of people who lack access to health care continues to grow, even while total domestic spending on health also continues to far outpace inflation. Medicare entitlements are a looming disaster. And real wages for full-time work are falling, so that middle class families can only keep up by working more and spending time with family less. None of this is worth discussing?

Though I can't say I have any data to back this up, I think a lot of Americans who say they want us out of Iraq in polls are simply sick of hearing about Iraq all the time. They want the President to start focusing on the domestic issues that directly impact them and their children, and they would tolerate a longer stay to keep the peace if they don't feel neglected at home. President Bush isn't doing that, and neither are Giuliani, Romney or McCain. I like Mike because he addresses these domestic issues with good ideas whenever he gets a chance. Too bad the moderators last night didn't give him one.