If Republicans ever want to govern again, they are going to have to take back the tax issue, which they have completely and inexcusably lost to the Democrats since 2008.

Unfortunately for them, the tax-code overhaul unveiled yesterday by Rep. David Camp (R-Michigan), chairman of the House Ways and Means Committee, fails to take it back.

It is, to be sure, an admirable failure -- a bold proposal, three years in the making, with many merits. But it's not nearly as bold as these troubled economic times demand, or voters want.

Overview

The Camp Plan admirably simplifies the tax code (greatly reducing the number of Americans who have to itemize). But it won't spur long-term economic growth. And it still redistributes wealth, distorts economic activity, indulges in social engineering, and (in the case of large businesses versus small) plays favorites.

Is it better than the status quo? Yes.

Will it revive the economy (and thus Republican political prospects)? Doubtful.

Economic growth can only be spurred by a combination of reduced spending, less regulation, and lower taxes.

Alas, Camp’s plan doesn't include any of those things -- though it does, to be sure, represent a big step in the right direction.

Plan Specifics

Here are some of the main features of the plan, with my own reactions:

Scraps Dozens of Loopholes and Giveaways. Camp cheerfully takes a bulldozer to dozens of special-interest credits, deductions, exemptions, and loopholes -- including the deduction for state and local taxes that rewards high-tax states like New York at the expense of low-tax states like Texas -- and deposits them in the policy landfill where they belong. This is by far the plan’s best feature, and I would love to be a fly on the wall of the Chamber of Commerce and certain K Street lobbies this morning.

Reduces the Number of Brackets. Camp compresses the current seven tax brackets (10, 15, 25, 28, 33, 35, and 39.6 percent) into just three: 10, 25, and 35. The new 25-percent bracket would begin at a level of $35,600 in annual income for a single filer, $71,200 for joint filers. The new 35-percent bracket would begin at the same income levels as for today’s 39.6-percent bracket: $400,000 for single filers and $450,000 for joint filers. (These levels, and many other code provisions, would be indexed to rise annually with inflation, using the so-called “chained CPI” measure, which rises a bit more slowly than traditional CPI.)

Isn't Single-Rate. Unfortunately, Camp leaves three brackets. Why? Why not just one? The only reasons to have more than one are to redistribute wealth (tax "rich" folks at a higher rate than the rest of us) and to hide the true cost of government (make it seem smaller to most voters than it really is). Neither reason is really defensible. Camp should have proposed a single-rate system that transparently shows taxpayers the full costs of Big Government.

Reforms EITC. Camp replaces the redistributionist, fraud-ridden Earned Income Tax Credit (EITC) with a simple offset that effectively eliminates the burden of the payroll tax for many low-income workers.

Repeals AMT. Camp scraps the Alternative Minimum Tax, possibly the dumbest tax ever devised by man.

Seeks to End IRS Political Targeting. As the 2012 election showed, the IRS has long been used as a tool by presidents of both parties to harass their political opponents. Camp includes a number of reforms to curb these abuses, though I'm skeptical completely eliminating them is possible so long as Washington is in the business of deciding which kinds of speech deserve to be "tax-exempt."

Regains the Mortgage and Charitable Deductions. Camp retains the popular but unjustified mortgage-interest and charitable deductions, in modified form. He may have decided he won't be able to pass the bill if he eliminates them overnight, but surely he could have phased them out over some reasonable period.

Retains “Pro-Family” Social Engineering. Camp increases the child and dependent tax credit from $1,000 per child or dependent to $1,500 and indexes it to rise with inflation. Some conservatives fancy using the tax code for social engineering. They want to use it reduce the costs of child-bearing and child-rearing. Those are very nice goals, but the Constitution doesn’t authorize Congress to pursue them; and even if it did, such subsidies are much better administered as simple cash welfare payments rather than tucked into the tax code.

Fails to Consider the Payroll Tax. Income tax reform can’t be done in isolation from the payroll tax, which is the biggest tax most Americans pay and a bigger burden on most families than the income tax, especially lower-income workers. Although Camp tries to soften the blow by retaining the EITC in a revised form, he still shifts a lot of the income-tax burden onto lower-income workers, making his plan a political nonstarter.

A better approach, if we are being bold, would be to tackle both the income and payroll taxes at the same time. This would give Congress a bigger policy arena to work in, and would help ensure that reform actually reduces taxes for everyone, instead of just shifting burdens around.

Raises Capital Gains Taxes. Camps raises the top marginal income tax rate on capital gains and dividends from today’s 23.8 percent to 24.8 percent and effectively treats capital gains as ordinary income, which they are not, having been taxed once already at the corporate level. Excluding 40 percent of the gains from tax doesn't really solve this problem. He also moves in the wrong direction on expensing and depreciation. Business should be allowed to write off all their capital investments in the year they’re acquired, but the plan stretches out the write-off periods.

Reduces the Nation’s Capital Stock. The nonpartisan Joint Committee on Taxation officially estimates that, while Camp’s plan would boost GDP in the first decade, it would also reduce the nation’s capital stock (our seed corn) in future decades -- the very opposite of what we need for long-term growth. This is a big problem.

Keeps Subsidizing Excessive Health Spending. The plan’s biggest failing, in my view, is on health care. Out-of-control health care costs are the single biggest driver of federal debt and deficits. The tax code’s single biggest distortion, after its negative effects on job creation, is its promotion of medical inflation. If you are going to overhaul the entire income tax code, you need to address the health care problem. Camp does not. Health benefits are income, but today’s tax code excludes employer-provided health benefits (and some other fringe benefits) from taxation. In an ideal system, all income would be taxed once and only once. If we are going to tax income, health benefits should be taxed as income. For prudential reasons, Camp refrains from touching the massive health care subsidy, since it could upset the one in two Americans who currently benefit from it. That will spare him some political grief; but in the context of a complete overhaul of the income tax, it’s not excusable. He does preserve the existing tax breaks for Health Savings Accounts (HSAs), which, in the current context are our best building-block toward patient-centered health care. But otherwise, Camp has passed up an opportunity to help wean Americans from the health care exclusion, a hidden entitlement that is the single biggest factor in out-of-control health care cost growth and the biggest driver of our national debt. If he feels constrained to retain a massive health insurance subsidy in some form, a better way to handle it would be to eliminate the exclusion and propose a new lump-sum, means-tested health insurance voucher system on the spending side of the budget. (And phase out that voucher by a date certain, in order to get back in good standing with the Tenth Amendment.)

Isn’t Bold Enough. By not eliminating all special-interest provisions, Camp has left the ground fertile for them to grow back and multiply. That’s what happened after the 1986 reform, which lasted a mere four years before Congress backslid. Today, we are arguably worse off than before the '86 reform. According to the Mercatus Center at George Mason University, 4,428 changes were made to the tax code from 2001 through 2010. That’s more than one change per day. The same study shows that from 2002 through 2011, lobbyists spent more than $27 billion petitioning federal, state, and local governments, for tax changes, which may be likened to earmarks. If we're going to build a whole new tax system, let's build it to be less prone to tweaking and corruption.

A Political Box

Politically, Republicans remain trapped in a box of their own making, and will never escape it, till they propose something that inspires real live voters (and not just K Street lobbies or Beltway think tanks).

The box comes from trying to simultaneously hold the traditional conservative view that the tax system should treat everyone the same and the progressive or socialist idea that tax rates should be graduated and the economy micromanaged. Politicians who refuse to choose between these two ideas will remain in the box.

What would truly inspire real live voters?

A truly inspiring plan would treat all Americans equally.

A truly inspiring plan would clear a broad path for every American to work, save, and invest as he sees fit -- would lift the weights of excessive government from every shoulder -- and thereby unleash economic growth and higher prosperity for all.

A truly inspiring tax plan plan would not penalize investment, redistribute wealth, perpetuate distortions, engage in social engineering, or create new taxes on specific industries.

Camp's plan, sadly, meets none of these criteria.

Why did Republicans lose the tax issue? Because in 2008, Barack Obama outflanked John McCain on both the left and the right by urging higher income tax rates on the “rich” (which is appealing to the vast majority of Americans who think of themselves as “not rich”) while viciously attacking McCain’s plan to “tax your health benefits” (an essentially sound policy that was politically foolish because it would disrupt existing health insurance arrangements for half the country, overnight).

In other words, McCain proposed raising taxes on most Americans while Obama proposed raising them only on the “rich.” Guess who won.

After his election, Obama went and taxed our health benefits anyway (to help pay for Obamacare, by way of a new tax on “Cadillac” health plans); and then, four years later, he forced a defeated (and defeatist) Republican leadership to raise taxes on the "rich" (by reversing most of the Bush tax cuts) and on the middle class (through a massive payroll tax hike).

And so McCain’s losing tax principles became law under President Obama.

Meanwhile, the economy has entered the sixth year of what amounts to a jobless recovery.

Conditions are now ripe for a GOP breakout from the tax box and a comeback on the tax issue. Conditions have arguably not been this favorable for Republicans since the late 1970s. But to win, the party of Coolidge and Reagan must be bold and principled. It must inspire.

Wanted: A Single Rate, and A Massive Tax Cut

What should Camp have proposed?

A single rate. And a massive tax cut.

By keeping a multi-rate structure, he deprives himself of the justice argument: he fails to treat everyone the same.

By attempting to be “revenue neutral” -- Beltway speak for “just move the shells around” -- Camp merely shifts more of burden of the income tax onto the 47 percent of Americans who currently pay no income tax. While his bill is certainly flatter, fairer, and simpler than today's tax code, “revenue neutrality” kills the plan in its cradle, ensuring that it remains a political nonstarter. If he wants to actually overhaul the tax code, he’s going to have to cut taxes for most Americans.

Would a massive tax cut increase the deficit? Yes. Do deficits matter? Of course. But deficits are currently shrinking. And balancing the budget requires a combination of spending cuts and increased receipts (from faster economic growth, of course, not tax hikes). As Coolidge, Kennedy, and Reagan all showed, a massive tax cut can be a huge shot in the arm to a struggling economy.

Tax cuts are a political winner.

Proposing massive tax cuts -- coupled with massive spending cuts that bring about a massive reduction in the size and scope of the federal establishment -- would spur massive economic growth and a massive shake-up in the political landscape, and fuel a massive political recovery for the GOP.

In sum, Camp's plan is an admirable failure -- but also a welcome one.

At just the right moment, it gives conservatives and libertarians an opening to drive a real -- and much-needed -- national debate about how to promote economic growth and expand freedom.

The White House is touting something called "Promise Zones" as a model to spur economic growth. These areas feature federal spending with the usual strings attached, attempting to spur economic growth and civic renewal. What the country needs is not set of federally micromanaged zones, but to restore the original American promise for all of the us: here we can be free.

It's Deja Vu All Over Again

The Promise Zone Initiative is a spin-off of Enterprise Zones, hailed in the 1990s as a means to turn around deteriorating communities. Enterprise Zones didn't work very well.

As mentioned on the Cato Daily Podcast, others saw that Enterprise Zones failed because there is more to a failing city or region than a failed economy. A LEAP Zone is a special legal, economic, administrative, political jurisdiction, designed to remove obstacles to progress.  A Promise Zone is a LEAP Zone turned on its back. 

On the positive side, the Promise Zone Initiative is more than just economics. On the other hand, the solutions offer more of the same governmental solutions that caused the problems.

The five points of the Promise Zone Initiative -- what makes a Promise Zone promise-y -- are:

• Accountability for Clear Goals
  There are regulatory strings attached to these promises. Along with with all of these benefits will come the obligation to abide by all of the rules the bureaucrats make as they go along. 
• Intensive Federal Partnership
  The federal government will throw money at the problems it has largely caused, at least as long as the "Promise Zone" remains in effect. If federal priorities change, the money will go away. 
• Help Accessing Resources
  The politically-designated Promise Zones will get priority accessing federal resources, in a direct violation of the constitutional guarantee of equal protection under the law. 
• National Service
  For some reason, the presence of full-time VISTA volunteer coordinators is expected to help.  
• Investing in What Works
  The first five (of 20 planned) Promise Zones are in San Antonio, Los Angeles, Philadelphia, Southeastern Kentucky, and the Choctaw Nation of Oklahoma. In order to show success in the program, they have avoided the most devastated areas, such as South Los Angeles, Detroit, and the entire state of Illinois.

Strings Attached

According to the Promise Zone application guide (pdf) (emphasis added)

All lead organizations of designated Promise Zones, implementation partners in the Promise Zone strategies and any federal grantees whose federally funded work contributes to Promise Zone strategies will be required to participate in evaluations of Promise Zone and related federal grant activities that may be conducted from time to time. Lead organizations, implementation partners and federal grantees contributing to Promise Zones must agree to work with evaluators designated by federal agencies, including providing access to program personnel and all relevant programmatic and administrative data as specified by the evaluator(s) under the direction of a federal agency, during and after the term of the Promise Zone designation and/or grant agreement. 

In other words, rather than freeing these places of the regulations that have bound the country into economic knots, the Promise Zone initiative will add a layer of regulation on top of what's already there.  

Several affected federal departments and agencies got involved promoting the effort with blog posts and web pages, including: 

• Housing and Urban Development 
• White House Office of Management and Budget
• Department of Agriculture
• Department of Education
• The Corporation for National and Community Service

Each of the agencies and departments echoed the White House talking points, sometimes copying and pasting the points -- just as the Promise Zone Initiative copies and pastes the same, tired governmental solutions.

HUD says, "A child’s zip (sic) code should never determine her destiny," but the Promise Zone is another attempt to let ZIP code determine destiny. 

In a free society, people who want to advance their lot in life can change their location -- in search of work or simply of a better neighborhood in which to raise their children. 

The benefits bestowed upon residents in the Promise Zone don't follow them if they move away. The programs give incentives to stay put, and not to advance.

At OMB, they get into the act, too, giving a long list of leftist agenda items, such as access to early childhood education, a minimum wage increase, and so on. Each of the items careens into a difficult problem: none of these initiatives has ever been shown to improve economic conditions.

Targeting certain communities with solutions that don't work will not have the effect the backers of Promise Zones desire. At most the benefits will be superficial, with a coat of paint for a community center or flower plantings along the same gray avenues devoid of the bustle of commerce.

Instead of Promise Zones, the nation needs not the addition of government programs, but their subtraction. Free the people from the rules choking the economic life from the country, stand back, and watch America roar to life again.

Photo credit: Businessweek

While tonight is New Year’s Eve for the rest of the country, inside the Beltway over the last few years December 31st has been akin to the Night of the Living Dead. Not because worn out Capitol Hill staff and interns wander the streets in a drunken stupor (though this is an accurate assessment), but because dozens of tax extenders set to expire at year’s end are usually reauthorized in bulk by Congress. These dying subsidies and loopholes in the tax code, used by Congress to micromanage the economy through perverse incentives, are all too often brought back like Frankenstein’s monster in some last-minute deal hailed as bipartisan compromise (See: American Tax Payer Relief Act of 2012).

While most of the 46 some-odd provisions that are set to expire tonight as the ball drops in Times Square are written to serve some inarguable and noble purpose, in the long-run these added complexities are bad for the economy. The Taxpayer Advocate Service, the office within the IRS which has the sole purpose of highlighting and combatting the most pressing issues of the tax process, lists tax code complexity as the number one issue facing taxpayers. Any step to chip away at the 4 million-word-long tax code is thus a welcome one.

Further, many of these provisions incentivize inefficient investments which have potentially serious economic consequences. This is Congress picking winners and losers before the market has a say, and when that happens we all lose. One such expiring provision is the renewable energy Production Tax Credit (PTC). The PTC, which subsidizes the production of electricity from renewable energy sources like wind, biomass, and geothermal has the effect of incentivizing the introduction of inefficient, unreliable, and largely experimental energy technologies onto the nation’s power grid. Wind power is particularly egregious, as peak wind energy production is inversely correlated to electricity demand, meaning that taxpayers are subsidizing wind companies to produce electricity when they need it the least. This has massively distortional effects on the electricity grid the nation can ill-afford during this tepid recovery. This is all on top of the fact that the environmental “benefits” of “green” energy like wind are marginal if not entirely imaginary. The PTC was set expire at the end of 2012, but was revived and expanded by Congress for at least the third time since its original expiration date in 1999. The cost? $12.2 billion.

All told, the Congressional Budget Office estimates that eliminating the PTC and the other 45 provisions set to expire tonight will save the federal government and taxpayers nearly $1 trillion dollars over the next 10 years. ($938.3 billion)

That being said, while many of the credits, subsidies, and loopholes that are lapsing are, in large part, either economically detrimental like the PTC, or just plain silly like “Three-Year Depreciation for Race Horses Two Years or Younger” or the “7-Year Recovery for Motorsport Racing Facilities”, some are certainly worth taking another look at. It’s hard to argue against the tax deduction for teachers’ out-of-pocket classroom expenses or the “Employer Wage Credit for Activated Military Reservists”. Without doubt, upon their return from the holiday, Congress will seek to reauthorize the bulk of these 46 programs while only touting no-brainer provisions like the preceding two. Yet it is critical to remember two things:

1. Reauthorizing tax credits and subsidies for the neediest and noblest members of society does not justify extending corporate welfare through programs like the PTC.
2. Many of the problems that these special loopholes seek to alleviate can be solved by comprehensive tax reform that simplifies and lowers the tax burden across the board, from teachers to tycoons.

Expiration dates are written into tax credits and subsidies for a reason. Instead of reneging on the rules that it has set for itself by taking the easy way out and granting a broad re-authorization of these expiring provisions, Congress should use this moment to kick-start a comprehensive evaluation of the entire tax structure and code. Let’s take the IRS’s advice; the tax code must be simplified and the tax burden lowered for all Americans, not just the ones that catch the sympathies, or can afford to catch the ear, of Congress. To live and let expire the 46 programs ending tonight is a critical first step in this process.

For a full list of the tax extenders set to expire, please see this Congressional Research Service Report: http://www.fas.org/sgp/crs/misc/R43124.pdf

Recently, I attended a speech that attempted to lay out a case that Ronald Reagan would not have been a Tea Party President. The speaker, a conservative not terribly familiar with the Tea Party movement, made an interesting case. He cited Reagan's tax increases, deficit spending and amnesty granted to 3 million illegal immigrants as proof that Reagan would not have been embraced by the Tea Party. I decided to investigate the case further, and this is what I found.

The speaker attempted to correlate the modern Tea Party movement with the Presidency of Ronald Reagan. He concluded that, despite the common refrain from Tea Party activists that The Gipper would be the ideal Tea Party president, Reagan's record does not hold up to Tea Party principles.

In order to determine whether Reagan was a Tea Party president, one must first determine what a Tea Partier is, what the Tea Party ISN'T, and how Reagan fits into the equation.

Now, when one is unfamiliar with a subject, what's the first thing one does? Google it! Type in “Tea Party”, and up pop 394,000,000 results in .43 seconds. It's a daunting task, to say the least, to narrow it down to legitimate sources only. And, sorry to say, the reference material found at the website cited in the speech leaves more questions than answers. I see a donation button and a lot of language designed to appeal to Tea Party activists, but a surfeit of information regarding its organizational structure. Luckily, they do list a phone number with a LIVE OPERATOR 24/7/365! Curious, I called the number.

After being placed on hold for 5 minutes, an operator came on the line with the greeting, "Tea Party Processing Center, how may I help you?" Turns out this number is a donation number only. I state that I have questions about the organization before I make a donation, and the operator is of course unable to answer any questions. He assures me he'll have someone call me back from the office. (I'm still waiting, of course.)

So on this site is a list of 15 Non-negotiable Core Beliefs. It doesn't actually say who collated this list, whether anyone actually voted on these items, or who contributed at all. Presumably, these are the core beliefs of the only individual listed on the website, the CEO of the site. Again, he'll be calling me back any time now.

Look, any yahoo can put up a website claiming to represent the Tea Party and start taking donations. In fact, that sort of fraud is rampant.

What I'd like to reiterate is what the Tea Party is NOT: The Tea Party is not a cynical fundraising vehicle with a website long on boilerplate and short on achievable goals. The Tea Party IS a loose coalition of many thousands of local groups that align themselves with the quest for liberty and patriotism. There are several dozen such groups here in Oregon that I can think of off the top of my head, with varying levels of organization.

The Tea Party has always functioned best when it encourages activists to find their own voice and empowers them to effect real change in politics. It inspires and empowers. It encourages folks to get off the couch and get involved. And that involvement means electing politicians and holding them accountable to Tea Party ideals.

Now, what are those Tea Party ideals? Do they include the minutiae from the website cited by the speaker, like Illegal aliens, special interests, English as our official language and family values? I would say that, in my experience, most Tea Party supporters believe in a mix of all of the above, but that is not to say that those are our core ideals. The core ideals are much more simple and more fundamental.

FreedomWorks, for instance, says this on their website:

FreedomWorks members know that government goes to those who show up, and are leading the fight for lower taxes, less government, and more freedom. Join us!

What We Do

FreedomWorks recruits, educates, trains and mobilizes millions of volunteer activists to fight for less government, lower taxes, and more freedom.

Why We Do It

FreedomWorks believes individual liberty and the freedom to compete increases consumer choices and provides individuals with the greatest control over what they own and earn.

How We Do It

FreedomWorks' aggressive, real-time campaigns activate a growing and permanent volunteer grassroots army to show up and demand policy change.

The prominent local Tea Party example in Oregon, of course, is the Oregon Tea Party PAC. At the website, oregonteapartypac.org, we see a mix of local and national news items, recent Tea Party operations and a list of political accomplishments since its founding in 2009, resources for new activists, a list of very simple principals, and, YES, a donate button.

So let's focus on those simple principles. This will be short, because there are only three:

• Limited Constitutional Government
• Free Market Economy / Capitalism
• Fiscal and Personal Responsibility

Now, of course, within these broad categories, there’s a lot of room to distill down a series of policy stances. The best way to define this is by example. Let’s take the biggest driver of Tea Party interest today: Obamacare. The Patient Protection and Affordable Care Act violates all three of the Oregon Tea Party’s stated principles – it greatly expands the size and role of government while clearly violating the constitution (John Roberts be damned); it requires the federal government to take over 1/6 of our economy and creates a command economy more akin to the Soviet Union than American capitalism while removing local and individual control over purchasing behavior; and it requires dozens of new taxes and fees, while requiring the participation of every single American citizen – sort of the opposite of fiscal responsibility.

Let’s take another example: The Columbia River Crossing. That also violates all three principles. So does the expansion of Medicaid. So does PERS. So do a myriad of state and federal policies – you get the point.

Please note, at this point, that nowhere in this discussion have the following issues been mentioned: an official national language, abortion, illegal immigration, military spending, or family values. This is because the Tea Party coalesces around the issues that are most dire for our national survival right now, and about which the overwhelming majority of us agree.

So, based on this refined definition of what the Tea Party is, would Ronald Reagan fit in? Well, where I agree with the speaker is that Ronald Reagan’s record is not the most conservative it could have been. He engaged in deficit spending, amnesty for 3 million illegals, and some tax increases. But what one must always keep in mind is the historical context in which these actions were taken. Liberals love to kill Republicans by saying any derivation of the following statement: “You are hypocrites for criticizing Obama’s spending policies, because Bush and Reagan both were responsible for bigger debt and more deficit spending” – a true statement lacking context. Both were president during war time. In Reagan’s case, it was the Cold War, but that makes his accomplishment all the more remarkable – he destroyed the threat from an enemy without a shot being fired or an ICBM being launched. And, it must be noted, that deficit spending PALES in comparison to the levels of spending today. Indeed, Obama’s gargantuan expansion of federal spending is unique in our history, as it is exclusively devoted to domestic programs instead of a war effort.

Now, the question still remains, does Reagan’s Cold War deficit spending conform to Tea Party Principles? I’d say there’s an argument on both sides, but many Tea Party activists would agree that he faithfully executed his constitutional duty to protect us from enemies both foreign and domestic. My somewhat educated guess is that this follows the spirit, if not the exact letter of Tea Party principles, but there is much debate to be had.

Regarding amnesty, as this is not a Tea Party principle, it may not be relevant to the discussion. However, it’s worth noting that MOST Tea Party activists probably disapprove of this policy, but again we must remember the context. When the Speaker of the House, Tip O’Neill, is to the left of Nancy Pelosi, you don’t have a lot of room for negotiation. This also holds true for the tax increases we saw under Reagan.

And speaking of negotiating, I want to touch on this point because we Tea Partiers often get a bum rap. We’re labeled as uncompromising and unable to negotiate. I reject that claim out of hand. Politicians most closely aligned with the Tea Party like Mike Lee, Ted Cruz and Rand Paul are perfectly willing to negotiate. What they won’t do is compromise on their core principles. Indeed, the core principles guide their negotiations – not the other way around. And, contrary to popular folklore, Tea Party activists generally understand that getting part of what you want instead of getting everything you want is way better than getting nothing at all. But what really drives us nuts is watching politicians give away their negotiating power right at the beginning. Giving up what the other side wants now, for the promise of something to come later, is a sure way to lose. And we hate losing.

What other aspects of Reagan’s legacy are relevant to this discussion? An unemployment rate that was cut in half, the end of Jimmy Carter’s stagflation and record GDP growth that lasted well past the end of his second term. The end of the Cold War. Overall, a cut and flattening of the tax code (with an assist from Senator Packwood). A safer, more secure, more prosperous nation that rediscovered what made America exceptional.

So, while I would certainly say that at times there would have been tension between the Tea Party and Ronald Reagan, and we might even have strong disagreements on elements of policy, there would have been much more to agree on than to disagree on. So yes, I believe that Ronald Reagan would have been embraced in real time by the Tea Party – that is, if Calvin Coolidge and Barry Goldwater were unavailable.

We all know that communism is evil, socialism is bad, big government reduces personal liberty and central planners can't plan their way out of a wet paper bag. But we don't often examine why. If governmental interventions into private lives and free markets are supposedly rooted in altruism and compassion for the less fortunate, why do they so often fail?

I recently wrote that the war on poverty has been an abject failure, leaving in its wake families and communities in utter chaos. Well, the reason that the programs fail is that the descriptions of being rooted in altruism and compassion are based on false premises, that too often go completely unexamined by their adherents. As Lenin (not Lennon) told us, "The goal of socialism is capitalism", and he conveniently mapped out the method for us: "The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation." Redistribution of wealth is not altruistic, and helping the poor is not the goal. The goal is to crush those at the top, to punish them for doing too well.

My friend Tom is fond of saying, "All taxes hurt the poor." Even the ones that are designed to help them. We see the effects of government dependency all around us as the entrepreneurial spirit and rugged sense of individualism is slowly extinguished. That dependency cannot be built except by redistribution via the tax code.

This system predicated on the false premise of helping the poor is a sick, twisted form of bondage. The true, inviolable, fatal flaw to the idea of government helping folks is that government solutions require a steady supply of two commodities: tax revenue, and poor people. So the question we must ask ourselves when considering whether a program is beneficial or not is: does it solve the problem, or perpetuate it? When you honestly examine almost every governmental program in existence, and really, truly want to know the answer, it becomes pretty clear. Then, when you stop to consider the words of Lenin and his roadmap to a communist state, you are forced to decide why similar policies exist today that drive up taxation and inflation.

Government isn't in the saving people business, or the environment business, or the health care insurance business, or the education business. It's in the government business.

This week, I decided to research the Farm Bill to write a little bit about some of the “reforms” House Republicans who support the bill are so proud of. The CBO estimates savings of $35 billion over the next ten years (vs. the current baseline). The CBO is also notorious for underestimating costs, and it looks like this time won’t be any different. 

Agriculture policy in the United States is among the worst examples of pork spending, corporate welfare, harmful subsidies, and anti-free market government intervention in the world. And the Farm Bill that is going to conference in Congress doesn’t accomplish any real reform to these bad policies. In fact, in some respects it makes things worse. 

The Republicans who passed the bill are lauding the end of the direct payments program, a move which they project to save $9.3 billion. While the end of one wasteful entitlement is a step in the right direction, Congress has created a brand new entitlement known as shallow-loss crop insurance, which you can read all about here. 

While that article mentions a plethora of terrible things about shallow loss insurance, a new report by the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri indicates that “the 2013 House- and Senate-passed farm bills are likely to cost taxpayers more than previously thought.” Specifically, “FAPRI estimates that expanded federal crop insurance subsidies would increase taxpayer spending (compared to the current funding baseline) by $15.2 billion and $10 billion, respectively.” 

Catch that? Eliminating the direct payments program saves $9.3 billion, but the new shallow loss entitlement would increase spending by at least $15.2 billion in the House bill and $10 billion in the Senate bill. The supposedly “conservative” Republicans, who were able to pass their Farm bill without a single Democrat vote, are celebrating the end of direct payments while creating a brand new, market-distorting subsidy for farmers that will cost more taxpayer dollars than it saves. 

K Street wins, taxpayers lose. 

As part of the complex montrosity known as Obamacare, people signing up for health insurance can have the help of Navigators - people with little training or experience wading through the most complex law ever passed. The manual for the program describes a system that will lead to privacy violations, personal embarrassment, and identity theft.

I read the Navigator manual in the mindset of information security: the set of practices and principles used to protect the confidentiality, integrity, and accessiblity of information systems. 

Along the way, I kept thinking; why do we need a program so complex that we then need "Navigators" to help us wade through it? 

Descriptions of practices that violate information security principles are rampant throughout the Navigator manual (pdf), but the portion on data safeguards has me crying into my coffee.

The IRS, in its zeal to block the legal political activity of conservative groups, has still not come clean. The agency is out of control, and needs serious reform, and ought to be shuttered, its services provided in some other way.

IRS officials are still trying to claim that the targeting of 292 Tea Party groups is nothing special because the IRS also turned its icy gaze on 6 progressive groups. It isn't clear that any of the progressive or liberal groups actually received any heightened scrutiny.

Items of interest:

• IRS official Lois Lerner waived her Fifth Amendment right against self-incrimination when she pleaded her innocence before trying to invoking it. 
• Another Senior IRS manager, Greg Roseman, did invoke the Fifth Amendment rather than testify to a House committee. 
• The Linchpins of Liberty provide a detailed account of questions the IRS asked them
• Public interest lawyer Cleta Mitchell noted that as of mid-May, the IRS was still harassing conservative groups. 

Now the second wave of IRS testimony has shown contradictions. Someone is lying.

As GatewayPundit put it,

Instead of condemning this practice, Tucker misrepresented the truth. She told the committee several different groups were targeted. This was not true. The Inspector General report in May confirmed that the agency was inappropriately targeting “conservative” groups. The IRS list allowed “progressive” groups to be approved on the spot while agents were told to send conservative applications to Washington DC.

According to McClatchy News Service, Treasury Department inspector general for tax administration J. Russell George wrote to Congress that liberal groups were not subjected to the same kinds of inappropriate IRS treatment as conservatives:

George added that while “we have multiple sources of information corroborating the use of Tea Party and other related criteria we described in our report, including employee interviews, emails, and other documents, we found no indication in any of these other materials that ‘Progressives’ was a term used to refer cases for scrutiny for political campaign intervention.”

According to Gallup, most Americans think it was all political, or at least knowledge of the operation went well up the organizational chart:

The coverup shows the crime.  With the IRS playing such a key role in implementing nationalized medicine, the nation deserves answers. Ideally, the whole agency should be abolished.