The Grand Old Partisan of Illinois

Monday, October 23, 2006

Chapter by Chapter Rebuttal to "The Plan"

Universal Citizen Service

Emanuel and Reed lead off with a bold and noble idea: Require all Americans between 18 and 25 to serve 3 months in a new domestic service corps. Their rationale is that this will teach young Americans how to respond to a terrorist attack or natural disaster, inspire more young people to join the military, and help repair the broken bonds of community by rebuilding the spirit of common purpose.

I agree with the authors that some Republicans will find fault with this idea, but for a different reason. They contrive a hypocritical Republican strawman about the relationship between responsibility and freedom, but the real conservative argument against their proposal is that – particularly in regards to their last goal - it gives government a role in our society that it should not (and, I believe, can not) fill.

I couldn’t help but think as I read this chapter that this is simply a government funded solution to the problems that liberals created by undermining the traditional pillars of American community. Patriotism, civil service and emergency preparedness are the cornerstones of the Scouting program, which has served as one of the most reliable sources of military recruits throughout it’s history. Unfortunately, the ACLU has spent the better part of 3 decades waging war on that organization. Without irony, liberals are now proposing the establishment of a government managed program to replace an independent organization. When you hear conservatives decry "big government," this is exactly what we are talking about.

When Emanuel and Reed lament that “many aspects of our lives – neighbors, schools, popular culture, political affiliation – are simply not the common experiences they were,” they curiously omit religion. Perhaps that is because their fellow partisans and ideologues are responsible for removing church from the central place it once held in our society, while leaving nothing in its place. I never pass up a chance to remind people that the American tradition of separation between church and state originally had to do more with protecting the former from the influence of the later, not the other way around. Liberals, in the second half of the twentieth century, reversed that, with disastrous results. Now Emanuel and Reed present us with the logical end of the liberal argument: the outright replacement of religion by government as the foundation of community and society. Could this be the "fundamental change" that President-elect Obama so often spoke of on the campaign trail?

While the aims of their “universal citizen service” proposal are laudable, it unsettlingly creates an arrangement whereby the government shapes the citizen, instead of the other way around. Americans know how to build strong, stable communities. They don’t need a government manual.

Universal College Access

Why Emanuel and Reed give the accessibility of higher education prominence over the need to fix primary and secondary education systems is beyond me. If the quality of education possessed by those with high school diplomas is not increased, getting accepted by and enrolling in college will become an exercise in academic vanity as institutions of higher learning begin to lower their standards in order to make their recruitment goals (I witnessed this first-hand as a student working in my university's admissions office).

I am all for the performance based rewards and increased salaries for teachers that Emanuel and Reed propose. Carrots are great, but they work much better in conjunction with a stick. Unfortunately, the authors’ allegiance to the teachers union prevents them from endorsing any negative performance based consequences. Tenure was developed to protect academic freedom in universities, not serve as a sort of civil service protection on steroids.

All of the authors’ talk from the previous chapter about the responsibilities of citizens in the social contract is forgotten in this chapter. Education is treated as an entitlement program, a service provided to you by the government. Too many parent’s interest in their student’s education is limited to property tax bills and disciplinary activity - if even that. Every teacher I have ever talked to has told me that parental involvement is crucial to academic success – but Emanuel and Reed don’t bring it up even once. What happened to their rhetoric about how “no government program can work unless it asks personal responsibility in return?”

We need bold, innovative new ideas to reform our nation’s education system. But education is far too important to be left to bureaucrats and pandering politicians.

Universal Retirement Savings

“The first step to strengthening Social Security is to help people begin building a comfortable nest egg outside of Social Security.”

I’ve long since given up the hope that Social Security will provide the same return for me as it did my grandparents, but my 401(k) and IRA has nothing to do with the strength and solvency of Social Security. Emanuel and Reed may have inadvertently stumbled onto an interesting notion: politicians will not have to worry about grabbing onto the third rail if we take some of the power out of it. While they propose some interesting ideas fot making Americans less dependant on Social Security for their retirement livelihood, they fail to follow that with any ideas on preventing the looming shortfall crisis. They assert that “the best way to strengthen Social Security is for Washington to stop spending the family fortune on everything else.” While I certainly agree that federal spending must be brought under control, that will do nothing to fix the fundamental problem facing Social Security: the fact that very soon, more money will be going out than coming in. If that basic structural flaw is not addressed, my generation will be the first to experience a reverse transfer of generational wealth.

Emanuel and Reed seem to have forgotten the “social” part of Social Security that has essentially made the program broken from the very beginning. From the start, people have been able to collect more money than they paid in. With average lifespans lengthening and the retirement age staying the same, that problem is only going to get exponentially worse. The same was true of most traditional pension programs offered in the twentieth century, and Emanuel and Reed recognize that corporations are “straining under the weight” of such systems. To take the place of such traditional pensions, they propose that all employers be required to offer 401(k) programs that are portable, for today’s career hopping generation. As someone who has held 3 jobs since graduating college, I can fully appreciate this proposal.

401(k)’s are ideal for businesses facing an increasingly competitive global marketplace. Instead of being saddled with the fiscal nightmare of paying benefits to an ever increasing pool of former workers in perpetuity, they can help their employees prepare for retirement in a way that does not impact them beyond the current fiscal year. Instead of defined benefits that must be paid, there are defined contributions.

Unfortunately, Emanuel and Reed fail to recognize that the problems currently facing GM because of its pension obligations are almost exactly the same ones facing the government as a result of Social Security. That is why President Bush proposed the creation of personal accounts for younger workers. Sure, there will be a funding disparity that must be addressed in the short term, but the long term benefit is that we will not have to face the unpleasant task of raising taxes of cutting benefits in 40 years. If GM had made the admittedly costly investment of transferring from a defined benefit to defined contribution system 25 years ago, they might not be getting slaughtered on their bottom line today. There’s a reason that the private accounts proposal came from the first President to have an MBA.

Universal Children’s Health Care

Everyone agrees that the single largest problem with our nation’s healthcare system is the cost. Emanuel and Reed suggest five “common sense ways to cut costs and improve quality.”

First, they advocate for the use of new information technology, paying respect to the efforts of Senator Clinton and former Speaker Gingrich for their work on this issue. Second, they propose a transformation from a system that financially rewards providers on the basis of quantity of procedures to quality of results. This is an innovative idea, and their assertion that “in other industries, the notion of paying fee-for-service is as outdated as the house call” is valid, but doesn’t take into account the fact that medicine is not an exact science. The human body is an enormously complicated thing, and even the best medical experts at the Mayo Clinic can’t always provide the desired results. Does that mean they should not be properly compensated for trying, and giving it their best shot? Sometimes chemotherapy just is not enough to cure the cancer. It’s unfortunate, but someone has to reimburse the hospital for the administration of the procedure anyway.

The third idea proposed is promoting a healthcare system that helps people stay healthy in the first place. This is already being put into practice by the market-driven insurance industry (my dental insurance provider reimburses me for the purchase of a quality electric toothbrush, because they know it will save them money in the long run on fills and root canals), and it’s nice to see Democrats proposing that government provided healthcare programs follow suit.

Fourth, they assert that “effective care is the most cost-effective care,” and propose more research into the comparative effectiveness of everything from pharmaceuticals to the treatment of major diseases. Again, I think that this is a worthy idea, but the marketplace will – and already does – sort that out.

Finally, they advocate for more focus on chronic care, which is where Americans spend the plurality of their healthcare dollars. But the only specifics they convey regarding this are a restatement of number 3, as they discuss the benefits of helping emphysema patients to quit smoking.

Emanuel and Reed then move into a section on making employees health coverage more affordable for small businesses. Curiously, they completely forget to mention that the Republicans in the House have passed, and the Democrats in the Senate have blocked, a bill endorsed by the Chamber of Commerce (who’s membership is over 95% small businesses) that does just that. Instead, they promote the bill submitted by Sens. Durbin and Blanche that would create a government managed program modeled after the Federal Employees Health Benefits Program. The Durbin-Blanche proposal, however, changes an important aspect that helps keep FEHBP so cost efficient: the exemption from state coverage mandates. Coincidently, that is the feature of the Republican backed plan that the Senate Democrats object to so much.

The authors spend a bafflingly brief amount of time discussion Medicare and Medicaid, especially considering that those are even bigger financial time bombs than Social Security. Again, their solution to the impending shortfall is: cut federal spending. And again, while I don’t disagree with that being a necessary part of the solution, it is only part of the solution.

Emanuel and Reed confess that they “don’t have a plan to secure Medicare solvency through the latter half of the twenty-first century, but we can begin now to start saving the Medicare trust fund.” My response to the latter part of that is, why bother? If the program is going to go broke in 50 years, why wait till then to take the necessary steps to address the structural flaws in the funding/spending equations? I guess Americans will have to turn elsewhere to find answers on that front.

Fiscal Responsibility and An End to Corporate Welfare (The Cost of One Party Rule)

I include that section subtitle from this chapter because that is basically what it’s all about. This is Emanuel and Reed’s chance to vent, and fire up the base with unabashedly partisan rhetoric. But blaming everything wrong with the modern relationship between politics and business is intellectually dishonest, as the examples they use to prove their point conveniently demonstrate.

Incumbency protection and gerrymandering are not new concepts. Republicans have certainly been more successful at implementing these tactics in recent years, but the Democrats’ failures are not for lack of trying. The controversial Texas redistricting plan, which the authors describe as “ruthless gerrymandering….for partisan gain,” was implemented because the post-2000 Census map drawn by the then Democratically controlled Texas legislature resulted in the vast majority of Texans being represented by Democrats despite the fact that a vast majority of Texans had voted for Republican candidates. If the party roles had been reversed, Emanuel and Reed would no doubt be praising this move as a bold defense of democratic ideals. The only thing truly controversial about it was the timing.

Turning to lobbying – the scandals surrounding which were originally going to be the Democrat’s trump card in this election until Mark Foley came out of the closet – they propose a five year lobbying ban on members of Congress, their senior staff, and senior administration officials. This is one of those ideas that is satisfying on a surface level, and might even accomplish its stated objective. However, there is a Constitutional issue to be considered: lobbying, like journalism, is protected by the Bill of Rights. Just as journalists and commentators (many of whom are paid handsomely, it should be noted) should not have their freedom of speech infringed upon, lobbyists should not have their freedom to petition the government for the redress of grievances, even if they are making money by doing it on someone else’s behalf. Would Emanuel and Reed even dream of denying anyone the right to be a journalist because they had recently served or worked in Congress or the White House? My opinion is that if we truly had “a clear set of rules that protect the public interest,” which I agree we should have, then the effectiveness of a lobbyist would depend more on their ability to justify their client’s position as being in the public interests than on who they are. To be fair, Republicans have not done as much to make that a reality as I would like. But let’s not pretend that the Republicans ended some sort of golden era of honesty and accountability during 50 years of Democratic rule in the House. We will never get lobbying reform that is truly in the interests of the American people as long as it is being justified in such blatantly partisan terms.

Tax Reform to Help Those Who Aren’t Wealthy to Build Wealth

After wading through the muck of partisan, class-warfare rhetoric that punctuates this chapter, I found myself actually in agreement with much of their proposal to simplify personal income taxes. However, their proposed 35% flat tax for corporations is economic populism run amok.

First off, not all corporations are Enron, and thus they don’t all deserve to be treated like Enron, legally or rhetorically. The negative impact of a 35% flat tax on small and start-up businesses would be staggering. Right now, such businesses employ ½ of the private sector work force. Expect to see that figure go down (and the unemployment rate to go up) if Emanuel’s tax plan is put into place. I do not understand how Emanuel and Reed could spend so much time extolling the virtues of progressive taxation for individuals, but fail to carry it over to corporate taxes in order to help give already struggling small businesses a better chance to compete.

Secondly, not all business deductions are created equal. Are there some egregious loopholes that should be closed? Of course. But, just like individuals and families, businesses deserve breaks while trying to get ahead. Unfortunately, there is not much room for nuance in this oversimplified “people versus the powerful” tax reform agenda. Perhaps the best place to start would be to take the 4 “super-incentives” that the authors identify for the purposes of personal income tax, and see if there are not some legitimate incentives that can and should be offered to businesses:

College/Education – How about a tax deduction for corporations with tuition assistance programs, or scholarship funds for employees and their children? The authors are right, in the chapter on education, to point out its importance to our nation’s economic competitiveness. Businesses certainly have a stake in our public schools system, and they have a vested interest in offering their employees opportunities to continue their education and training throughout their career. Such an investment benefits the employer, employee, and the economy of the entire country. Businesses should be rewarded for making this sort of investment by being able to deduct the cost from their taxable profits.

Home/Property – An important tax incentive for businesses that was unfortunately not renewed in 2005 was the brownfields deduction, which allows corporations to deduct the costs associated with remediation for contaminated industrial sites. These sites are often in decaying urban areas in vital need of both economic redevelopment and increased environmental quality of life. Businesses that did not cause the pollution, but are willing to make the investment to clean it up deserve the assistance of the federal government through the tax code. Similarly, businesses should continue to be rewarded for making investments in energy efficient technology and retrofitting old facilities to meet modern accessibility and safety standards.

Family – Corporations that go above and beyond in providing child-care and extended maternity leaves should be able to do so without economic penalty. By making the salaries of employees on family leave 100% tax deductible, more companies might be willing and able to provide the sort of extended time that many liberals would like to see made mandatory.

Retirement – Finally, corporations that help their employees prepare for retirement by matching their 401(k) contributions should be rewarded through the tax code.

This is hardly an exhaustive list. But the point here is that sticking businesses with a 35% flat tax would not only be bad for the economy, but discourage them from being ‘good corporate citizens.’ Almost every sector or profession could probably come up with a list of 5-10 deductions that are not only beneficial for their bottom lines, but also critical to their ability to provide quality, affordable products or services to their customers. In short, helping corporations and business usually helps customers and employees, as well. (More in The Hybrid Economy)

A New Strategy to Win the War on Terror

I have news for the authors: we didn’t “splinter the world’s resolve to stamp out radical Islamic totalitarianism.” It never existed in the first place. Most other countries around the world can’t bring themselves to even acknowledge that radical Islamic totalitarianism exists, let alone is a threat worth confronting. And the leaders of those that do are derided as puppets and “poodles” of George W. Bush. Emanuel and Reed talk about “reforming and strengthening multilateral institutions for the twenty-first century, not walking away from them,” but don’t give any insight as to what sort of reforms they think are necessary. Republicans like Senator Norm Coleman and Ambassador John Bolton have not walked away from the UN. They are the ones leading the charge to reform it and root out corruption. I am sure that both would be more than willing to make those bipartisan efforts.

Emanuel and Reed bemoan the fact that the Bush Administration has asked ordinary Americans to sacrifice so little in this war. They may have a point, but only if we limit our definition of sacrifice to financial terms. Yes, in World War II, Americans were more than willing to pay higher taxes. But Americans were also willing to accept that letters and cables between them and foreigners might be reviewed by the government, in an effort to combat spying and sabotage. I am not saying we should go back to draconian measures of FDR’s wartime administration. But it is worth noting that today’s Democrats believe an American’s right to a private conversation with someone with suspected terrorist ties is absolutely sacrosanct without a warrant. Even simply obtaining information about what phone numbers are calling what other phone numbers overseas is considered a gross violation of individual rights and freedom – an ominous intrusion by “big brother.” If we are going to start tying the intelligence community’s hands tactically, then all the money in the world won’t win this war. Republican criticism of Democrats over the war on terror has nothing to do with cynical exploitation of fear, and everything to do with a real concern that liberals only want America to fight this war as long as it doesn’t offend anyone overseas or intrude on anything other than the finances of the upper tax brackets.

The authors’ proposal to create an MI-5 style counterterrorism agency is thoughtful and worth exploration. The communication breakdowns within our nation’s intelligence apparatus were caused by barriers placed between the domestic agency (FBI) and the international agency (CIA) that were intended to prevent the latter from legally corrupting the cases of the former. An agency with the broad authority to deal with modern terrorism, which often combines domestic criminal matters and international security threats, would be an asset to our country. But Emanuel and Reed’s proposal that this agency “be given painstaking oversight by the intelligence committees of Congress” would represent as power grab by the legislature just as disturbing as any of which the Democrats have accused the Bush Administration. Congress is not a judicial body, and is ill prepared to assume the role of vanguard of constitutional rights. New rules are needed to fight this new kind of war, but that doesn’t necessitate (and I should think liberals would agree) the reordering of our constitutional separation of powers - a concept with which I would have expected the authors to agree.

The Hybrid Economy

The final chapter deals with using technology and innovation to achieve the goals of increased energy efficiency, a cleaner global environment, and a more competitive national economy. These are worthy goals in which every American has a stake. My problem with Emanuel and Reed’s approach is it’s over-reliance on government funded and directed research. In addition to the strong argument that can be made for private research being more efficient and productive, there are many reasons why the government should not be in the business of leading the charge on cutting edge technology. The current debate over stem cells highlights one of them. Call them luddites if you want, but almost every miracle of technology (particularly medical technology) has had its detractors – those who felt that the moral costs of progress were greater than the tangible return. By limiting the it’s role to providing tax incentives for private research endeavors, the government can support innovation without making any individual tax-payer feel as if they are directly supporting research that compromises their values and beliefs.


This is the most comprehensive agenda I have seen from the other side of the aisle since Bush took office. Some of the ideas are interesting, and worthy of further exploration. But, on balance, they are often predicated on the same failed liberal platform: government is the solution, and business interests (and those with wealth) are the problem. This is flawed logic on its very face, and has been flatly rejected by the American people for over 50 years. Any agenda that cannot move beyond that premise is doomed to keep the party that embarrasses it a recipe for disaster.