Putin’s Goal: Prove NATO’s Dead

After years of provoking Western powers, Vladimir Putin finally crossed someone who was willing to stand up to an increasingly imperialistic Russia when Turkey shot down a Russian jet that had violated its airspace. It is in many way fitting that the man with the strength to act was President Recep Erdogan who is emulating the Putin model at home. Facing term limits as Prime Minister, Erdogan shifted to the Presidency, which was previously a ceremonial role, and has been moving powers to that office. As such, he remains the de facto leader of the country as evidenced by the fact he, and not the PM, is the person Putin and President Obama interact with during this and other crises. As with Putin in Russia, in Turkey, the powers increasingly are endowed to the man not the office. Just as Putin has ramped nationalistic rhetoric the past decade to consolidate public opinion, Erdogan has let religion creep into a government that has been proudly secular to secure support. In Erdogan, Putin has a worthy and like-minded adversary.

While some of his actions have been unseemly, the fact is Erdogan is an ally in NATO with Turkey an indispensable nation in the Middle East that on balance is a positive influence. That raises the stakes of this incident severely, and a NATO power has not shot down a Russian plane since 1952. With Russian and American planes flying over limited airspace, the risk of accident or unintended escalation is great, and with our nuclear arsenals, the cost of a worst case scenario is unimaginable. Given the mutual defense clause (Article 5), a Turkey-Russia skirmish is equally dangerous.

Now, I do not ascribe to the view that this incident could be the precipice of a world war, despite the fact World War I was beget by a minor incident. Irrespective of constant underestimation by some on the left (who seem to have a real penchant for underestimating threats, mind you), Putin is not an oafish brute, seeking to use hard power everywhere. He is a strategic thinker who uses hard power only when necessary. A direct Turkish-Russian war is in no one’s interest. His goal is a different one entirely with long-lasting geopolitical implications: to prove what we secretly fear to be true, that NATO is dead.

NATO enlargement has been a key policy priority for years, and it is a wise policy assuming two conditions are met. First, the new country’s principles and policies are in-line with the organization’s goals and values (one does not typically allow enemies into an alliance). That condition has largely been met during enlargement, and if anything the former Soviet States who have been the focus of enlargement more forcefully support a united Europe than existing ones. Second, member nations must have the same willingness to provide for the common defense of new members as existing ones, for a failure to defend any nation would undermine the basic fabric of the alliance. If NATO members are unwilling to fight on behalf of Country X, they should not accept Country X into the alliance. This is the condition that Putin is wisely testing. Invading Turkish airspace is not intended to provoke Turkey; it is a test of NATO’s resolve. We must calibrate our response accordingly.

For months, Putin has been provoking the West from buzzing U.S. ships to sending submarines near Swedish waters. Since launching airstrikes in Syria, Russia has violated Turkish airspace several times, and after repeated warnings, Turkey shot down an unmanned drone last month. It must also be noted that the fact Russia is bombing near the Turkish border is your evidence he isn’t focused on defeating ISIS as they do not control that territory. He is bombing moderate rebels to help boost Assad’s grip on power. Putin does want to eradicate ISIS eventually as that’s required to help Assad, but his mission is to roll back all rebel groups and is currently focused on moderate rebels to ensure there is no credible alternative to Assad, or an Assad-like crony. Of course, some of these rebel groups, including the Turkmen, are supported by Turkey, only antagonizing Russian-Turkish relations further.

It is from this perspective that Erdogan’s decision to down a Russian jet must be viewed. Russia has ignored repeated warnings about entering your airspace and is killing the very rebel groups you have been helping. It’s an exasperating situation that can fairly be seen as an act of war. So when a Russian plane entered Turkey, even if it was for less than 30 seconds, Erdogan felt compelled and was entirely justified in acting. To be clear, Erdogan is completely in the right. That said, I think Erdogan likely made a strategic error here. It is one thing to shoot down an unmanned drone; it is another to shoot down a jet, which led to the death of the pilot and a marine. The fact the Russian plane appears to have been shot down over Syrian territory also makes the decision even more questionable.

If anything, this incident has given Putin cover to intensify bombing against the pro-Turkey rebels, and he will likely deter tourism (Turkey has a mock-Kremlin so many Russians visit it) and other joint economic projects. Shooting down a Russian jet also increases the tail-risk of the situation escalating beyond anyone’s controls.

Is a 17 second violation enough to merit being shot down? The slippery slope argument is powerful here, if not 17 seconds, is 1 minute enough, 5 minutes? Further, the history of appeasing strongmen in the hopes their thirst for expansion is satiated is disastrous, and a violation of airspace is a violation no matter how long it lasts. That said, my reaction given the brevity of the incident would have been to give Putin just one more mulligan, have scrambled jets but not shot, come out publicly with the information a Russian jet violated Turkish air space, publicly vow to shoot down any jet that enters the air space going forward, and proactively offer coordination to avoid a similar incident (an offer which Putin would likely ignore). Should a jet violate the airspace after Tuesday, I would then shoot it down without hesitation. This policy to me would not fall into the appeasement camp, but be a final proverbial warning shot that I would then act upon if necessary (unlike certain people who erase their red lines).

We are now in a dangerous situation, one Putin precisely wants to be in. What if he violates Turkish airspace again? Erdogan would have to act again, but does that just result in further escalation from Putin? We also know that Europe, France in particular, sees Putin as an essential partner in Syria. Thanks to years of dithering on our part, Putin has been able to insert Russia as an integral player in a political solution. He and Iran continue to prop Assad up, and unless we are willing to put in our ground troops and risk direct conflict, they will have to acquiesce to any political transition. Putin is using Syria to gain leverage in his real area of territorial ambitions: Europe. Therefore, our response to his aggression needs to be centered in Eastern Europe.

Putin is fully aware Europe wants him involved as a partner in the fight against ISIS, and as such, he has us over a barrel. While Europe seems willing to continue the existing sanctions against Russia over his invasion of Ukraine and annexation of Crimea, they are unlikely to support a significant ratcheting of pressure for fear that will preclude him from cooperating on the Assad question. Putin has the ability to keep provoking with little if any ramification. As such, he will continue poking to find the weak underbelly of NATO to exploit it.

In all likelihood, NATO members urged Erdogan to soften just as we urged France not to invoke Article 5 after Paris, which is shameful. Does anyone really think Italy is willing to face off with Russia over Turkey? NATO membership has devolved into a two-tier system: nations whom we would defend no matter what, and nations who we would defend depending on the aggressor. Now, Turkey is such a critical player in the Middle East, it may be a core member, but this flare-up will only serve to increase the tensions between the Russia hawks and doves in NATO. This could be a prelude to a stiffer test of NATO’s resolve.

Ultimately, there is no strategic reason for Putin to war with Turkey, but there are NATO members that should be worried. In particular, I have concerns about Estonia, which has a 25% Russian-speaking population; remember, Putin used supposed discrimination against Russian-speakers to explain his annexation of Crimea. He also exploited this population to foment an “internal” resistance in East Ukraine that has totally crippled the nation. Estonia is in the process of fencing its Russian border over this very fear. The appearance of an internal rebellion is preferable for Putin as it would make it easier for some NATO members to say Article 5 does not apply (it must be an external aggressor). With its large Russian population, Latvia too is a potential target.

Estonia is a country of 1 million, and Western Europe is uninterested in a direct confrontation with a nuclear power, especially given the pressing problems in Syria. Turkey was the first attack on NATO, and the Baltic States are the obvious next target. While these are small nations, their defense is critical. Once it appears Article 5 does not apply to a member, how can we know what members of NATO are really protected? By enlarging the alliance to nations we are unwilling to protect, we actually risk shrinking the alliance in the long-run. Sure, the U.S., Canada, Germany, France, UK, Poland and others are almost certainly core nations, but Eastern Europe should be petrified. How important are they? Are Germans willing to die for Slovenians should Putin go too far?

NATO is now an alliance without a cause and as a result is dying a slow death. What is its raison d’être now that the Soviet Union is gone? It has been wandering aimlessly without any core objectives; all the while, European armed forces have decayed and much of the continent is headed for economic and geopolitical irrelevance. Eastern Europe sees Putin for the threat he is, but the rest of Europe and current US leadership doesn’t see Putin as a mortal danger. We are minimizing (if not ridiculing) his aggressiveness as a result. We do so at our own peril.

Fracturing NATO and cracking the façade of a united Europe would be a dramatic diplomatic coup and undermine the security order of the world. Action in Estonia, if not responded to, would render NATO impotent and show the US, not only unwilling to enforce red lines, but unwilling to defend allies. That could have cascading ramifications across Eastern Europe and Asia where American allies like the Philippines, Taiwan, Japan and South Korea face an increasingly adversarial and expansionist China. If they question U.S. commitment, we risk capitulations that could up-end the balance of power in that region.

This is what at stake. We are not on the precipice of a Turkey-Russia war (in all likelihood), but we face something equally dangerous. Putin is pushing around the edges of NATO to test how united we really are, and if we actually will honor our commitments. Proving that Article 5 is really more bark than bite for non-core nations could unravel the US-security compact that has kept the world safe, and we in its center, in favor of a world where the Russia-China-Iran axis gains strength and US reliability is questioned. The seeds have been sown for a second Cold War, if it has not already begun.

In response to the Turkish air invasion, we must make crystal clear that NATO support cannot be questioned. We have increased our military presence in the Baltics a bit, but NATO needs to move beyond a token presence. Announcing further deployments to Estonia and the Baltics in the wake of the Turkey incident would be a clear signal to Putin that he should not test NATO resolve. Simultaneously, we should commit to build the cancelled-missile defense shield in Eastern Europe, for which the Poles have clamored. This would apply a real cost to Putin’s actions. If you mess with a NATO country, it must be clear, we will work against your strategic objectives (dominion over Eastern Europe) and redouble commitment to member nations. Putin’s goal here is not to intimidate Turkey; it is to prepare for a grand pivot to Europe. Accordingly, NATO must pre-emptively harden its European positions.  Whether he is actually willing to call NATO’s bluff in the Baltics is uncertain, but we should pro-actively make clear NATO commitments aren’t a bluff to ward off any potential Russian intervention.

With the rise of ISIS, it should be Eastern Europe in a panic. Putin has built leverage over Europe in Syria and is now testing NATO. We must stand firm and signal our commitment to all member nations. Putin, like any thinking person, can see that NATO is divided with many members likely lacking the will to risk war with him over smaller, newer members. Destroying the illusion of NATO joint security and unwavering US commitment to its treaties would be the greatest political coup since Nixon opened relations with China. That is why we must come out now, in the wake of Turkey, and dispel these concerns, affirm all NATO nations stand firm, increase our presence in the Baltics to comfort these nations, and build the begged-for missile defense shield. Maintaining the balance of power not just in Europe but also in Asia requires this reaction and a steadfast commitment to all allies, big and small.

NATO is being tested in a way it hasn’t since the Cold War ended. We must prove it is an organization that has not outlived its usefulness. To do otherwise would undermine US leadership and the quarter-century of great power peace and prosperity it has bought us.

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What Happened to Optimistic Conservatism

Over the past week, we have witnessed the Obama Presidency collapse upon itself. From the attacks in Paris showcasing how we have underestimated ISIS, to the fact Iran has increased its stockpile of enriched uranium since agreeing to the nuclear deal, to UnitedHeath considering exiting Obamacare exchanges due to massive losses. Even a key Obamacare architect concedes the insurance plans stink and that costs haven’t been controlled. All the while, Obama, the man who ran promising to end the politics of old and unify the country, has taken his rhetoric to new lows, suggesting Republicans are ISIS recruiters while dismissing a terrorist attacks as a “setback.” The President apparently thinks failings are due to the fact the office of the Presidency “is weak.” A more likely explanation? The man in the office is weak.

In 2016, the Democrats will almost certainly put forth Hillary Clinton who helped architect our naïve and misguided foreign policy that is in total ruin. On top of this, her forthrightness on the issues leaves just a bit to be desired. Given failed policies and the historical challenges of winning three straight terms, 2016 should be a prime opportunity for conservatives to retake the White House and set the country back on a proper trajectory. Polls this far in advance are of little import but show a close and very winnable race, yet I fear there is increasing reason to be worried that once again we will steal defeat from the jaws of victory.

Before your eyes glaze over in anticipation of reading the 14,714th piece on how the GOP needs to do better with Hispanics or women, that is not my focus (either you agree or disagree with that argument, nothing I say will sway you). My concern is more fundamental. The republican electorate is increasingly pessimistic about the future of the country. Conservativism is an innately optimistic political philosophy, and we need to instill optimism if we are going to win. Yet according to the Public Religion Research Institute (in a poll of 2,700), only 41% of republicans and 33% of Tea Party members think America’s best days are ahead of us.

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Clearly, the disaster that is the Obama Presidency is weighing on sentiment, and that isn’t surprising; voters’ anger is palpable. At the same time, republican candidates can’t merely play into this pessimism; they need to offer a compelling and hopeful vision about the future. This was a key failure (there were several) in Mitt Romney’s 2012 campaign. While he prosecuted the case against Obama well, he did not articulate what he would do going forward in a compelling fashion (which boggles the mind given how gifted his running mate, Paul Ryan, is at doing precisely that). It is a fatal error to take a pessimistic tone to voters because it is at odds with our beliefs. Liberals are pessimists at heart, though Obama did a masterful job in 2008 portraying himself as an optimist, helping win the nomination and cruise to the Presidency. I would argue that ultimately voters, even angry ones, want to believe better days for the nation are ahead. To give this ground is mistaken, particularly when our future actually is bright. Saying better days are ahead isn’t merely wise politics, it happens to be the truth! We are too great a nation to accept inevitable decline.

To be conservative is to believe that power and decision-making is best left in the hands of individuals through lower taxation, less regulation, and local control. In other words, we think ordinary people make better decisions than a bunch of so-called experts in a centralized bureaucracy, which implies a positive view of the competence and judgment of people. To support more control at a centralized level, as liberals propose, suggests they don’t trust the public to make decisions. Generally, one thinks less of a person whom one does not trust. This dichotomy is the core disagreement between liberalism and conservatism: do you put your faith in people of bureaucracy? Whether you have a positive or negative view of the public’s competence is a driver of your answer. If you have confidence in the public (as conservatives inherently do), it is then questionable to think the nation’s best days are in the rear view mirror.

This optimist/pessimist divide permeates further. Liberals are now obsessively focused with income inequality. They have all but written off attempts to grow the pie and are laser-focused on re-slicing it. They see an America that can’t be the global leader (heck, Hillary Clinton doesn’t even think the US should lead the fight against ISIS), as though our time as a Super Power able to roll back the evil of communism was a mere flash in the pan, destined to burn out. The core of the democratic platform is basically: we can’t grow so let’s take from the rich to help the poor and abdicate global leadership. This is the platform of people who think America’s best days are behind it. It is also the path of Europe, which chose to enter blissful decline 40 years ago (though it is now realizing that decline isn’t so blissful when debts are high and innovation lacking) and is now on a path to irrelevance in global affairs.

It is still early, but republican candidates have not done a particularly good job laying out an optimistic vision. Much of this is due to the Donald Trump phenomenon. He spends much of his time tearing down opponents, and his policy statements are negative like “wages [are] too high” or “the American dream is dead” (both from the Fox Business Debate…Trump has subsequently claimed he was only speaking to the minimum wage, though he repeated the wage line elsewhere). The recent controversy over a national Muslim registry shows a candidate who plays to our worst fears rather than our greater aspirations. Given multiple chances to walk back that statement, Trump continues to suggest an openness to it, most recently on This Week. Let’s be clear: rounding up and registering people of a certain faith isn’t conservative, it is evil, cruel, and fascist. For a candidate pledging to “make America great again,” it would be hard to argue Trump has run a hopeful, optimistic campaign, and in the process, he has lowered the discourse in our primary debate. I would suggest other candidates like Ted Cruz have let anger overwhelm optimism, and many who are supposed optimists like Jeb Bush come across as impotent. In fairness, Marco Rubio has been the candidate who has done the best job in the field laying out an optimistic vision for the country.

In particular, he has turned the immigration issue on its head to prove the greatness of the country. From The O’Reilly Factor: “I think America is great. You know how I know it’s great? You don’t have American refugees winding up on the shores of other countries. You actually have people wanting their children born here. America is a great country. The issue is: We could be even greater. We are not fulfilling our potential.” Conservatives everywhere should copy this down.

Now, admittedly, it can be challenging to put forth an optimistic vision when the other party is in control because if things are going so great, you should stick with them. There is a necessary balancing between saying things not being great today but have the capacity to be great in the not too distant future. There is a nuance to it that can be lost in a news cycle obsessed with 30 second soundbites. While I caution republicans from discussing the Reagan legacy too much since most Americans did not vote in the 1980 election (it was 35 year ago), there are lessons in his rhetoric that are still applicable. He succinctly framed all elections in one simple question: “Are you better off than you were four years ago?” This is an excerpt of his answer in that debate with President Carter (emphasis my own):

This country doesn’t have to be in the shape that it is in. We do not have to go on sharing in scarcity with the country getting worse off, with unemployment growing. We talk about the unemployment lines. If all of the unemployed today were in a single line allowing two feet for each of them, that line would reach from New York City to Los Angeles, California. All of this can be cured and all of it can be solved…I would like to have a crusade today, and I would like to lead that crusade with your help. And it would be one to take Government off the backs of the great people of this country, and turn you loose again to do those things that I know you can do so well, because you did them and made this country great. Thank you.

Reagan’s campaign was predicated on the argument the American people were great, and it was the government holding them back. By rolling back government and freeing the public from the shackles of high taxes, regulation and inflation, the country would flourish again. His was a campaign of hope not hatred, appealing to the intrinsic decency and aspiration of every individual. It was a theme he expounded upon in his Inaugural Address (emphasis added):

It is no coincidence that our present troubles parallel and are proportionate to the intervention and intrusion in our lives that result from unnecessary and excessive growth of government. It is time for us to realize that we’re too great a nation to limit ourselves to small dreams. We’re not, as some would have us believe, doomed to an inevitable decline. I do not believe in a fate that will fall on us no matter what we do. I do believe in a fate that will fall on us if we do nothing. So, with all the creative energy at our command, let us begin an era of national renewal. Let us renew our determination, our courage, and our strength. And let us renew our faith and our hope.

We have every right to dream heroic dreams. Those who say that we’re in a time when there are not heroes, they just don’t know where to look. You can see heroes every day going in and out of factory gates. Others, a handful in number, produce enough food to feed all of us and then the world beyond. You meet heroes across a counter, and they’re on both sides of that counter. There are entrepreneurs with faith in themselves and faith in an idea who create new jobs, new wealth and opportunity. They’re individuals and families whose taxes support the government and whose voluntary gifts support church, charity, culture, art, and education. Their patriotism is quiet, but deep. Their values sustain our national life.

Now, I have used the words “they” and “their” in speaking of these heroes. I could say “you” and “your,” because I’m addressing the heroes of whom I speak — you, the citizens of this blessed land. Your dreams, your hopes, your goals are going to be the dreams, the hopes, and the goals of this administration, so help me God.

This optimism and unyielding faith in American public was the cornerstone of Reagan’s political philosophy and career. It is only fitting that in his final remarks to a Republican Convention in 1992, he poetically ratified this political doctrine (emphasis added):

A fellow named James Allen once wrote in his diary, “Many thinking people believe America has seen its best days.” He wrote that July 26, 1775. There are still those who believe America is weakening; that our glory was the brief flash of time called the 20th Century; that ours was a burst of greatness too bright and brilliant to sustain; that America’s purpose is past.

My friends, I utterly reject those views. That’s not the America we know. We were meant to be masters of destiny, not victims of fate. Who among us would trade America’s future for that of any other country in the world? And who could possibly have so little faith in our America that they would trade our tomorrows for our yesterdays?

Republican candidates and pundits can spend so much time waxing nostalgically about the Reagan era it can feel like they would trade our future for our past. This tendency, coupled with such an angry, divisive campaign, can leave people thinking the best is behind us, especially considering the crumbling of the Obama Presidency we are witnessing. This is a problem, and we will not win if we cannot put forward a credible and compelling vision for the country. Unfortunately, we are constantly sidetracked by the boorish shenanigans of Trump who is either lobbing insults, threatening to sue, or more recently maligning Muslims. We are a movement that believes in Shining Cities not Gestapos, and he is a charlatan masquerading as a conservative. We need to start aggressively calling him out for it.

Democrats have mastered identity politics, dividing voters against each other to cobble together winning coalitions. To combat this, republicans shouldn’t try to beat them at their own game but offer a unifying message, which is more constructive when it comes to actually governing. Rather than betting on government to manage the decline, I want to bet on the public to make this a better country. It has been a winning bet for over two centuries, and while we are suffering from abject incompetence in the White House, I see no reason to stop placing this bet. Where are the world’s greatest new companies from Facebook to Uber built? What country has the most hard-working, innovative citizenry? What country serves as the inspiration for the oppressed in the world? The questions can go on and on, but the answer remains the same: the United States.

Do we have challenges? Obviously, from a broken entitlement system to stagnant wages to an aggressive China and resurgent Russia. These challenges are not unusually grave, and we are better positioned than any other country on the earth with a better mix of personal freedom, economic ingenuity, military might, and demographics than any other nation. Without a shadow of a doubt, our best days are ahead of us. Decline is a choice not a sentence. Conservatives need to renew our faith in the future of the country. There is no reason for 58% of republican voters to feel like our best days are behind us. That is a failure of our political leadership to lay out a compelling vision. We need to move away from angry rhetoric, rebuke Trump’s asinine assertions, and once again explain our faith in the American people and how returning money and power to them can undo the damage Obama has done.

Pessimistic conservatism is a non-starter and ideologically inconsistent. We can express anger at the failings of the Obama/Clinton policies while also pivoting to an optimistic agenda that ensures brighter days are ahead. It’s the only way to win.

Post Paris: Ashamed of our President

NB:

In the days following the heartbreaking, cold-blooded terror attacks in Paris, I have opted not to post anything in this forum because my thoughts have been very harsh (I feared overly so). In times of strong emotion, one can say something they later regret, and I did not want to fall into this trap, stretch my arguments, or offer commentary I would later wish I hadn’t. Instead, I have pored over my words to be as precise as possible and ruminated over my thoughts so that I could articulate exactly as I feel without writing anything regrettable. I am saying this upfront because what follows is (for me at least) a very strongly-worded condemnation of not only our President’s policies but of our President himself as well. Personal attacks are quickly tiresome and rarely justified, and I attempt to avoid them. However after several days of thought, I have come to a clear conclusion: President Obama’s policies are making us less safe, likely because he has succumbed to delusion over fact, and he is undermining our moral authority on the world stage, which is the gravest of offensives. I am ashamed of our President, words I have never previously uttered—these words still feel foreign to me. Below are my views on these two points (the first is policy-driven, the second point houses my more severe criticisms for those who prefer to skip ahead); I hope you consider reading this worth your while, regardless of whether you agree with my conclusions.

  1. President Obama is in a State of Delusion

Friday marked a clear turning point in the war against the Islamic State (ISIS). First, it bombed a Russian airliner, then it perpetrated a massive suicide attack outside Beirut, and it culminated with the devastating, extremely well-planned, coordinated attack in Paris Friday night (additionally, on Tuesday, Germany was forced to cancel a soccer match and concert in Hannover due to “concrete evidence” of an impending attack). ISIS has morphed from a powerful conventional ground force into a terrorist organization with al-Qaeda-like capacity to launch terrorist attacks in the Western world. This is a deeply disturbing development that makes ISIS a clear and present danger to the United States and our European allies.

We can engage in counterfactuals all day to assign the blame of ISIS’s rise. Many on the Left say if Bush hadn’t invaded Iraq, ISIS would not be here, and there is some truth in that point (not that Saddam was a saint). On the right, we can point to the fact Obama pigheadedly refused to negotiate a status of force agreement to ensure a stable transition because he wanted to win the political points associated with a rapid withdrawal. Fair-minded individuals can see that a lot of people share the blame for the conditions that allowed ISIS to form. However, the blame clearly shifts to Obama as the question turns to gains ISIS has made in terms of its capabilities and territory, taking control of half of Syria and Iraq, a landmass larger than at least 13 states.

Yet while speaking at the G-20 summit on Monday (after the Paris attacks), President Obama reiterated, “We haven’t underestimated their abilities.” Well, I hate to see how dangerous ISIS could be if we had underestimated them. While being dismissed as a JV-team, ISIS was racking up conquests in Ramadi, Fallujah, and Mosul while we seemingly assumed they had the staying power of the pet rock. Yet, here we are 18+ months later, ISIS has barely lost territory, likely has tens of million (probably north of $100 million) in the bank, and has developed the ability to launch outward attacks of terror. We are left with two possibilities: the President is a bald-faced liar, pretending his strategy is working to avoid losing political standing, or alternatively, he is in a state of delusion. Neither option is a flattering one.

Considering the Administration is doctoring its own intelligence reports to better fit their narrative, reality be damned, I find myself in the delusion camp. A further sign of delusion is that the Administration seems hell-bent on continuing with the same, failing strategy (if Obama were lying to the public, I like to think he would change things behind the scenes). Ben Rhodes, the deputy national security advisor, promises a mere “intensification” of the current strategy, comments Obama has since echoed. However, the underlying strategy is misguided.

Here is what Obama said hours before the Paris attacks: “Well, no, I don’t think they’re gaining strength. What is true is that from the start our goal has been first to contain, and we have contained them.” It is truly stunning how badly Obama could misread ISIS to think we had contained them. Even if, simply for the sake of argument, we concede that ISIS has been territorially contained, that is not success—it is an undeniable failure. Iraq has been ravaged, and what remains is quickly descending into an Iranian-proxy state. Similarly, Assad is merely a puppet for Iran and Russia. The status quo makes it easier for Iran, with Russia by its side, to become the regional hegemon, controlling the capitals of Iraq, Lebanon, Yemen, and Syria. That tilts the balance of power in the region decisively against us, and nuclear deal or not, it is impossible to label a Russia-Iran axis as friendly to democracy or our interests (I’ve written about this very issue weeks ago).

By definition, a policy of containment cedes its current territory to ISIS. In this territory, ISIS can train and build the capacity to launch outward attacks, for which it has just proven a stunning proficiency. Was the policy of “containing” al-Qaeda to Afghanistan particularly wise in the 1990s? Obviously, not. Controlling territory gave it free rein to plan and execute the 9/11 attack. Should it surprise anyone that giving ISIS the same set-up allowed it to execute attacks of its own? All the while, ISIS has built cash reserves, trained a revolving door of foreign fighters who have returned home to the West, and entrenched itself in its territory, ensuring removal will be costlier and bloodier than necessary. The policy of containment has been disastrous at every level. Obama has allowed Iran to gain influence, Assad to hang on, and ISIS to develop al-Qaeda-like capacity.

Not since Richard Nixon thought he could survive Watergate, has a President been so detached from reality. Nixon’s delusions put the nation in a constitutional crisis, and Obama’s threaten a security crisis. This crisis is even more acute for Europe, which has faced a tsunami of migrants entering without any vetting. Plus, its Schengen area policy of open borders has allowed these migrants to travel to any member state with minimal if any tracking, making it impossible for any government to know who is in their country at any given time. Each European nation is only as safe as the nation with the weakest borders, in this case Greece (austerity to deal with its budget debacle has crippled its ability to police borders and hold migrants). This migrant crisis, coupled with returned foreign fighters, exacerbates Europe’s security situation. Amazingly even though his own FBI director has expressed concerns about our vetting, Obama wants to accept at least 10,000 Syrian refugees and has suggested anyone who opposes him is a bigot (I would note the presumed head of Senate Democrats, Chuck Schumer, happens to have reservations about the current system). Obama has avoided policy debate and simply attacked the character of those who oppose him on this issue. The rational decision is to suspend the program for 3 months, ensure all vetting is done to acceptable standards, and then if concerns are dealt with, reopen the program.

For 18 months, we have watched ISIS grow like a cancer as Obama underestimated them and then employed a wrongheaded policy of containment. He touts launching 8,000 airstrikes, though this amounts to ~20/day, less than 1/5 the pace of Bill Clinton’s strikes in Serbia. On Monday, Obama had the gall to say, “We have been fully aware of the potential capabilities of them carrying out a terrorist attack. That’s precisely why we have been mounting a very aggressive strategy to go after them.” That is indisputably untrue; our bombing campaign has been anything but aggressive. These strikes barely manage to slow the advance of ISIS but do nothing to roll back its capacity. Our President’s policies are that of an inveterate invertebrate. He fecklessly dithers, leaving us in a situation where there are no easy options. In 2013, we should have enforced a no-fly zone and aided the Free Syrian Army in their fight against Assad, but Obama backed away from his own red-line.

Now, Russia is propping up Assad, moderate rebels have been squeezed from both sides, and ISIS has a serious foothold. A full no-fly zone risks confrontation with Putin. Considering how Obama backed down to Assad and Putin in Crimea, it is hard to see Putin taking our no-fly zone seriously. The temptation to partner with him is tantalizing, put aside the Assad question now, deal with ISIS, and then work on Assad. Aligning with Putin is like sleeping with the devil, fun at first not so good in the long run. If we deal with ISIS together, there is no pressure for Putin to support removing Assad (except to replace him with another crony—any crony will do!).

Instead, the US must significantly intensify our airstrikes, encourage rather than discourage France to invoke Article 5 of NATO, and build a Western coalition to systematically roll back ISIS. This means directly arming the Kurds, whom we have long-standing relations with and who are adept fighters. US troops embedded with the Kurds and FSA, Gulf partners providing ground troops, and NATO air-strikes and some ground troops can decisively roll back ISIS. Simultaneously, we need to create safe zones where refugees can go in Syria and Jordan, financed by the West, to keep refugees from flooding Europe. We, both Western and Muslim states, then need to maintain a presence to help new governments in Iraq and Syria build the institutions and structural strength to endure. This is a battle among civilizations, and we need to treat it as such.

The idea containment would ever work is a pure fallacy, perpetrated by an administration unable to deal with ISIS and unwilling to admit its mistakes. Despite all the evidence to the contrary, Obama continues to delude himself into believing the strategy is working. If we continue on this course, the threat ISIS poses to the Western world will only grow. I fear a world in which Paris is not an anomaly but the beginning of a long string of attacks, apparently we barely avoided another in Germany Tuesday. Simply containing ISIS allows them more time and space to develop their capabilities and export there terror. We need to get tough now; to do otherwise is to gamble the security of our homeland and that of our allies.

  1. President Obama Has Shamed this Nation

This (briefer) section pivots away from my policy critique and focuses instead on the character of our President. While I have never been a fan of his simplistic and pessimistic policy platform, I have long considered President Obama to be a good man and have defended him to fellow conservatives as such (at the expense of being dubbed a RINO occasionally). As his administration progressed, this has been a tougher argument to make, particularly after he blatantly lied about his healthcare plan (you can keep your doctor…). However, there is a difference between telling a lie and shaming the nation, or at the very least, there needs to be a very high standard when it comes to saying someone has shamed the nation (Nixon is the lone President whom I had previously put in this basket in the post-WWII era). Monday that changed.

While on the Sunday shows, Rhodes suggested Paris was a “setback.” People do misspeak or overstate their case, particularly on talk shows, and I aim to give all the benefit of the doubt, despite the callousness of that remark. Then on Monday, we were presented with dueling remarks from French President Hollande and Obama. Hollande powerfully declared to his nation: “France is at war. No barbarians will prevent us from living how we have decided to live. To live fully. Terrorism will never destroy the republic, because the republic will destroy terrorism.” Hollande understands the stakes of this battle. We are dealing with suicidal maniacs who want the world to burn, and we need to pulverize them. Hollande is seizing the gravity of this moment to eradicate a great evil from this earth.

Our President could not match this rhetoric. Instead, Obama doubled down on Rhodes line, saying, “The terrible events in Paris were a terrible and sickening setback.” Setback was not an off-the-cuff remark, it was clearly chosen in advance by our President to describe the Paris attack after being test-run by Rhodes Sunday. Our oldest ally has just suffered its worst terrorist attack since World War II, and that is all Obama has to offer. Families were destroyed, innocent civilians murdered, and children’s lives and sense of safety have been forever destroyed. This is not a mere setback; Friday we saw the face of evil. Even Orwellian newspeak cannot contemplate such emotionless verbiage.

Our President takes no issue calling his political opponents immature racists who are helping ISIS recruit (he did so earlier this evening!), yet he has no moral outrage to show psychopathic terrorists? Meanwhile, his Secretary of State suggests we shouldn’t be so shocked about the Charlie Hebdo shooting from earlier this year as though you make yourself a target merely by engaging in political discourse. That is anathema to the founding principles of this country, and the Western world.

Our President demeans fellow republicans with alarming ease but is incapable of calling out true evil on the world stage. Is he afraid of offending ISIS? There is no rationale for this cowardice. America is the world’s moral beacon, and as such, we have a responsibility, no a duty, to stand with allies and call out evil, yet we paper over a vicious action that has rocked France to its very core. In doing so, Obama is abdicating the moral authority of his office, and undermining our position in the world. We are seeing a stunning, virtually unprecedented, absence of leadership. How can we rally the world against evil when our President is all but unwilling to acknowledge its existence?

Obama’s remarks in the aftermath of Paris are unfathomable and show a moral compass gone haywire. The slaughtering of over 100 civilians is not a setback; that language is disgraceful, particularly when contrasted with the language he uses to demonize republicans. I shudder at a President who shrugs off allied civilian mass murders. We have a responsibility to lead the world, and Obama is throwing away our moral authority, which is particularly astonishing since he went on an apology tour over our supposed sins to restore it.

This is disgusting. Decency and a love for humanity demands anger, pain, and condemnation when discussing Paris or any terrorist attack. Hollande understands this; virtually all civilized people do. Yet, our President is so busy playing politics, he can see it as a mere setback in his strategy. Tell that to the families of the murdered.

President Obama has been disgraceful in the aftermath of these attacks, and I feel ashamed he is our representative to the world.

 

 

Ignoring History: The Lawlessness of Obama Executive Orders

On Tuesday, the Senate overwhelmingly passed the National Defense Authorization Act 91-3, leaving President Obama no choice but to sign it in lieu of suffering a humiliating veto override. Within the act, there is a provision banning the President from moving the enemy combatants held at Guantanamo Bay (GITMO) into the United States or third countries, thereby blocking the President from fulfilling his wrongheaded campaign promise in a stunningly bipartisan fashion.

Not to be deterred by an act of Congress (he is only an inveterate invertebrate when dealing with real enemies like Russia and Iran after all), the White House has hinted the President may use executive powers to flout popular will and bring detainees into the US anyway. Some like Senator Dianne Feinstein and others are suggesting the President could have the authority to do this under his Constitutional Powers as our Commander-in-Chief. They argue the President has essentially unlimited powers over just about any tactical decision in war-time. Funny, precisely these arguments have been made before, only to be blasted in one of the most important Supreme Court decisions you probably haven’t heard about (more on that below!).

These current arguments calling for more power to be placed in the executive are particularly rich, coming in a week when a Federal Appeals Court upheld an injunction on Obama’s executive order rewriting our nation’s immigration laws. Now, the President is turning to the Supreme Court hoping for a more receptive hearing; however, the case in favor of his order is so dubious he spent years explaining how he couldn’t “fix” immigration laws by executive fiat.

One’s view of the constitutionality of his immigration order and potential GITMO one should transcend your view of whether they are wise policy. The core issue is exactly how much power is vested in each branch of government, not whether the underlying policy is well-intentioned. While questions of process often illicit droopy eyes, its importance cannot be understated. Our founders built an intricate system of checks and balances to carefully ward off tyranny, and upsets in this balance can have long-lasting implications. We can take for granted how much of a historical (and sadly even contemporary) anomaly the peaceful transition of power we enjoy every Inauguration day is.

I’m not saying we are on the verge of despotic rule; the issue here is cut and dry so there is no need to hyperbolize. Rather, it is about ensuring that powers remain at the proper branch to avoid the tyranny of one branch over another at the expense of public’s will. Allowing power to wrongly accumulate risks an incremental, creeping tyranny. For 85 years, we have seen more power coalesce around the Presidency, primarily at the expense of the legislature, a phenomenon that has happened under both parties’ watch, to the point where congressional law at times feel like mere guidelines for the President. Here on GITMO in particular, we have a congress asserting its right, but a President looking to ignore it anyway, the public’s opinion be damned.

In actuality (where I happen to live), this is not an unprecedented situation, rather there is a specific precedent that crystallizes the illegality of such an executive order. In 1950, Harry Truman was President, and we were waging war in the Korea Peninsula. Truman faced a steelworker’s strike, which would have disrupted the supply of arms to our forces. Truman saw keeping steel mills open as a matter of national security. Now, Congress had passed two laws, the Taft-Hartley Act and the Selective Service Act (its applicability in this case can be debated), which could have been used to keep the mills operating. Instead, he circumvented the will of Congress and unilaterally seized the plants to be run under the watchful eye of the Federal Government. Believe it or not, legal calamity ensued.

In a 6 to 3 decision in Youngstown v. Sawyer, the Court delivered one of the biggest pushbacks against a Presidential power grab in the century. Truman’s argument that his war powers granted him the ability to seize private property was found sorely wanting. In his concurring opinion (which is the opinion whose influence has endured time in this case), Justice Robert Jackson explained the three tiers of Presidential power (courtesy of Findlaw, emphasis mine):

  1. When the President acts pursuant to an express or implied authorization of Congress, his authority is at its maximum, for it includes all that he possesses in his own right plus all that Congress can delegate. In these circumstances, [343 U.S. 579, 636] and in these only, may he be said (for what it may be worth) to personify the federal sovereignty. If his act is held unconstitutional under these circumstances, it usually means that the Federal Government [343 U.S. 579, 637] as an undivided whole lacks power. A seizure executed by the President pursuant to an Act of Congress would be supported by the strongest of presumptions and the widest latitude of judicial interpretation, and the burden of persuasion would rest heavily upon any who might attack it.
  2. When the President acts in absence of either a congressional grant or denial of authority, he can only rely upon his own independent powers, but there is a zone of twilight in which he and Congress may have concurrent authority, or in which its distribution is uncertain. Therefore, congressional inertia, indifference or quiescence may sometimes, at least as a practical matter, enable, if not invite, measures on independent presidential responsibility. In this area, any actual test of power is likely to depend on the imperatives of events and contemporary imponderables rather than on abstract theories of law.
  3. When the President takes measures incompatible with the expressed or implied will of Congress, his power is at its lowest ebb, for then he can rely only upon his own constitutional powers minus any constitutional powers of Congress over the matter. Courts can sustain exclusive presidential control in such a case only by disabling [343 U.S. 579, 638] the Congress from acting upon the subject. Presidential claim to a power at once so conclusive and preclusive must be scrutinized with caution, for what is at stake is the equilibrium established by our constitutional system.

Essentially, Jackson believes the Court needs to view Presidential power in three ways. In the first situation when the President is acting thanks to an act of congress, he has the most authority (both his and Congress’s combined). In the second, Congress is silent, which could lead to a fuzzy gray area over whether it is Congressional or Presidential authority. This means the President is not due the same level of deference as when Congress acts alongside him. In the third situation, the President acts against an act of Congress (either clear or implied), so his power is at the lowest ebb because the Court needs to disable Congress’s ability to legislate in that area. As such, the Court would be ruling for the President and against the Congress, threatening the balance of powers.

Incidentally, the President’s immigration executive order falls squarely into the third category where he is trying to move directly against the intent of our immigration laws. As congress indisputably has the authority to write our immigration laws, the President’s power here is non-existent, and his executive order is blatantly lawless.

Now while Gitmo also clearly falls into the third category, it is a bit trickier constitutionally as the President definitely has more power when it comes to waging war than in domestic affairs, though this power is not absolute. In Youngstown, Jackson found Truman was in the third scenario as well—the parallel fortuitously continues. The Court did determine that Congressional laws dictating the process for dealing with strikes (that were totally ignored by Truman) were still relevant during war-time as the powers of the Commander-in-Chief are actually “cryptic” to quote Jackson contrary to what Obama’s cheering squad now suggests. Jackson goes on (emphasis mine):

He has no monopoly of “war powers,” whatever they are. While Congress cannot deprive the President of the command of the army and navy, only Congress can provide him an army or navy to command. It is also empowered to make rules for the “Government and Regulation of land and naval Forces,” by which it may to some unknown extent impinge upon even command functions.

This statement clearly goes against the pre-planned argument from Obama’s allies that Congress is meddling in tactical matters. That fact is not in and of itself problematic, particularly because we are dealing in part with an internal issue where the President would be bringing enemy combatants into the United States itself. Jackson eloquently notes the danger of letting a President use his foreign powers to assert additional powers within our borders (emphasis mine):

But no doctrine that the Court could promulgate would seem to me more sinister and alarming than that a President whose conduct of foreign affairs is so largely uncontrolled, and often even is unknown, can vastly enlarge his mastery over the internal affairs of the country by his own commitment of the Nation’s armed forces to some foreign venture….

 

This argument holds whether we are dealing with enemy combatants or steel plants. The idea our elected representatives would be powerless over what happens within our country is abhorrent to the very essence of democracy. Moreover, this line of attack doesn’t just come from our Courts, it is directly address by our founders themselves. Jackson again (emphasis mine if you hadn’t caught on by now):

That military powers of the Commander in Chief were not to supersede representative government of internal affairs seems obvious from the Constitution and from elementary American history. Time out of mind, and even now in many parts of the world, a military commander can seize private housing to shelter his troops. Not so, however, in the United States, for the Third Amendment says, “No Soldier shall, in time of peace be quartered in any house, without the consent of the Owner, nor in time of war, but in a manner to be prescribed by law.” Thus, even in war time, his seizure of needed military housing must be authorized by Congress.

Our founders went out of their way to expressly give our Congress legislative power in a tactical matter (housing soldiers) when it occurs on our soil. Ironically, many feel like the 3rd amendment is quaint if not anachronistic, serving no purpose in a modern society such as ours. They are wrong as the wider applicability is clear. The founders did not envision a President being able to take total power, Roman dictator style, during a time of war. They went out of their way to carve a role for Congress when the matters of war are internal in nature. How often in the course of human history have we seen dictators use foreign adventures as an excuse to tighten their grip back home? That is anathema to our carefully crafted constitution, ensuring democracy and balanced powers in peace and war time alike.

Given this reasoning, it isn’t hard to see that Congressional laws in that 1952 case were relevant and that Truman over-stepped. Was Truman attempting to become a dictator? Of course not; in totality, he was still one of our finer Presidents. This was merely a case where he reached too far in a time of war, and the Supreme Court took the opportunity to draw a clear line in the sand regarding Presidential power. By the same token, one doesn’t have to think Obama is a dictator to find his executive orders to be an overreach.

If there is any cogent argument differentiating a GITMO executive order from Truman’s in Youngstown v. Sawyer, I have yet to come across it. With Obama planning to sign the NDAA that has GITMO restrictions, any executive order would clearly fall in Jackson’s third scenario (contradiction with Congress’s intent) where Presidential authority is at its weakest. Bringing detainees into the United States proper is without a doubt an internal matter, giving Congress the constitutional power to legislate on the issue. That simple fact evaporates what legs that aspect of order stands on.

What about the aspect of the law that bans the President from sending detainees to Libya, Syria, or elsewhere? Does the fact the United States proper is not involved negate the specific “internal” Congressional powers implied by the 3rd amendment? In short, no. In 2008’s Boumediene v. Bush, Justice Anthony Kennedy’s majority opinion makes clear the US has “de facto” sovereignty over GITMO, making the fundamental rights of the constitution applicable there. This ruling functionally makes GITMO “internal,” providing Congress with authority. In other words, Congress has the power to put restrictions on the closure of GITMO and transfer inmates anywhere, not just to the United States but to Libya and other third countries as well.

Looking at simple Supreme Court precedent underlines the sheer lawlessness of Obama’s plans. In Youngstown, Presidential powers are clearly delineated, and on both immigration (where Courts are already standing up) and GITMO (where an executive order may be in the works), his power is at its nadir. Plus, it now appears Democrats plan to argue that being in war gives a President absolute power (funny, it seems like just 8 years ago they argued the opposite), but this does not jive with our history or the obvious intent of our founders and is really an effort to stack powers inside an Imperial President. No matter your policy preference, this is dangerous as it takes power away from the power of the people’s representatives in Congress who are a necessary check. Our constitutional balance of power is a delicate one; we mustn’t unnecessarily tamper with it and risk breaking it for our next generation. Certainly not to score cheap political points.

Obama has been fond of shamelessly saying Republicans want a return to the 1950’s for women’s rights. Well, it appears in his zeal over studying 1950’s contraception policy, he skipped over that decade’s constitutional lessons. Ironic; he was a constitutional professor after all. Must’ve skipped those classes.

 

Taxing in the 21st Century

Several Republican Presidential candidates (Trump, Bush, Rubio, Paul, Kasich, Jindal, Santorum, and Cruz to name a few) have outlined fairly specific tax plans aimed at accelerating U.S. economic growth. Most follow a similar pattern of eliminating deductions and lowering rates, which has worked quite well in the past (the Reagan Recovery being the standout example as seen in Chart 1). While the impulse to dust off the Reagan playbook is quite strong given the empirical data, conservatives really need to aggressively rethink how we tax and be careful not to knee-jerk back to past solutions. It is on this point where Sen. Ted Cruz’s tax plan stands out and should be applauded. While I have reservations about how the specifics of his tax plan, he has shown the greatest willingness to move away from the orthodoxy and rethink the nature of our tax code (more on his plan will follow)

Chart 1

r v o vc

With each passing day, the Reagan era grows more distant (an admitted redundancy that is still important to remember), and reflexively returning to his playbook is fraught with political danger (more and more voters were not old enough to cast a ballot for him) and policy danger. Conservatives need to do a better job delineating solutions from principles. Principles are what we believe (and as such are relatively unchanging) whereas solutions are how we implement principles (and as such change as the problems change). It is a disservice to Reagan’s legacy to simply suggest cutting marginal rates is the best answer to a slow economy as this implies there is a magic formula that would solve any problem.

The genius of the Reagan Administration was its ability to take conservative principles and apply them to policies to craft specific solutions to the problems of the day. We need to keep these principles, but today’s problems may necessitate different solutions. In brief as conservatives, we believe in returning power to the individual and away from the collective. Ultimately, individuals make better decisions regarding their own lives than a bunch of bureaucrats can hope to. This means entrusting power in the people and keeping government interference to a minimum.

Armed with these beliefs, Reagan focused his tax relief on capital. In 1981, the US was suffering from high unemployment and high inflation (stagflation). Reagan took over an economy that was treating capital poorly. As can be seen in the following chart, labor was gaining share in the economy—at the expense of capital, leading to a retrenchment in investment. There was a supply of capital crisis. When capital is treated poorly (ie 70% marginal tax rates and windfall profit taxes), holders of capital are less likely to invest it. When you don’t see capital investment, an economy grows too tight, sending prices skyrocketing (Chart 3, NB inflation is inverted). As prices soared, consumer confidence fell, leading to less spending and subsequently an even worse environment for investing.

Chart 2

obama econ

Chart 3

pce

Recognizing the supply problem the economy faced, Reagan freed up capital by rolling back regulations and focusing tax cuts on top marginal rates (bringing them down from 70% to 50% and later 28%). Reagan’s capital-aimed economic policies worked remarkably well, bringing inflation down and consumer confidence back (Chart 3) while economic growth soared (Chart 1). Reagan took conservative principles (empowering the individual rather than the collective) and applied them to the problems of the day (unfavorable policies inhibiting capital and causing an inflation shock) to create policies that bettered the lives of Americans.

Fast-forwarding to the present day, we have conservatives offering a variety of tax plans aiming to spur growth. When looking at tax plans, we need to drill down to the basics and ask the question: why we tax? The answer is simple: to fund government expenditures. There are some things government must spend money on (ie defense), and we cannot sustainably borrow money to pay for everything. Depending on the speed one wants to bring down our debt load, tax revenue likely needs to be 17.5-20.5% of GDP on average over the medium term.

It then becomes a matter of constructing a tax code that has the best impact on the economy over the medium term. In a sense, offering a tax break to one group needs to be offset by taxing another group; for instance, opting against an estate tax (which many conservatives call for) would cost revenue that needs to be made up elsewhere. On the other hand, eliminating ineffective deductions (the deductibility of corporate interest expense perhaps?) helps to fund tax breaks elsewhere. Ultimately, we would build a tax system that generates the necessary revenue while having the best economic impact, and this tax code could be dramatically different from our current convoluted mess (spoiler alert: it would be).

Most importantly, the efficient tax code would change over time because our economy is ever-changing. While conservatives should continue to push for as low of a tax burden as possible with a simple code that leaves individuals with as much power as possible, how that translates into marginal rates, deductions, and so forth can change a bit. Reagan faced an economy that treated capital poorly, and so, he lessened capital’s tax burden. Today’s economy is far different. Under Obama (as you can see in Chart 2), labor has done absolutely terrible, losing share to capital. This decline helps to explain why aggregate economic statistics (like 5% unemployment) seem out of whack with how most in the middle class feel. As such, it is critical to build a tax code that incentivizes work to get people back into the work force and working. This requires creative thinking from expanding the earned income tax credit, to contemplating the implications of a negative marginal tax rate bracket, and closing loopholes that provide little economic bang for the buck.

On the whole, it is hard to look at most of the Republican tax plans and not believe they would be better than the status quo, though none is without flaws. Most plans (like Rubio, Bush, and Kasich) stick relatively close to traditional conservative orthodoxy, but Cruz’s stands out. Cruz basically throws out the current system, has a 10% income flat tax, and a 16% business flat tax. Per the Tax Foundation, the Cruz plan costs about $3.6 trillion over a decade, but based on their view that the economy will be 13% larger (a plausible but definitely not unfriendly view), they see it only costing $770 billion. The US, in aggregate, is certainly not under-taxed, so there is nothing wrong with a tax plan that offers a moderate tax cut like Cruz’s does. I would note (that based on my rudimentary number-crunching) most of the growth driven revenue gains would be realized at the back end of the decade with years 9 and 10 generating up to $1 trillion of the incremental $2.8 trillion in revenue. Essentially, the revenue hit is not $77 billion/year, rather, it is much larger upfront and shrinks, possibly even gaining revenue at the tail end.

At first glance, it looks like Cruz provides labor with a massive tax cut, given the low 10% rate that for a family of 4 kicks in after 36k. However, his business tax would tax both profits and payrolls. So an employee earning $100,000 would pay a 10% flat tax, but his employer would also pay a 16% tax ($16,000). Under current law, the Social Security payroll tax is only 6.2%, so Cruz is really using a tax increase on payrolls to fund cuts elsewhere. Frankly relative to current law, Cruz is providing a dis-incentive to employee people.

Alongside this, Cruz would allow for the immediate expensing of equipment. Put in simple terms, buying a robot would not be subject to a 16% tax but hiring a worker would be. We continue to see a push towards automation in the economy. While painful for the worker being automated out, this is a good thing. I think we would all agree that on net ATMs have been a positive, even though they were a negative for bank tellers. Businesses should automate when the underlying economics make sense, but we don’t want decisions being made for tax purposes. An economy functions most efficiently when capital is allocated based on underlying economics and not tax implications. When taxes start changing allocation decisions, a government is picking winners and losers, which more often than not ends badly (how’d that Solyndra loan work out?).

Now, the government should not actively impede automation as this would leave the US poorly positioned in world trade and slow growth. The tax code should be neutral on the matter, and let economic reality be the determinant. Amazingly, this is one of the few things our current code does somewhat well. Employers pay a payroll tax but can deduct payroll immediately while purchases of equipment are deducted over multiple years (ignoring temporary tax breaks). When calculating the present value of the tax implications of the decision (a worker or machine), they roughly cancel out (or come fairly close), meaning that business owner would choose the economically wisest.

Cruz’s plan tilts the playing field away from workers and towards capital, incentivizing automation. Now if the pre-tax economics of hiring a worker or automating are the same, a business would choose to automate because it receives more favorable tax treatment. Interestingly, there is a pretty good case to be made that this plan would have worked particularly well in 1980 when the cost of capital was too high. Similar to Reagan’s steep marginal rate cuts, the Cruz plan would incentivize investing and have increased aggregate supply to bring inflation under control.

While Cruz’s plan benefits from original thinking, it solves past problems and would likely exacerbate the trend in chart 2 where labor has lost ground under Obama. This is one reason why I think the Tax Foundation’s growth expectations could be a bit optimistic. The Foundation does say the capital stock rises 44%, which makes sense as lower taxation would create more capital. The fact it grows 3x the economy does show the diminishing return of excess capital in the current environment. In fact, the issues with our capital stock could be dealt with more simply and just as effectively in two strokes. First, stop taxing repatriated profits at 35%, which would bring back $2 trillion. Second, Dodd-Frank has disincentivized bank lending, and as such, banks are carrying $2.5 trillion in excess cash. Roll back some of these regulations, and banks would be free to increase lending to small business and others, which would push growth faster.

Cruz (and others) are fighting the last war, focusing tax cuts in places where they will provide less growth. Reagan’s ingenuity was not that he lowered taxes but that he recognized the problems he was facing and structured his tax cuts in a way to solve those problems. Labor and capital supply an economy, and he faced a capital crisis. By fixing that, he put us on a path for 25 years of prosperity. Today, capital is doing well, and our crisis is on the labor front. Labor force participation is lower than it should be, wage stagnation is real, and capital has done fairly well with the top doing very well under Obama (who has helped exacerbate the very inequality he rails against). Again, the solution to this problem is not to punish the top to subsidize everyone else as that slows growth over time. However while Reagan tried to stimulate capital, we need to stimulate labor. This means debating a larger EITC, considering negative marginal rates, incentivizing job training, and eliminating certain loopholes (like carried interest and interest deductibility) to fund lower marginal rates. It also means keeping capital gains taxes and rethinking total opposition to the estate tax (or at least the stepped-up basis).

Reagan’s principles and the tenets of supply-side economics are as relevant as ever, but conservatives need to engage in further debate about how those principles apply to today’s challenges. The best answer could be wholesale change to the tax code (like Cruz has boldly suggested) or sticking a bit closer to the status quo. Taxes at the end of the day are a means to an end, a way to fund government while creating the conditions for the most robust growth. This requires an analysis of what breaks provide the least value and what taxes slow growth the most in today’s economy (and then eliminating those breaks to fund the elimination of those taxes!). It also requires a deeper debate on what part of the supply curve needs the stimulus. Admittedly, stimulating labor, without doing so at the expense of capital, is a challenge but not an insurmountable one (pairing labor-focused cuts with fewer deductions, a quasi-territorial corporate system, modified Dodd-Frank, and reformed estate tax is our best bet in my estimation).

Conservatives need to do a better job explaining how our principles and faith in the American people rather than government translate into solutions for today and are not merely regurgitated answers to the problems of 35 years ago. That is a pre-requisite for winning elections, and more importantly, it is the only way to actually make the American public better off. Re-examining our tax orthodoxy is a good place to start. Hats off to Senator Cruz for doing just that. While I would question the specifics of his plan, he is starting a debate we very much need to have.