Republicans - A Party of No Ideas?



Representative, Housing Secretary and Vice Presidential candidate Jack Kemp, my high school clubmate and quarterback on our football team and future NFL MVP, was credited in great part with starting the Reagan Boom with his Kemp-Roth tax bill that lowered the top marginal income tax rate from 70% to 28%.  The Reagan Boom from 1983 – 2007 was the greatest 25-year period of wealth creation by any country in recorded history. It was a great Republican idea.

Unfortunately during that same 25-year period the American government incurred the greatest debt load of any country in recorded history.  Although Reagan, Bush 41 and 43 were always giving lip service to “smaller government” each helped explode the national debt ($12 trillion today) and unfunded entitlement debt ($60 trillion).

Today the American taxpayer is burdened with a massive government bureaucracy carrying an ever increasing $72 trillion of debt and one political party in power working feverishly to increase that debt and another party with no concrete idea how to stop it.

Another Kemp contemporary,  Art Laffler, the famous conservative economist – he of the “Laffler Curve” – recently said the following regarding how to payoff this debt that technically has the country in a unsustainable dilemma:

We have to grow the economy to pay off this debt. We have to get people to save money and invest in the economy.

Answers like that are why liberal propagandists like Paul Krugman of the NYT feel comfortable saying the Republicans are a party of no ideas. Americans have an annual of gross income $14 trillion and are currently spending $15.4 trillion. The government is funding the $1.4 trillion deficit by printing more money, increasing taxes, making more promises and borrowing more money from foreigners. There is no room to run surpluses to pay off the debt.  Mr. Laffler’s suggestion is well intentioned but hardly a reasoned solution that ordinary Americans will embrace – it lacks specificity. 

Fortunately for Republicans the American people are mad at their politicians.  They are complaining at every turn.  They were so desperate to get a change they hired a man who said he would champion their cause but after election did just the opposite. He is increasing their debt, raising their taxes, imposing costly regulations and is taking over private enterprise which with the government’s record in running any enterprise portends a huge disaster.

So what is the next great Republican idea?  Presently stopping the irresponsible increase in spending and the frantic leap to socialism that the Democrats are proposing is the political gift the Democrats have given the Republicans. Just stopping the bleeding will carry Republicans to victory in 2010. However, that is not a great Republican idea.  It is merely reigning in the excesses of a failed political construct – socialism.

In stopping the bleeding the Republicans will still be saddled with the $72 trillion in debt and the mandated entitlements that chronically increase that debt each year. Trying to grow the economy to pay off that debt without another great Republican idea seems like a zero sum game – the debt will grow, taxes will increase and benefits will be cut to stave off further bankruptcy of the federal government. The people will still be frustrated that the wealthiest country in the world can’t get its government to represent them.

Fortunately there is a great Republican idea out there that will make the average American happy because the party will be representing them. It will eventually deliver the American Dream of financial independence to every worker and their family, immediately extinguish $64 trillion of government debt, cut the national budget in half (small government), generate the biggest tax cut in history (lower taxes) and eventually increase the net worth of America and each American 20 fold.  Here is a summary of how it works.


The plan is called Rise Up America (RUA).  The vehicle we have devised to energize our economy is called the "USA" the Universal Savings Account.  The enactment of RUA/USA legislation will deliver the following benefits.

1.Cut the national budget in half (smaller government)
2.Deliver the largest tax cut in history -now  (lower taxes)
3.Immediately Pay off the $59 trillion in unfunded entitlement debt
4.Eliminate income disparity by delivering the American Dream of financial independence to all Americans
5.Avoid cutting benefits for retirees or raising taxes on workers
6.Increase retirees monthly checks 20-fold.
7.Increase the Dow past the 14,000 level almost immediately restoring confidence in our free market system
8.Eliminate the need to get venture funding from China and Sovereign Wealth Funds
9.Create wealth without the entire population having to get a college degree
10.Make America run on all eight cylinders instead of running on the ¼ of 1 cylinder it runs on in good times
11.Rid the country of socialist beliefs by restoring the "common good" to capitalists.
12.Free the economy of the obstacles a big government imposes on the freedom to prosper.
13.Increasing the value of the dollar while paying off all legacy costs.
14.Economically emancipating women

Social Security was created in the 1930’s to help elderly Americans fund their retirement. But now we're left with this question – is the way they decided to fund it the best way to do it today? Social Security and Medicare are both technically bankrupt. With the pay-as-you-go method, there won't be enough working people to pay for the system. It's unsustainable.

Welcome to the Rise Up initiative; no new taxes, no benefit cuts, no temporary fixes. Rise Up will maintain benefits for retirees, greatly increase retirement benefits for the future, slash taxes, put money back into everyone's hands for they and their children's futures, and eliminate the $59 trillion unfunded Social Security and Medicare liability.

Again this Plan Will...
Generate the biggest tax cut in history
Reduce the size of government by half
Alleviate poverty and economically emancipate lower class citizens
Infuse enormous sums directly into the economy and accelerate growth
Eliminate the need for government pensions and Medicare
Pay off all $59 trillion of unfunded Social Security and Medicare liabilities
Give back to Americans the money that they earn
Increase the economic opportunities of all Americans

Why It Isn't Working

When Social Security and Medicare were originally set up, they were intended to be safety nets. They were never designed to be retirement programs. Contrary to popular belief, the programs are not a fund that you pay into as you work and draw on when you retire. It is pay-as-you-go system, with taxes from those working paying for the benefits of those retired.
When the system was first set up under FDR, the program was small enough and the number of people working large enough to fund it, but since that time both the coverage of the program and the percentage of people retiring have increased, making the burden heavier and now unsustainable.
As of today, future benefits to be paid out will exceed anticipated payroll taxes by $60 trillion. That's a debt of $200,000 for every man, woman and child in America or over $500,000 for every household.

Unfortunately politicians haven't addressed the problem, preferring to kick the can down the street to future generations. In the next few years the anticipated benefits will outstrip what payroll taxes can fund, which means we either impose new taxes on workers or we reduce the benefits everyone receives at retirement. But there's another option: Rise Up will let us climb out of the hole we've dug ourselves into, substantially increase benefits and dramatically reduce taxes.
How This Works
Rise Up redirects the 15.3% payroll tax paid by individuals (and in the case of employees, their employers too) into a personally-owned investment account that will grow over their working life. The funds are invested in safe indexed stock funds that have historically been growing at over a 10% rate since 1911. It will not affect current checks for retirees - the enacting legislation guarantees zero reduction in benefits and those benefits will be backed by the government. In fact, those benefits may be increased over present levels. Seven important principles make Rise Up work:

I. Convenience: For those people who can’t manage their own money, contributing to the capital pool for investment is automatic.

II. Constancy: It won't cost the taxpayer one dime more than it does now – it will be the same 15% deducted for payroll taxes now paid for by the taxpayer and his employer or just the taxpayer if he is self-employed.

III. Security: The taxpayer’s funds are unreachable by politicians, Congress, taxes, courts, or anyone else. No one, no entity, can invade the taxpayer’s personal account during his working life, giving it the opportunity and time to grow.

IV. Stability: As a minimum all present and future retirees without the time to accumulate their nest eggs are guaranteed to receive from the government the same present benefits paid under Social Security, Disability and Medicare for the rest of their lives.

V. Neutrality: The taxpayer’s funds will not be managed by stock brokers or investment houses; the trust will merely invest the taxpayer’s funds at the taxpayer’s direction into several trust-assembled funds that will track stock indexes thereby directly bypassing the cost of Wall Street advice, management and tricks.

VI. Choice: The taxpayer will control which trust-assembled stock funds his or her money is invested in during their working life. These funds will track the steady upward movement of the market and grow with our economy.

VII. Safety: The funds will not be invested in risky stocks funds. They will contain hundreds of quality stocks and avoid having one or two or even a group of them crash the whole account.

Balancing the Present and Future
Rise Up will direct Federal payroll taxes to be placed in the Personal Investment accounts (USAs) of each particular taxpayer while also providing for the funding of all benefits of existing Social Security and Medicare beneficiaries. How is this done?

A dollar a year invested for 40 years compounds into $442 at a rate of 10% per year, whereas printing 40 dollars over 40 years generates only a $40 currency dilution, or $40 more dollars put into the total money supply, making each dollar worth less. The USAs will grow over time to the point where in 40 years they will be 11 times greater than the actual currency dilution if all benefits had been paid for 40 years by printing money.

In the short term, the infusion of massive amounts of new capital into the stock market will substantially increase economic activity and double Federal income tax revenue within three to five years. This increase can be used to pay the benefits due under the old entitlement plans and reduce the need to use printed money.

There are also numerous other ways to fund the old entitlement benefits other than printing money or using taxes, such as privatizing public lands, buildings and other government facilities. As older participants pass out of the system, the old entitlement liabilities extinguish themselves. And depending on growth patterns, the PPA will be sufficient after 15 to 25 years to fund benefits equivalent to those guaranteed under the old plans, taking away the need for calculation of unfunded liabilities.

Our Economy
A free market relies on an ever-increasing pool of capital with which to grow and prosper. Unfortunately, punishing taxation, suffocating regulations and artificial "stimulus" packages funded by government debt, borrowing, and future taxes puts a drain that capital, stunting economic growth. The money infusion by USAs represents the investment necessary to rapidly grow the economy.

USAs, by investing in stocks, will add $100 billion a month to the economy, or $1.2 trillion a year, with no new taxes, government spending, or more borrowing to pay for that spending. That's $1.2 trillion a year of new investments, new businesses and new jobs. The multiplier factor will take that annual $1.2 trillion and create a least $6 trillion of new GDP and millions of new jobs, throwing the economy into over-drive. And every working person, from the richest to the poorest, will be able to put away money. But what will that look like?

Average Americans
In recent years the average American has not been saving but spending all their income just to stay afloat. With Rise Up, that all changes.

The average American household makes over $50,000 a year and pays over $7,500 in payroll taxes. In plain math, that $7,500 invested each year in the stock market, earning 10% a year over 40 years, will generate a $4 million nest egg that throws off a $33,000 a month retirement check without touching the trust, which can be passed on to his or her heirs. After 40 years, a janitor making $20,000 a year can expect $1.6 million, a technician making $40,000 can expect $3.2 million and a truck driver making $60,000 can expect $4.8 million. That's the real math. Compare that to current programs, with no nest egg at all and only a paltry monthly check. Rise Up takes money out of the hands of government, so that hard-working Americans can fully realize the American Dream.

A book, tables and graphs and extensive library that fully explains this “Republican idea” can be found at www.riseupamerica.us.

Americans are in need of a good government housecleaning.  This plan presents a blueprint for Republicans to follow to thoroughly do the job.  If enacted they will become the dominant political party for the next hundred years and throw socialism under the bus.