Rudy’s the One

Rudy’s the One
The free-market leader of the GOP field.

BY STEVE FORBES
Friday, March 30, 2007 12:01 a.m.

Rudy Giuliani is the real fiscal conservative in the 2008 presidential race. That’s why I’m endorsing him for president.

Most Americans know that Mr. Giuliani turned around America’s largest city. They know he cut crime and welfare in half; they know that he improved the quality of life from Times Square to Coney Island and everywhere in between. And they witnessed his Churchillian leadership following the terrorist attacks on 9/11.

Less well known is the mayor’s fiscal record. Nonetheless, conservatives will find it impressive. He built New York’s resurgence not just on fundamental police work, but also on a foundation of fiscal discipline. He cut taxes and the size of government and turned an inherited deficit into a multibillion dollar surplus.

Mr. Giuliani entered office in 1994 with a $2.3 billion budget deficit handed to him by his predecessor, Mayor David Dinkins. Liberal conventional wisdom held that the only way to close the gap was to raise taxes while cutting back on basic city services such as sanitation. The new mayor rejected this advice–in fact, he famously threw the report recommending tax hikes in the trash!

Instead, he set out to restore fiscal discipline to the “ungovernable city”–and achieved results that Reagan Republicans can applaud.

In his first budget address Mr. Giuliani explained that he would “cut taxes to attract jobs so our people can work.” While lots of politicians make promises about cutting taxes Mr. Giuliani delivered, overcoming the initial resistance of the overwhelmingly Democratic City Council. He ultimately prevailed 23 times, including cuts in sales, personal income, commercial rent and hotel occupancy taxes. He understood that these taxes were not revenue producers, but counterproductive job killers.

When he left office after eight years, New Yorkers had saved over $9 billion, while enjoying their lowest tax burden in decades. The private sector, which had been hemorrhaging hundreds of thousands of jobs in the years before he took office, produced over 423,000 new jobs. Meanwhile the unemployment rate was cut in half. Businesses responded to Mr. Giuliani’s reforms by returning to the center of city life.

So when he talks about his belief in supply-side economics, its not just theory, it’s a plan he has already succeeded at putting into action. He’s seen the results of supply-side economics first hand–higher revenues from lower taxes.

Controlling government spending is another pledge often made by politicians. Conservative voters now know to be skeptical of such claims. But Mr. Giuliani has a record they can have confidence in. His first budget cut spending for the first time in the city since the fiscal crisis of the 1970s–and over the course of his administration he controlled the city’s spending while federal government spending grew by over 40% and average state spending ballooned by over 60%. Mr. Giuliani always made fiscal discipline a priority: instructing city commissioners to cut agency budgets even when the deficits had turned to surpluses.

Mr. Giuliani set out to cut the size of city government, insisting that New York should live within its means. New Yorkers saw their quality of life improve with more effective delivery of services while the bureaucratic ranks were being thinned by nearly 20,000–a near 20% decrease in city headcount, excluding police officers and teachers. He increased the number of cops and teachers because he understood that public safety and quality education are what we expect in return for our tax dollars, not partisan job protection or union featherbedding. As mayor, he proved that government can be smaller and smarter–more efficient and more effective.

Rudy Giuliani can unite the Republican Party and restore our traditional claim as the party of fiscal conservatism. He has already proven he can stand up to liberal special interest groups and achieve tax cuts, even with a Democrat-controlled City Council. That’s the kind of leadership we need in Washington. That’s the kind of leadership that will inspire the next generation of the Reagan Revolution. And that’s why America’s Mayor should be America’s next president.

http://www.opinionjournal.com/extra/?id=110009873

Promises They Can’t Keep

Promises They Can’t Keep

By Robert J. Samuelson
Wednesday, January 9, 2008; A15

The big lie of campaign 2008 — so far — is that the presidential candidates, Democratic and Republican, will take care of our children. Listening to these politicians, you might think they will. Doing well by children has now passed motherhood and apple pie as an idol that all candidates must worship.

“We will do whatever it takes to make America a better country, to give our kids a better future,” says Mike Huckabee, winner of the Republican Iowa caucuses.

“We will deliver for our children, our grandchildren and our great-grandchildren,” claims Sen. Barack Obama, the Democratic winner in Iowa.

“We’re going to reclaim the future for our children,” says Democratic Sen. Hillary Clinton.

Actually, these are throwaway lines, completely disconnected from reality.

Our children face a future of rising taxes, squeezed — and perhaps falling — public services and aging — perhaps deteriorating — public infrastructure (roads, sewers, transit systems). Today’s young workers and children are about to be engulfed by a massive income transfer from young to old that will perversely make it harder for them to afford their own children.

No major candidate of either party proposes to do much about this, even though the facts are well known.

Social Security, Medicare and Medicaid — three programs that go overwhelmingly to older Americans — already represent more than 40 percent of federal spending. A new report from the Congressional Budget Office projects that these programs could easily grow to about 70 percent of the budget by 2030. Without implausibly large deficits, the only way to preserve most other government programs would be huge tax increases (about 40 percent from today’s levels). Avoiding the tax increases would require draconian cuts in other programs (about 60 percent). Workers and young families, not retirees, would bear the brunt of either higher taxes or degraded public services.

Similar pressures, though less ferocious, exist at the state and local levels. Schools, police, libraries and parks will be squeezed by the need to pay benefits for retired government workers. A study by the Pew Charitable Trusts found that states have promised retired workers $2.7 trillion in pension, health care and other benefits during the next three decades. Only about $2 trillion has been set aside; the rest would come from annual budgets.

Medicaid, a joint federal-state program with states paying about 40 percent of the costs, represents another drain; about two-thirds of its spending stems from the aged and disabled. Roads, water and mass transit may also be shortchanged. States and localities pay about three-quarters of their costs.

But facing these facts would expose candidates to three daunting problems.

First: Lightening the burden on the young requires cutting retirement benefits for the old — raising eligibility ages, being less generous to richer retirees and making beneficiaries pay more for Medicare. Simply increasing taxes or cutting other programs won’t work. The problem is not just closing the budget deficit.

Second: We can’t wait. Ideally, prospective retirees would have received several decades’ warning, but we’ve delayed too long. We need to cut benefits for baby boomers and even some existing retirees. They are the source of mounting costs.

Third: Even if retirement benefits were cut, pressures for higher taxes and lower public services would not disappear. Social Security and Medicare are part of the nation’s social fabric. Although individuals’ benefits can be responsibly trimmed, the growth in the elderly population (a doubling by 2030) and rapidly rising health-care costs would still expand total spending. The increases would simply be smaller.

A moral cloud hangs over our candidates. Just how much today’s federal policies, favoring the old over the young and the past over the future, should be altered ought to be a central issue of the campaign. But knowing the unpopular political implications, our candidates have lapsed into calculated quiet.

They pay lip service to children but ignore the actual programs that will shape their future. The hypocrisy is especially striking in Obama. He courts the young, promises “straight talk” and offers himself as the agent of “change.” But his conspicuous omissions constitute “crooked talk” and silently endorse the status quo.

The insidious nature of this problem is that because the spending increases for the elderly occur gradually, the pressures on taxes and other government programs will also intensify gradually. A crucial moment to clarify the stakes and compel politicians to make choices probably won’t occur until it’s too late.

The longer we delay — and we’ve done so now for several decades, because the strains created by an aging society have been obvious that long — the more likely that eventual “solutions” will be unfair to both young and old. To acknowledge that and to come to grips with it would constitute genuine “change.”

http://www.washingtonpost.com/wp-dyn/content/article/2008/01/08/AR2008010803488.html?hpid=opinionsbox1

Free-Market Think Tanks in Europe

Giving Tanks

Across Europe, thinkers are promoting free-market ideals.

by John Fund

Monday, December 10, 2007 12:01 A.M. EST

LONDON–The Heritage Foundation, the Cato Institute, the American Enterprise Institute and other free-market Washington think tanks are known to many Americans. What isn’t generally understood is that there has been an explosion of free-market think tanks around the world that are increasingly challenging the conventional view that government is the solution to society’s problems.

Last week the Stockholm Network, an umbrella organization for European free-market think tanks, held its first annual award ceremonies to honor the groups that have been most effective in informing policy makers and the general public about policies like school choice, portable pensions and decentralized approaches to delivering health care. The Wall Street Journal was a co-sponsor, in line with its adherence to an editorial philosophy of “free markets and free people.”

In 1997, the Stockholm Network had five members; it now boasts more than 130 affiliated groups, stretching from Iceland to Armenia. In Bulgaria, the Center for Market Economics has played a major role in building support for the country’s adoption of a 10% flat-rate income tax, effective Jan. 1. “Watch Bulgaria,” says Steve Masty, an economic development specialist based in London. “The intellectual light bulbs that have been switched on there are now having real-world results.”

More than one guest at the Stockholm Network dinner commented that several countries in Europe that escaped the Soviet bloc less than two decades ago are now pursuing reforms that would be regarded as too radical for Western European electorates. In Slovakia, the introduction of a profit-based health system has led to the entry of two private health-insurance companies that have helped drop the state share of the health-care market to 65% from 80% in just two years.

Some of the think tank presidents attending the dinner have suffered more than criticism for their work. Prof. Atilla Yayla, the president of the Association for Liberal Thinking in Turkey, gave a speech last year in which he stated that the single-party secular rule imposed by Kemal Ataturk in the 1920s “appears backward rather than progressive.” He said he found it difficult to explain to visitors to Turkey why statues and pictures of Ataturk appear in almost every public space.

Mr. Yayla was viciously attacked in the media and subjected to criminal prosecution for his comments. Now teaching on a yearlong sabbatical in England, he plans to return to Turkey to continue his fight for a truly liberal society that represents a third way between Islamism and Ataturk’s state-imposed secularism. He has more than 500 Turkish academics and intellectuals on his mailing list.

While the Stockholm Network focuses on Europe, that doesn’t mean that free-market think tanks in developing countries are being ignored. This week the Cato Institute is launching a series of international Web sites to build support for the ideas of liberty and to promote the work of local think tanks. Web sites in French, Portuguese, Chinese, Kurdish, African languages and Persian will join existing Cato Web sites in Russian, Spanish and Arabic.The project is the work of Tom Palmer, who 20 years ago as a young libertarian scholar smuggled photocopiers into the Soviet Bloc so dissidents could produce their own samizdat publications. “In many countries there is a clear need for private efforts not subject to or tied to any government entity,” he told me. “Clearly, the government-led efforts aren’t doing such a hot job of promoting the ideas of liberty at the moment.”

John Blundell, president of Britain’s Institute for Economic Affairs, says an increasing emphasis on promoting liberty in developing nations and among immigrants from those nations is appropriate. At IEA’s annual conference for up-and-coming free-market scholars in October, white men were a distinct minority of the 100 students attending. The children of Indian and Chinese immigrants won almost half of the prizes and honorable mentions in IEA’s annual student essay contest.

The original inspiration for much of the worldwide growth in free-market ideas was a slender volume written by F.A. Hayek, obscure professor at the London School of Economics, in 1944. As World War II was winding down and postwar planning for growing welfare states was under way, Hayek’s “The Road to Serfdom,” made a powerful case that the collectivist ideas then gaining ground would almost inevitably lead to a loss of liberty in all its forms.

Hayek also made a positive case that the venerable ideas expounded by thinkers like Adam Smith, David Hume and Edmund Burke, who promoted limited government and the rule of law, could prove a powerful antidote to socialism. Hayek urged proponents of liberty to build on the example of socialists, who built a network of theorists and philosophers that later helped them gain political power. He called for a “a truly liberal radicalism (in the European meaning of that term) . . . which does not confine itself to what appears today as politically possible.”

A few years after publication of “The Road to Serfdom,” a young entrepreneur named Anthony Fisher met with Hayek and started IEA. It spent 20 years building the case for a freer society until its ally, Margaret Thatcher, became prime minister in 1979.

While the Stockholm Network dinner was held in a celebratory mood, several speakers reminded the audience illiberal notions like protectionism are making a comeback in many countries, and that global warming has become a pretext for those advocating draconian limits on economic growth.Such wrongheaded ideas are also on the march in America. Everyone seems focused on which party will control the White House and Congress after next November’s election. But regardless of who wins, real changes in the public-policy landscape are likely to come only if those who hold political power also have won the battle for their ideas. That’s why, despite the hundreds of millions of dollars being spent on the 2008 election, advocates on both the left and right are also pouring money into think tanks. They are preparing for the day when those ideas can be taken off the shelf and put to the test.

http://www.opinionjournal.com/diary/?id=110010969