Clicking on banner ads enables JWR to constantly improve
Jewish World Review Sept. 1, 2004 / 15 Elul 5764

Amity Shlaes

Amity Shlaes
JWR's Pundits
World Editorial
Cartoon Showcase

Mallard Fillmore

Michael Barone
Mona Charen
Linda Chavez
Ann Coulter
Greg Crosby
Larry Elder
Don Feder
Suzanne Fields
Paul Greenberg
Bob Greene
Betsy Hart
Nat Hentoff
David Horowitz
Marianne Jennings
Michael Kelly
Mort Kondracke
Ch. Krauthammer
Lawrence Kudlow
Dr. Laura
John Leo
David Limbaugh
Michelle Malkin
Chris Matthews
Michael Medved
Kathleen Parker
Wes Pruden
Sam Schulman
Amity Shlaes
Tony Snow
Thomas Sowell
Cal Thomas
Jonathan S. Tobin
Ben Wattenberg
George Will
Bruce Williams
Walter Williams
Mort Zuckerman

Consumer Reports

Competitive endgame | "Most of it doesn't add up to much."

The line comes from "Five Easy Pieces," a Jack Nicholson film in which an oil rigger describes his failed career, a series of piecemeal efforts that led to nothing. The phrase also fits the description critics are giving of George W. Bush's economic career as president. Bush has not had a clear plan— or accomplished much— in his first term, the critics say. What is more, he does not have a plan for the next term— assuming he wins one. And he has failed to do that most important of jobs— control the budget deficit.

On Thursday, in his big speech at the Republican National Convention, the president will make a few new claims, paw the stage with his left boot, and offer up some pro forma proposals. More incoherence from the hard hat.

Nice screenplay, but it is not an accurate one. The Bush team did target a specific economic goal, from the presidential campaign in 2000 on: to sustain America's relative competitiveness. In the 3 1/2 years he has held office, Bush, with the help of Congress, has pushed the nation repeatedly towardthis goal.

Some of us have not agreed with all of his tactics: steel protectionism, nationalizing education standards, letting the dollar drop to help certain exports. There have been outright inconsistencies, such as an outrageous drug entitlement, a gift to Florida's senior citizens. And certainly there have been problems— the deficit. Still, completing unfinished business is what second terms are for. We can even outline what Bush might aim for in the next four years. Sticking to the theme of that Nicholson film, we will call the plan "competitiveness in five easy pieces."

First comes reform of America's national insurance program. Social Security is a public-finance time bomb, as Alan Greenspan, the Federal Reserve chairman, acidly noted over the weekend. Bush can privatize Social Security by replacing the New Deal collective system with individual retirement accounts. This helps move America away from being an entitlement society and toward being a shareholder society, another stated Bush goal. It also removes Social Security payments, one of the biggest unfunded liabilities, from the government's balance sheet. These future liabilities matter more than the annual budget deficits you hear Bush's opponents rattling on about. Bush can show he is truly serious— more serious than Democrats— by taking on an issue they dare not touch.

Donate to JWR

Next, taxes. The single most important thing a developed country can do to stay competitive is to cut taxes, and Bush has done it repeatedly. His reduction in the capital gains tax was especially important. Now he can make two further tax efforts. The first— and he should even do this in the next few months— is to make permanent some temporary tax cuts from his first term. This is crucial because it demonstrates consistency. And next term could bring a thorough overhaul that finishes the transition from a system based on income to one based on consumption. If you think tax reform is passe, you haven't been in Washington lately. Everyone has a scheme to replace the current system. The best and easiest is the flat tax.

Healthcare: When chief executives visit Washington to talk about hiring, they complain about rising health-care costs. At the core of the problem is the fact that third parties, currently insurance companies and government offices, make the payments. Bush would return responsibility to citizens by strengthening Health Savings Accounts, making people responsible for their own insurance, which would be deductible for tax purposes. Sen. John Kerry (D-Mass.), like Sen. Hillary Clinton (D-N.Y.) in the 1990s, would increase the power of third parties by endowing government offices and other health-care managers with higher subsidies.

Fourth comes the lawsuit problem. Next term will be the time to push through federal legislation that reforms tort law. U.S. businesses and foreign investors tend to console themselves with vague daydreams that eventually asbestos claims will subside and that the next round of suits will be easier to handle. This is nonsense. The next asbestos is yet more asbestos, with suits bigger and more costly than ever.

Nobody is an angel in the legal story, and nearly all politicians are beholden to lawyers. Still, Bush can make clear that under a Kerry-Edwards administration, U.S. voters will not only have leaders who took campaign contributions from trial lawyers, they will have a leader who is a trial lawyer.

Fifth, restraining government spending. Here is where Bush has failed most often. The price of his first-campaign philosophy, compassionate conservatism, was higher spending.

The war made things worse: To get support for his military legislation, the White House made considerable concessions to various constituencies involving increases in non-defense spending.

Of course there is no guarantee that Bush will mention all these goals, let alone manage to achieve them. Though he did not plan it, he is, as he says, a war president. Most of what he does on the domestic side will be affected by the trading he has to do to achieve his defense goals. What is more, the contest of 2004 is not merely a contest between the Democratic Party and the Republican Party. It is also a contest between two cultures— the culture of entitlement and the culture of the shareholder-owner. Both parties play to elements of both cultures. Republican strategists this week are arguing that the typical Republican voter today is leaning toward entitlements, and Bush is hearing their message.

Still, one can argue that voters, especially Republicans, are merely awaiting a stronger commitment to the ownership message, one that does not permit exceptions such as cynical drug buyouts for the elderly in swing states. They are also looking for a reminder of what they know is true: that annual deficits matter less when growth is robust. Let Bush talk about eight years of pro-growth policy. There is nothing piecemeal about that.

Every weekday publishes what many in Washington and in the media consider "must reading." Sign up for the daily JWR update. It's free. Just click here.

JWR contributor Amity Shlaes is a columnist for Financial Times . Her latest book is The Greedy Hand: How Taxes Drive Americans Crazy and What to Do About It. Send your comments by clicking here.


06/22/04: Oil as a curse
06/16/04: What de Gaulle can teach us about Iraq
05/18/04: Why trade matters in a time of war: Promising steps by U.S. and EU against protectionism
05/12/04: Let's face it, planning your life to reduce your tax bill is a time-honored and legal tradition
04/29/04: Being caught between 2 complicated syndromes: The high cost of living in big cities and the progressive structure of the U.S. tax code
04/20/04: Kerry's ‘Misery Index’ is just sad
04/15/04: John Kerry's ‘tax the rich’ mantra won't get the jobs done
04/02/04: Faithful following at the White House
02/25/04: It's back to the Dark Ages on trade
02/20/04: Trust the U.S. or trust Al Qaeda
02/12/04: A Political Year of Yalies: Boola Boola for Meritocracy
02/04/04: Here's what America doesn't need: Another New Deal
01/15/04: Forget Mars, U.S. economy looking like the final frontier
12/30/03: Bob Bartley put morality's place in the market economy
12/18/03: Mission accomplished: 1991's, that is
12/11/03: Shrugging off outdated data: Inside America's economic machine
11/13/03: Leaving a little something for the kids? Good luck
11/05/03: Never, Never will we Desist
09/30/03: Tax, lies and a few supply-side parables 10/09/03: Free markets are the key to rebuilding Iraq

09/25/03: Don't be sentimental, Mr. Bush
08/12/02: Howard Dean, Robin Hood
05/29/02: Berlin Diarist: To believe that by self-improvement and restraint, we can end tyranny
03/27/02: The curse of oil
11/12/02: Political Correctness at the Fed (No joke!)
10/31/02: Local enforcer who has changed national laws
10/12/02: No Mirror for Europe; US is a picture of unity
08/14/02: Keeping your financial eggs at home
07/24/02: New Democrats' unaffordable luxury
06/26/02: The evolution of eminent domain is the story of the lasting power of Supreme Court decisions to alter the American cultural fabric
06/20/02: The distinction between known risk and uncertainty: What was lost in the Martha Stewart flap
06/11/02: Europe, long waiting for a chance to assert itself as independent from the US on the world stage, is clueless to terror's threat
06/04/02: A Cold Warrior's lessons for the Middle East
05/21/02: Geography does matter when it comes to development, but aid must nonetheless be linked to good governance
05/14/02: The increasing number of new claims is hurting innocent companies and making a mockery of the Common Law system
05/09/02: Aid, development and guilt in our times of terror
04/30/02: Wine lovers may at last be able to stray across state borders. The Internet is coming to the aide of free trade
04/23/02: Taxation by way of Madison Avenue
04/17/02: Special relationships and free trade do not mix
04/08/02: Is terror the flip side of globalization?
03/20/02 Bush gives aid but seeks results
03/13/02 The Danger in policy by numbers
02/26/02: States' smokescreen for tax hypocrisy
02/20/02: Echoes of leadership against a global threat
02/13/02: Jackson Vanik May be a Useful Analogy When Thinking About the Middle East
02/07/02: Budgeting for victory: Requiem for a peace dividend
02/05/02: The detectives of 1930s pulp fiction had a nose for clients bearing gifts. Sadly, those consulted by Enron did not
01/22/02: Allow all American children a decent chance
01/15/02: Do not disturb the profit-sharing revolution
01/09/02: It is dangerous to elevate a currency as a political emblem if the need for other economic reforms is obscured
01/03/02: There is only one way for a free thinker to bring up children
12/20/01: Why America's economy always bounces back
12/18/01: When it comes to taxes, Washington lawmakers can learn a thing or two from The Honeymooners
12/13/01: Bush opens a new era
12/12/01: A flamboyant reversal for the Democratic party
12/06/01: Threat of an oil embargo on the U.S. is a bluff
11/29/01: Which is more important--the war or diplomatic comity?
11/20/01: Unbalanced by a wealth of oil and diamonds
10/17/01: Afghanistan Needs a General MacArthur
09/27/01: The US has gained an understanding of the costs of war for which its European allies have hitherto wished in vain
09/13/01: War against terrorism will rise from the ashes
08/15/01: Geography is no excuse for the state's economic stagnation. Its policymakers should take a leaf from Ireland's book
08/07/01: Teamsters may pay a heavy price for winning its batle in Congress
07/25/01: Towards a patent-free nirvana?
07/17/01: History proves the lasting value of tax cuts
07/10/01: Stem cell research has awakened a bitter debate in Washington but voters care more about other electoral issues
07/03/01: America foots the bill for Europe's largesse
06/26/01: America the litigious, land of the lawyer's fee
06/20/01: Five reasons for gloom about global growth 06/18/01: Show pity for Alice in Tax Wonderland
06/13/01: America must take a French lesson in trade
06/11/01: Time to dream the impossible dream for Iraq
06/07/01: Whatever happened to simple?
06/04/01: When the relationship between companies becomes as close as a marriage, the eventual break-up is often very painful
06/01/01: Loving and hating the Bush tax bill
05/30/01: Will Grisham soon be unemployed? In America's courts these days, there's no room left over for legal fiction
05/22/01: Republicans sample the rhetoric of confidence
05/16/01: Boeing has been promised $60m to site its headquarters in Illinois. The deal looks a poor one for taxpayers
05/14/01: Adam Smith in love
05/09/01: Those rotten Russian capitalists
05/07/01: Why tax havens provide shelter for everyone
05/04/01: Middle classes pay for get-the-rich folly
05/01/01: Money can't buy happiness? Think again.
04/26/01: Calling America's rogues and entrepreneurs
04/19/01: High earners right to feel lonely at the top
04/11/01: The right must learn the comfort of strangers
04/04/01: When domestic law arrives by the back door
03/30/01: A Lexus tax cut suits the jalopy driver
03/27/01: The unchallenged dominance of King Dollar
03/20/01: Natural selection of an intellectual aristocracy
03/16/01: The hidden danger of a regulatory recession
03/14/01: Is the American condition that boring? Why so many Oscar nominated movies aren't set in America
03/07/01: Trampling on the theory of path dependence
03/05/01: Fighting the good fight
03/01/01: It is time for Fannie and Freddie to grow up
02/27/01: IT's important
02/22/01: The guilty conscience of America's millionaires
02/14/01: The benefits of helping the 'rich'
02/09/01: The Danger and Promise of the Bush Schools Plan
02/05/01: Crack and Compassion
01/31/01: Debt is good
01/29/01: Clueless
01/24/01: A gloomy end for a half-hearted undertaking
01/17/01: The challenge of an ally with its own mind
01/15/01: An unexpected American family portrait
01/10/01: A fitting legacy for America's beloved dictator
01/08/01: The trick of tax 'convenience'
01/03/01: Time to stop blaming Greenspan over taxes
12/11/00: So smart they're dumb
12/06/00: How economic bad news came good for Bush
12/04/00: The Boies factor
11/30/00: "The inevitable demands for recounts erupted like acne…"
11/28/00: Fair play and the rules of the electoral game
11/23/00: The shining prospect beyond a cloudy election
11/21/00: Try the Cleveland model
11/16/00: A surprising winner emerges in the US election
11/09/00: Those powerful expats
11/07/00: What's right for America versus what works
11/02/00: Time to turn off big government's autopilot
10/30/00: Canada beating America in financial sensibility
10/26/00: When progressiveness leads to backwardness
10/24/00: The most accurate poll
10/19/00: The Middle East tells us the hawks were right
10/17/00: The split personalities of America's super rich
10/10/00: 'Equity Rights' or Wake up and Smell the Starbucks
10/04/00: Trapped in the basement of global capitalism
09/21/00: The final act of a grand presidential tragedy
09/21/00: Europeans strike back at the fuel tax monster. Should Americans follow?
09/18/00: First steps to success
09/13/00: America rejects the human rights transplant
09/07/00: Minimum wage, maximum cost
09/05/00: Prudent Al Gore plans some serious spending
08/31/00: A revolution fails to bring power to the people
08/28/00: A reali$tic poll
08/21/00: "I Goofed"
08/16/00: Part of the union, but not part of the party
08/09/00: Silicon Alley Secrets
08/02/00: Radical Republicans warm up for Philadelphia
07/31/00: I'll Cry if I Want To
07/27/00: Cold warrior of the new world
07/25/00: The Estate Tax will drop dead
07/18/00: Shooting down the anti-missile defence myths
07/14/00: A convenient punchbag for America's leaders
07/07/00: How to destroy the pharmaceutical industry
07/05/00: Patriots and bleeding hearts
06/30/00: Candidates beware: New Washington consensus on robust growth stands the old wisdom on its head
06/28/00: White America's flight to educational quality
06/26/00: How Hillary inspired the feminist infobabes

© 2003, Financial Times