Charting Our Way to Solvency

Charting Our Way to Solvency
George Will
Sunday, February 07, 2010

WASHINGTON -- In 2013, when President Mitch Daniels, former Indiana governor, is counting his blessings, at the top of his list will be the name of his vice president: Paul Ryan. The former congressman from Wisconsin will have come to office with ideas for steering the federal government to solvency.

Not that Daniels has ever been bereft of ideas. Under him, Indiana property taxes have been cut 30 percent and for the first time, Standard & Poor's has raised the state's credit rating to AAA. But in January 2010, Ryan released an updated version of his "Roadmap for America's Future," a cure for the most completely predictable major problem that has ever afflicted America.

Some calamities -- the 1929 stock market crash, Pearl Harbor, 9/11 -- have come like summer lightning, as bolts from the blue. The looming crisis of America's Ponzi entitlement structure is different. Driven by the demographics of an aging population, its causes, timing and scope are known. 

Funding entitlements -- especially medical care and pensions for the elderly -- requires reinvigorating the economy. Ryan's map connects three destinations -- economic vitality, diminished public debt, and health and retirement security.

To make the economy -- on which all else hinges -- hum, Ryan proposes tax reform. Masochists would be permitted to continue paying income taxes under the current system. Others could use a radically simplified code, filing a form that fits on a postcard. It would have just two rates: 10 percent on incomes up to $100,000 for joint filers and $50,000 for single filers; 25 percent on higher incomes. There would be no deductions, credits or exclusions, other than the health care tax credit (see below).

Today's tax system was shaped by sadists who were trying to be nice: Every wrinkle in the code was put there to benefit this or that interest. Since the 1986 tax simplification, the code has been recomplicated more than 14,000 times -- more than once a day.

At the 2004 Republican convention, thunderous applause greeted George W. Bush's statement that the code is "a complicated mess" and a "drag on our economy" and his promise to "reform and simplify" it. But his next paragraphs proposed more complications to incentivize this and that behavior for the greater good.

Ryan would eliminate taxes on interest, capital gains, dividends and death. The corporate income tax, the world's second highest, would be replaced by an 8.5 percent business consumption tax. Because this would be about half the average tax burden that other nations place on corporations, U.S. companies would instantly become more competitive -- and more able and eager to hire.

Medicare and Social Security would be preserved for those currently receiving benefits, or becoming eligible in the next 10 years (those 55 and older today). Both programs would be made permanently solvent.

Universal access to affordable health care would be guaranteed by refundable tax credits ($2,300 for individuals, $5,700 for families) for purchasing portable coverage in any state. As persons under 55 became Medicare eligible, they would receive payments averaging $11,000 a year, indexed to inflation and pegged to income, with low-income people receiving more support.

Ryan's plan would fund medical savings accounts from which low-income people would pay minor out-of-pocket medical expenses. All Americans, regardless of income, would be allowed to establish MSAs -- tax-preferred accounts for paying such expenses.

Ryan's plan would allow workers under 55 the choice of investing more than one-third of their current Social Security taxes in personal retirement accounts similar to the Thrift Savings Plan long available to, and immensely popular with, federal employees. This investment would be inheritable property, guaranteeing that individuals will never lose the ability to dispose every dollar they put into these accounts.

Ryan would raise the retirement age. If, when Congress created Social Security in 1935, it had indexed the retirement age (then 65) to life expectancy, today the age would be in the mid-70s. The system was never intended to do what it is doing -- subsidizing retirements that extend from one-third to one-half of retirees' adult lives.

Compare Ryan's lucid map to the Democrats' impenetrable labyrinth of health care legislation. Republicans are frequently criticized as "the party of no." But because most new ideas are injurious, rejection is an important function in politics. It is, however, insufficient. Fortunately, Ryan, assisted by Republican representatives Devin Nunes of California and Jeb Hensarling of Texas, has become a think tank, refuting the idea that Republicans lack ideas.

Soft on Terror

Soft on Terror
Charles Krauthammer
Friday, January 29, 2010

WASHINGTON -- The real scandal surrounding the failed Christmas Day airline bombing was not the fact that a terrorist got on a plane -- that can happen to any administration, as it surely did to the Bush administration -- but what happened afterward when Umar Farouk Abdulmutallab was captured and came under the full control of the U.S. government.

After 50 minutes of questioning him, the Obama administration chose, reflexively and mindlessly, to give the chatty terrorist the right to remain silent. Which he immediately did, undoubtedly denying us crucial information about al-Qaeda in Yemen, which had trained, armed and dispatched him.

We have since learned that the decision to Mirandize Abdulmutallab had been made without the knowledge of or consultation with (1) the secretary of defense, (2) the secretary of homeland security, (3) the director of the FBI, (4) the director of the National Counterterrorism Center or (5) the director of national intelligence (DNI).

The Justice Department acted not just unilaterally but unaccountably. Obama's own DNI said that Abdulmutallab should have been interrogated by the HIG, the administration's new High-Value Detainee Interrogation Group.

Perhaps you hadn't heard the term. Well, in the very first week of his presidency, Obama abolished by executive order the Bush-Cheney interrogation procedures and pledged to study a substitute mechanism. In August, the administration announced the establishment of the HIG, housed in the FBI but overseen by the National Security Council.

Where was it during the Abdulmutallab case? Not available, admitted National Intelligence Director Dennis Blair, because it had only been conceived for use abroad. Had not one person in this vast administration of highly nuanced sophisticates considered the possibility of a terror attack on American soil?

It gets worse. Blair later had to explain that the HIG was not deployed because it does not yet exist. After a year! I suppose this administration was so busy deploying scores of the country's best lawyerly minds on finding the most rapid way to release Gitmo miscreants that it could not be bothered to establish a single operational HIG team to interrogate at-large miscreants with actionable intelligence that might save American lives.

Of course, this case is just a reflection of a larger problem: an administration that insists on treating Islamist terrorism as a law-enforcement issue. Which is why the Justice Department's other egregious terror decision, granting Khalid Sheik Mohammed a civilian trial in New York, is now the subject of a letter from six senators -- three Republicans, two Democrats and Joe Lieberman -- asking Attorney General Eric Holder to reverse the decision.

Lieberman and Sen. Susan Collins had written an earlier letter asking for Abdulmutallab to be turned over to the military for renewed interrogation. The problem is, it's hard to see how that decision gets reversed. Once you've read a man Miranda rights, what do you say? We are idiots? On second thought ...

Hence the agitation over the KSM trial. This one can be reversed and it's a good surrogate for this administration's insistence upon criminalizing -- and therefore trivializing -- a war on terror that has now struck three times in one year within the United States, twice with effect (the Arkansas killer and the Fort Hood shooter) and once with a shockingly near miss (Abdulmutallab).

On the KSM civilian trial, sentiment is widespread that it is quite insane to spend $200 million a year to give the killer of 3,000 innocents the largest propaganda platform on earth, while at the same time granting civilian rights of cross-examination and discovery that risk betraying U.S. intelligence sources and methods.

Accordingly, Sen. Lindsey Graham and Rep. Frank Wolf have gone beyond appeals to the administration and are planning to introduce a bill to block funding for the trial. It makes flesh an otherwise abstract issue -- should terrorists be treated as enemy combatants or criminal defendants? The vote will force members of Congress to declare themselves.

The White House, feeling the heat on this issue, signaled on Friday that it is looking for another venue. But the issue isn't New York. The issue is giving KSM a civilian trial anywhere. Rather than leaving him in the military commission system where he was until Obama decided otherwise.

Congress may not be able to roll back the Abdulmutallab travesty. But there will be future Abdulmutallabs. By cutting off funding for any KSM civilian trial, Congress can send Obama a clear message: The Constitution is neither a safety net for illegal enemy combatants nor a suicide pact for us.