What Prof. Keynes REALLY Advised Re “Stimulus Spending”

August 9, 2009

WHAT PROF. KEYNES REALLY ADVISED

REGARDING GOVERNMENT “STIMULUS” SPENDING

Copyright 2009 Craig Cotora

“The difficulty lies not so much in developing new ideas

as in escaping from old ones.” J.M. Keynes

While The Government debates a “Second Stimulus Plan” and The Pundits assailed the First Plan as “Krazy Keynesian deficit spending”—e.g. The Ethan Show 3-11-09; it seems a most appropriate time to take a few moments to consider what Prof. John Maynard Keynes actually advised regarding “appropriate” government stimulus spending.

Of course, it is probably only fair that we excuse such pundifications such as “Keynesianism—the theory that the public sector should control the private sector through strict regulation…” [Ibid.] when Professor Keynes in fact spent most of his seminal work—the General Theory of Employment, Interest and Money—arguing that pro-active “appropriate” government “intervention” in the macro-economy was necessary to ensure the success of both capitalism and democracy.

That is “fair” because one of the very few things that all economists of any “school” would agree on is that the General Theory is not “an easy read”–a fact Prof. Keynes admitted himself by spending practically the rest of his life explaining what he meant in the General Theory on the lecture circuit and in numerous articles.  And what Harvard Professor Alvin Hansen wrote in 1953 appears just as true today: “Nowadays one reads a good deal of the literature about Keynes but little in the General Theory itself.”

Actually, all one has to tackle to determine what Professor Keynes actually would advise us today regarding “appropriate” government stimulus spending is Chapter 23 of the General Theory– in which Professor Keynes tried to synthesize the conclusions and therums of the previous 22 chapters to define what he considers “the most appropriate” role of a democratic government in the macro-economy.

Not surprisingly—in that The General Theory was written in the midst of The Great Depression—Keynes believed that the principal purpose of government fiscal policy was to “maintain long term full employment” (hence “the General Theory of Employment…”etc.).   And more importantly regarding what Keynes would actually advise our government today regarding “stimulus” spending was that how the government spent stimulus funds was even more important than when [according to Keynes when economic indicators were “pointing to a downturn” in the economic cycle—i.e. before a recession–] and how much [an “appropriate amount” Prof. Keynes said for the economic conditions at the time.]

As Prof. Keynes emphasized in his numerous defenses of the the General Theory, “long term” full employment—i.e. not creation of temporary state road, bridge, etc. “infrastructure” jobs but “permanent” ”industrial” infrastructure employment–should be the focus of government economic stimulus spending because this was “just basic economics”  This particular type of stimulus spending creates more high skill, high wage jobs, the tax base increases accordingly, resulting in more tax revenues and thereby over time transforming government budget deficits to budget surpluses.

Professor’s Keynes “conservative” critics also might like to know, since is is apparent from their pundifications about Keynsian Economics that they have not actually studied his work, that once the government realized budget surpluses from “long term full employment” stimulus employment spending, he then also advocated reductions in income tax rates.   Besides maintaining a healthy democracy through “full employment,”  a “primary objective” of a government fiscal policy of “long term full employment” was lowering of income tax rates. (Pop quiz for Pundits Of Any Color: Who said: “The avoidance of taxes is the only intellectual pursuit that carries any reward.”? Yes Gentlemen…and Lady…that was J.M.K.)

Given what Professor Keynes actually advocated in the General Theory, what would he think of the current Administration’s interpretation of “Keynsian Economics”–if that is what the Adminstration’s current stimulus policy is intended to be—of “bailouts” and “$ for States”? Most likely a prolonged knashing of teeth since obviously neither bailouts of failed banks, S&L’s and investment houses nor $ for state infrastructure projects is the type of stimulus spending that would create “long term full employment” that would sufficiently expand the tax base to create budget surpluses and permit the lowering of tax rates.

Rather Prof. Keynes would certainly advise that that Trillion Dollars [if he would have actually approved of that much “deficit” spending] would much more productively be spent on grants, licenses and/or loans to corporate America to vastly expand American aero-space and “green” environmental industries—which would create exactly the kind of “long term full employment” Keynsian fiscal policy argues is required to expand the tax base sufficiently to create government budget surpluses and reduce tax rates.

There would also be other major benefits of ”long term full employment” stimulus spending in America’s environmental and aerospace industies. These are all industries whose products the rest of the world would demand (e.g. there is almost not a single manufacturing, service or energy development or consumption product or process that could not be made significantly more environmentally friendly.)  Consequently this type of government stimulus would not only convert America from a debtor to a creditor nation, but this type of spending would also easily accommodate the shifting of unemployed and underemployed American workers—particularly auto and other assembly line workers—into industries where they can still realize their American dreams with little additional re/training. [After all, if they can assemble products as complex as the modern automobile, they certainly could assemble a wide variety of aero-space and environmental machinery and/or equipment.]

In conclusion, if the Administration really desires to apply “Keynesian Economics” to help resolve the current economic crisis and if the Pundificators really desire to constructively criticize government fiscal policy, it would be best for both camps to actually read the General Theory—or at least Chapter 23—and Professor Keynes subsequent explanations of it; simply because if the government actually applied Keynesian full employment fiscal policy—our nation would have a good start on not only ending The Great Recession, but also restoring America to being the world’s leading manufacturing economy for generations to come.

Where Is President Obama’s ‘Arthur Schlesinger’ (When He Really Needs Him)?

February 4, 2009

President Kennedy did not keep a White House “resident historian”–Mr. Arthur Schlesinger of Harvard University–among his full time White House Staff just to help him write his memoirs, but used him as a consultant on a wide range of domestic policy issues–as Mr. Schlesinger himself documented in his book “A Thousand Days.”

In fact, Mr. Schlesinger was a historical expert of the 1930s and wrote a popular multi-volume history of The Great Depression era: “The Crises of the Old Order” and “The Coming Of the New Deal.”

If president Obama had an “Arthur Schlesinger” on his staff, surely he, or she, would be pointing out to him that its was fundamental structural economic and political reforms–principally the re-industrialization of America during WWII–that finally ended the The Great Depression, and not simply “economic stimulus”–six years of which only managed to end in the Recession of 1937-39.

History illustrates that “economic stimulus” can relieve some of the symptoms of a depression/serious recession, but it cannot “cure the underlying disease.”

And if the President’s advisers offered fundamental structural reforms along with “economic stimulus,” such a comprehensive economic plan would also answer the principle attack of political  “conservatives” to his economic plan–i.e. that the new administration, with its “stimulus package”  is simply increasing the deficit to a Mount Everest of National Debt with no end in sight.

Fortunately for the President, an ‘Arthur Schlesinger’ on his White House National Policy Team could also advise him–based on the lessons of history–exactly what fundamental reforms would permanently end The Great Recession and restore America to is rightful place as the world’s industrial and economic power house:

  • a complete overhaul of the federal taxation system including no business taxation of family and start up business, no taxation of savings, investment and retirement income, and no tax “shelters” of any kind;
  • re-industrialization (in the aerospace and environmental industries) to replace “minimum wage” service” sector jobs with “living wage” industrial sector jobs; and
  • public financing of all election campaigns to finally cut the tie between the Real Estate-Banking-Investment industries and the government that is supposed to be protecting the American worker and investor from the greed of so many of their executives.

Does America Need Another ‘New Deal’ To End The Great Recession Of 2007-2009, Or A Completely New Deal?

February 1, 2009

As Congress and President-Elect Obama debate exactly what kinds of “economic stimulus measures”–public works projects, tax cuts and credits, etc.–will end the current “recession” [1], President Lincoln might be smiling and thinking of the time when an office seeker claimed that he was “one of those who made you President,” and Mr. Lincoln replied: “yes, and its a pretty mess you got me into!”

In fact, since Mr. Lincoln personally defined “conservatism” as the “adherence to the old and tried, against the new and untried” [2], Mr. Obama and his economic advisers “new Deal” like economic stimulus proposals look more like the “conservative” approaches of the Hoover administration to The Great Depression rather than the innovative proposals of FDR‘s “New Deal.” [3]

But more importantly for Mr. Obama and his advisers searching for solutions to The Great Recession of 2008-09, did FDR’s New Deal legislation actually result in the ending “The Great Depression” of 1929 to 1933 [4]?

Although no historian has denied that New Deal programs certainly provided millions of unemployed Americans renewed hope, a sense of purpose and food and shelter for their families and began the construction of a regulatory system aimed at protecting the earnings of working Americans from unscrupulous bankers, investment firms and speculators–no small accomplishment by any means, the current consensus among American Great Depression era historians is that the massive re-industrialization resulting from America’s entry into World War II and  four continuous years of full employment and factory wages ended The Great Depression. [5]

And regardless of whether we call the current economic crises a “recession” or a “depression,” the “social contract” between Americans and their government today, as it was in 1932, is not just “torn,” but is in “shreds:”

  • Between 2000 and 2007 median household income decreased by .6%–and, that, of course, was before the economic collapse of 2008. [6]
  • Both the income gap between 80% of working men and women and the other 20% and the concentration of wealth in the United States are at historical highs; [7] and
  • Senators now spend over 30%, and Congressmen and women up to 40%, of their professional time raising money for their, and their respective party’s, re-election campaigns–instead of attending to the People’s Business. [8]

Consequently what Americans really need is not just “another New Deal” but a completely “new New Deal” with its government that promotes steady, significant annual income growth–especially among the first 80th percentile of the American work force; and instead of a “reactive” economic policy trying to alleve the symptoms of the nation’s current economic disease–primarily unemployment, declining property values and erosion of retirement capital– the Obama Administration needs to design a “pro-active” national economic policy which “cures” the disease and acts as an antibody to its re-occurrence.

So what would an entirely new “New Deal”–or perhaps more appropriately  a renewal of TR’s “Square Deal“– for the average American worker involve?

1.  A Complete Overhaul Of The Federal Income Tax [FIT] System. All triteness aside, the current FIT is literally a giant  millstone around the nation’s economic neck.  It discourages savings and investment by the average working American by taxing their earnings from saving and investment.  It taxes the retirement income and benefits of persons who most need that extra income.  It taxes the income generated from family owned and start up businesses even during the most critical time frame of launching a new business–the first five years.  To entreprenuership the FIT is an anchor dragging on the bottom just when the business is trying to leave the dock.  The FIT system needs to be entirely replaced by the simple progressive income tax originally proposed and enacted by the GOP. [9].

2. Re-industrialization. As we have previously noted history shows us that massive industrialization, not New Deal economic stimulus programs, finally ended The Great Depression, and therefore, it stands to reason that only comprehensive re-industrialization of America’s economy will ultimately end the current “Great Recession.”  Re-industrialization would:

  • Replace predominantly “minimum wage” service sector jobs with “living wage” high tech and manufacturing jobs;
  • Replace service workers with minimum education, training and skills with skilled workers having significant education and training [with a consequential increase in the quality of products, support services and productivity]; and
  • Replace our current predominantly “mercantile economy”–i.e. the business of selling–and as we see almost everyday now in the media frequently re-selling–securities and related banking and investment services–the historical hallmark of every declining national economy since at least the 1700s with a primarily manufacturing and manufactured products support service economy–the historical hallmark of every rising and/or healthy national economy [10].

And with the worldwide general recognition–now finally even including most governments–that humans can no longer widely and systematically pollute our planet and/or use up its increasingly diminishing resources without causing a global catastrophe, what better time for America to re-industrialize to provide sound resource utilization, environmental protection and aerospace machinery, equipment and processes and their required technical support services?

3. Public Financing Of All Federal Election Campaigns. The “Great Recession” of 2008 is the second occasion within the last 80 years where  reduced, if any, oversight of the American banking, real estate and investment industries has resulted in wiping out a significant portion of America’s investment and retirement capital–the first, of course, being the ‘laissez-faire” policies of the Harding, Coolidge and Hoover administrations between 1920 and 1932. [11].  And their is general agreement among both economists and historians that the “roots” of that lack of oversight during the last several decades was the same as it was during the 1920s and 1930s–i.e. that the financial, real estate and insurance industries, cumulatively, were then, and still are the biggest donors to candidates for federal office. [12].  Consequently, it seems logical that the only “proactive” national policy for preventing that national tragedy from re-occurring is public financing of all Congressional and Presidential elections so that–finally–America’s elected representatives are “beholden to none”–except to the citizens they represent.

END NOTES

1.  “Obama Advisors: Plan Would Create 4.1 Million Jobs” Philip
Eliot, AP, 1-10-2009.

2.  “The Life and Writings Of Abraham Lincoln,” P.V.D. Stern,
Modern Library, NY, copyright 1999 at page 581.

3.  Wikipidia: “Calvin Coolidge,” “Herbert Hoover,” and “Franklin D.
Roosevelt
.”

4.  Wikipidia: “The Great Depression.”

5.  Ibid.

6.  U.S. Census Bureau “Table H-8: Median Household Income…
1984-2007.”

7.  CNN Money “Income Gap Widens” Tami Luhby 4-9-2008; U.S.
Dept. of Labor, Bureau Of Labor Stastics: “Labor Force Statistics
From The Current Population Survey, Multiple Job Holders,
Minimum Wage Data [and] Characteristics of the Employed;”
and “The Distribution Of Wealth In America” Survey Of Consumer
Finances
.

8.  “More Raise $1 Million In Congress Races,” USA Today, Mon.
12-15-2008; “Money in Politics…Clean Elections For Congress”
Common Cause (web site).

9.  The GOP Congress of 1862 enacted the very first federal income
tax
to help finance the Civil War which by 1864 consisted of three
flat tax brackets of 5, 7.5 and 10% on annual incomes above
$600. “History of the Income Tax in the United States” at Info
Please (web site); and Tax History Museum “The Civil War 1861
-1865 (web site).

10. “Wealth and Democracy,” Kevin Phillips, copyright 2002,
Random  House Inc.. N.Y., N.Y.   is an entire book devoted to this
subject.

11. Wikipidia: “Warren G. Harding,” “Calvin Coolidge,” and “Herbert
Hoover
.”

12. MapLight.org 2008 Election Contribution Statistics (By Industry)
(web site).  The “Finance-Insurance-Real Estate” industries–
the ones who received virtually all of the approx $350 billion
in “bail out” funds distributed so far–gave a collective total of
approximately $462.5 million. The next largest group of
contributors were “Lawyers-Law Firms-Lobbyists” at $318.5
million [and no surprise there either].

‘A House Divided’ The Future Of Abraham Lincoln’s GOP: “Conservative” Or “Progressive”?

February 1, 2009

Abraham Lincoln began his “House Divided” speech before the 1858 Illinois Republican State Convention: “If we could first know where we are, and whither we are tending, we could better judge what to do, and how to do it. [1]”

Where we registered Republicans are today is that, even though a June 4,  2007 Rasmussen Survey reported that only 30.8% of Americans consider themselves “Republicans”– in third place behind those who considered themselves “Democrats”  (36.3%) and  those who consider themselves “not affiliated” with either political party (32.9%); the 2008 election was not even 24 hours old before pundits were beating their drums that the Republican losses were due to the GOP’s straying from its “conservative principles” “base” and/or “roots.”[2]

However, there is one very “inconvenient truth” about any claim that the roots of the GOP are “‘conservative”.  If we define “conservatism” as a policy of “less government is better” and de minimis government regulation of private enterprise offers the American worker more opportunity for socio-economic advancement than fiscally responsible promoted and regulated capitalism, there was absolutely nothing “conservative” about the G.O.P. at its inception, or about its first successful Presidential party leader Abraham Lincoln. [3]

I. THE ORIGINAL “PROGRESSIVE HOUSE” OF THE GOP OF 1856-1865.

The Republican Party Platform of 1860 consisted of 16 paragraphs which can be printed on just two pages [4]–a document of simplicity and conciseness that one can only wistfully admire in comparison to the 62 page text of the 2008 Republican Platform. [5]  (And to differentiate the Republican Party born in 1856 from the first American political party to call themselves “Republicans”–i.e. the party of Thomas Jefferson whose principal faction evolved into the Democratic Party of Andrew Jackson–we are referring to the modern Republican Party in this article as the GOP.)

The principle provisions of the 1860 GOP platform–other than those pertaining to the GOP’s opposition to the expansion of slavery into U.S. territories and the fugitive slave act were:

  • Paragraph 13 of the 1860 GOP Platform advocated the use of federal funds to purchase territorial lands for distribution to any American citizen willing to farm it.
  • Paragraph 15 provided for “appropriations for…river and harbor improvements of a national character.”
  • Paragraph 16 provided for Federal aid for construction of a transcontinental railroad and and “Overland Mail” and
  • Paragraph 12 advocated a national industrial and labor policy which: “secures to working men liberal wages;..to agriculture remunerating prices…and to mechanics and manufacturers an adequate reward for their skill, labor and enterprise…”

And,  although not mentioned in the Platform, one of the first legislative acts of the first GOP Congress of 1861-1862, in the darkest days of the Civil War for the Union, was enactment of The [Morrill] Land Grant College Act–which used federal funds for the purchase of state lands upon which almost all of America’s current state university systems have been constructed. [6]

As President Lincoln explained, all of these social and economic policies of the original GOP were to fulfill the mandate of the Preamble of the U.S. Constitution for the federal government to “promote the general welfare” [7].

In fact, President Lincoln not only did not have a very high opinion of  “conservatism” as political philosophy [8], but in his published speeches, messages to Congress and letters he also advocated and/or supported:

  1. a national banking system [9];
  2. the right to strike [10];
  3. creation of the Department of Agriculture [11];
  4. a transatlantic and a transpacific telegraph [12];
  5. the 13th Amendment to the Constitution (abolishing involuntary servitude in the United States and all of its territories), as well as limited negro suffrage; [13]
  6. women’s suffrage (as early as 1836) [14];
  7. general public education [15]; and even
  8. federal support for a trans-isthmus of Panama canal [16].

Also illustrative of how socially progressive the original GOP was are President Lincoln’s life long public statements regarding the “relation between capital and labor” in America–none of which should be surprising given the fact that, as President Lincoln himself publicly acknowledged: “I am not ashamed to confess that 25 years ago I was a hired laborer.” [17]

  1. In 1847 as a Congressman: “In all ages of the world, that some have labored, and others have without labor enjoyed a large proportion of the fruits.  This is wrong and should not continue….to secure to each laborer the whole product of his labor, or as nearly as possible, is a worthy object of any good government. [18]“
  2. In 1859 as a candidate for the US Senate: “The democracy of today [referring to the Democratic Party at that time advocating the use of federal authority to protect slavery in the United States and not prohibit its expansion into US territories] hold that the liberty of one man to be absolutely nothing when in conflict with another man’s right of prosperity. Republicans, on the contrary, are for both the man and the dollar, but in cases of conflict, the man before the dollar. [19]“
  3. And in 1861 as President: “Labor is prior to and independent of capital.  Capital is only the fruit of labor, and could never have existed if labor had not existed. Labor is the superior of capital, and deserves much the higher consideration. [20]“

Neither the original GOP’s stated principal mission of creating opportunities for the nation’s laborers to advance themselves both economically and socially , nor its advocacy of the use of federal authority and money to accomplish that mission, is historically surprising.

President Lincoln, as well as many other “Fathers” of the GOP,  was previously a member of the Whig Party before the GOP was officially born in 1850s,  and the Whig Party was principally composed of either members of the former  Federalist Party (the original political party advocating use of the federal government to “promote the general welfare”)–such as Daniel Webster–and former National Republican Party members who split with their NRP colleagues over state’s rights–principally the rights to secede and to own other human beings–such as Henry Clay–President Lincoln’s “beau idea of a man.” [21]

The principal economic and social policy advocated by the Whig Party (whose party symbol was the industrious and crafty, at least so considered in that era, raccoon):

“…was to establish the ‘American System’ originally proposed by Alexander Hamilton and championed by Henry Clay which favored government support for a more modern industrial economy in which education and commerce would equal physical labor or land ownership as a means of productive wealth.  Whigs sought to promote domestic manufacturing through protective tariffs…, a growth oriented monetary policy with a new Bank of the United States and a vigorous program of internal improvements–especially to roads, canal systems and railroads….  The Whigs also promoted public schools, private colleges, charities and cultural institutions. [22]“

Therefore there were long historical antecedents for the GOP’s original philosophy of federal activism and for President Lincoln, in his first message to Congress in 1861, defining the “leading object of the [federal] government [to be]…to elevate the condition of men–to lift artificial weights from all shoulders; to clear the paths of laudable pursuit for all; to afford all an unfettered start, and a fair chance in the race of life. [23]”

II.  THE HOUSE DIVIDES.

More than just the possibility of a compassionate and rapid reconstruction of the secessionist southern states died with President Lincoln on April 14, 1865; the original GOP’s socially progressive agenda also died with him.

The first major player in the long journey of the GOP from a “progressive” to a “conservative” core political philosophy was President Lincoln’s successor in office Andrew Johnson–ironically, or, perhaps not, neither a Republican nor a former Whig, but a “War Democrat” who owned slaves until at least 1863. [24].  Although originally stating he favored Lincoln’s social policies–including those regarding a quick reconstruction–he unfortunately had none of President Lincoln’s intelligence, eloquence or patience–and most of the Johnson administration was consumed by his fights with Congress over who had authority to fire federal employees–a fight which came within one vote in the Senate of his becoming the only President to be removed from office by Congress. [25]

Then came the eight year administration of President Ulysses S Grant whose approach to executive branch leadership was to leave executive government to his appointees–unfortunately too many of whom came to Washington primarily to line their own pockets, and by so doing first earned the GOP the political label of the “party of the rich and privileged” and “of [economic] scandals” [26]–a label which the GOP is still contending with one hundred and fifty years later.

Theodore Roosevelt–who was an ardent admirer of President Lincoln since his youth [27]–almost restored the progressive soul of the original GOP  at the turn of the 20th century with his “Square Deal” for the “working man”– which included active federal enforcement of anti-trust laws against business monopolies, federal regulation of food, drugs and railroad rates [up until that time subject monopoly pricing], government intervention in settling a national coal strike [at that time America’s principal source of home and industrial energy], and even realizing Lincoln’s dream of the United States building a canal across the Isthmus of Panama [28].

President Theodore Roosevelt was also the first President to advocate creation of a national park system to make certain public lands inaccessible to private development, universal health care and national health insurance. [29]

But in 1912 the GOP leadership (many of whom detested TR for his “abraisive” personality, but probably more for his popularity and disdain for back room deals and the  “spoils system”) refused to recognize all of T.R.’s primary victories (many of which where “non-binding” at that time]–including T.R.’s victory in California, and thereby denied him the 1912 GOP nomination.  Instead they nominated W. H. Taft as their presidential candidate–who finished last in the three way presidential race of 1912–and thereby not only permitted Woodrow Wilson to be elected with just 41.8% of the popular vote [30], but also permitted Wilson and the Democratic Party to assume the “progressive” mantel–and women’s sufferage and direct election of US senators became the law of the land under a Democratic instead of a Republican administration. [31]

Then came the real “historical culprits” in the permanent demise of the originally socially progressive GOP: the three Republican presidents between 1920 and 1932.

Warren Harding served as President only long enough to accumulate what some historians still consider the most economically scandal ridden presidential term in US history, and he was succeeded  by Calvin Coolidge who championed “laissez-faire” “hands off” federal government and thereby ushered  the country into The Great Depression of 1929-33. [32].

And it was Herbert Hoover–ironically by all accounts personally a very intelligent and humanitarian man–who refused to use federal legislative authority to attack the causes of The Great Depression. [33]  In a very real sense, President Hoover permitted the destruction of all of the economic and social gains of working class Americans which the original GOP and its first presidential party leader had advocated and legislated for.

Just as it had in 1912,  in 1932 the GOP surrendered to the Democratic Party and its presidential standard bearer the claim to the title “champion of the working man” and permitted FDR and the Democratic Party to set the agenda, and means, for achieving economic and social egalitarianism for working class Americans– as it has also surrendered that claim again to the Democratic Party in 1960, 1992 and 2008. [34]

But probably even more distressing to President Lincoln, if he were alive today, than the sea change in the political philosophy of the GOP is “where we are…and whither we are tending” as a nation in relation to his vision of an America where each “laborer secures the whole product of his labor,” “artificial weights are lifted from all shoulders” and “paths of laudable pursuit are cleared for all” — that is:

  • a nation in which both the income gap between 80% of working men and women and the other 20% and the concentration of wealth are at historical highs, and in which service sector “minimum wage” jobs have replaced “living wage” manufacturing and technology jobs as the predominant form of employment in America–resulting in a steadily increasing number of American workers to work at least one, or more, part time jobs in addition to a full time job [35];
  • a nation where the federal income tax system penalizes savings and investment by taxing their earnings, presents obstacles to, not “clearing the path” of, family owned and start up businesses by taxing them, and has essentially become the instrument of  those who can afford $500 an hour tax lawyers and accountants to shield large portions of their income from any federal taxation; and
  • a nation in which Senators now spend over 30% of their time, and Congressmen and women up to 40% of their time raising money for their, and their respective party’s, re-election campaigns and in which the average cost of winning a US Senate race has surpassed $10 million dollars and even a Congressperson needs an average of $1.3 million for re-election–and that is all apart from the estimated almost $1 Billion Dollars spent by all the 2008 Presidential contenders in 2007 and 2008. [36]

In a very real sense, the national “House” is as divided today–between the economic “haves” who are quickly accumulating almost all of the national wealth and have the dollars to contribute to those Congressional and Presidential candidates who most protect their interests, and the economic “have nots”–as the nation was divided over a hundred and fifty years ago over whether owners of human beings could earn their livings, and their fortunes, from the labor of those who were paid almost nothing for their work (other than minimal food, clothing and shelter).

III. PRESIDENT LINCOLN ADDRESSING REPUBLICANS IN  2008…”WHAT     TO DO…AND HOW TO DO IT.”

Since, as far back as I can remember, both Republican, as well as Democratic, Presidents making a public address from the Oval Office almost always have a bust of President Lincoln in the background.  If he were alive now, would he have any advice relevant today as to “what the GOP should do, and how to do it?”

Using President Lincoln’s definition of the “leading object of government”–i.e. “to elevate the condition of men [and women]…to lift artificial weights from all shoulders; to clear paths of laudable pursuits for all”–and having, I hope, demonstrating historically that both he, and the other Fathers of the GOP, believed that a fiscally responsible  active in the “promotion of the general welfare,” federal government was the best mechanism for a society to achieve those goals,  President Lincoln would definitely have some sound, relevant advice for the GOP and our nation today.

Furthermore, we can also reasonably conclude based upon that President Lincoln’s public statements that he would be opposed to the approach currently apparently to be pursued by the new Democratic Congress and President to attack the preceding national problems–i.e. of passing even more layers of legislation and adding even more pages of regulations–in lieu of fundamental reforms.  On that subject President Lincoln said:

“I think that one of the causes of these repeated failures [referring to the numerous failed attempts since the Missouri Compromise of 1850 of resolving the national crises regarding the extension of slavery] is that our best and greatest men have greatly underestimated the size of the question.  They have constantly brought forward small cures for great sores–plasters too small to cover the wound.” [37].

Constructing from the GOP Platform of 1860, GOP legislative actions during Lincoln’s presidency and President Lincolns statements in his messages to those Congresses and public letters and speeches which we reviewed in Section I of this article, it is reasonable to surmise that President Lincoln, addressing a 2008 convention of Republicans, and the nation, would advocate the following government reforms:

1.  The Replacement of The Entire Current Internal Revenue Code Federal Income Taxation Provisions With Simple Progressive Income Tax Originally Proposed By The GOP.  The first reform President Lincoln would probably advocate to “lift artificial weights” and “clear paths of pursuit” would be to return the FIT to the system as originally proposed by the GOP–a three rate progressive income tax [38] with no deductions, exemptions, credits, write-offs, pass throughs, and/or shelters– with the probable exceptions that he would favor some home mortgage deduction and a charitable donation deduction given his dedication to “elevating the condition” of workers and encouraging private rather than public charitable giving.  There would no longer be any taxation of interest on savings, capital gains, and/or anyof profits earned from the operation of family owned or start up businesses. [And, conversley, there would also be no deductions or write offs for any personal or business losses–which middle class taxpayers have to make up for under the current IRC.]

2. Wage and Industrial Policies Aimed At Replacing Unskilled, Minimum Wage Jobs With Highly Skilled Living Wage Jobs.  Given both President Lincoln’s and the early GOP’s dedication to opening doors of advancement for all workers and “to secure to each laborer the whole product of his labor,” we can also reasonably conclude that he would also advocate federal wage, industrial and education policies and programs that would replace as many of the current service sector minimum wage jobs with “living wage” manufacturing and technology jobs [the “service sector” as a whole now constituting 75% of all jobs in America] [39].  And knowing President Lincoln’s fascination with, and life time advocacy of federal government support for, the development of new technologies we previously noted in Section I of this article, we can further reasonably conclude that he would advocate federal government encouragement of a vast expansion in America’s aero-space industries which could produce millions of high skill manufacturing, technology and research and development jobs in an industry in which America still has an edge in technology which other nations would want to purchase and invest in (thereby also reversing the historical trend of America’s steadily ballooning balance of payments deficit.)

3. Public Financing Of Federal Election Campaigns. And to ensure that “working men [and women] are the basis of all [democratic] governments” [40] President Lincoln clearly would want to sever the ability of those with the most money to disproportionately influence the election of  presidents and/or members of Congress.  Being an avid and life long reader and student of history, President Lincoln would be one of the first to remind us that a hallmark of the final decades of the Roman Republic was that only the candidates with personal fortunes and/or who could raise and spend the most money held elective office.

4.  Reduction And Eventual Elimination Of The National Debt. The last current “artificial weight” that President Lincoln would certainly want to “lift from all shoulders” would be to at least start paying down the national debt; preferably by using “the prudence and economy which ought to always regulate public service.” [41]  President Lincoln also had an interesting idea for retiring the astronomical [well at least until now] Civil War national debt that might be worth considering today–at least until interest earned on federal securities is no longer taxable: reduction of the national debt by paying off  current treasury obligations using lower interest rate–but tax exempt–federal bonds. [42].

So instead of just propping up busts of President Lincoln in their offices, all any President or Member of Congress really needs to do to obtain sound advice concerning “what to do, and how to do it” about the political, social and economic crises currently facing the nation today is to reasonably deduce–based upon the historical record–and listen to what President Lincoln and the other Fathers of the GOP would have to say.

As  hopefully has been historically documented in this article, his, and their,  words and national agenda would be as sensible and sound today, as they were one hundred fifty years ago.

END NOTES

1.  Unless otherwise noted, all Lincoln quotes are from either The Life and Writings of Abraham Lincoln, P.V.D. Stern, Modern Library, NY copyright 1999 cited as “Stern”; or Lincoln Speeches, Letters… and Proclamations Volumes 1 and 2, The Library of America edited by Don E. Fehrenbacher copyright 1989 cited as “Fehrenbacher.”

2. Pick almost any post election print or TV media outlet.  For example, “…a good place for the [Republican] party’s comeback strategy is to begin with a renewed commitment to limited government.” USA Today Opinion Page 11–05–2008.

3. Wikipidia: “Conservatism in the United States” Section 2.1.

4. The Republican Party Platform of 1860 printed from: members.aol.com/jfepperson/repub.html.

5. The 2008 Republican Platform at docstoc.com.

6. Wikipedia: Morrill Land-Grant Colleges Act.

7. Stern, p. 557.

8. Stern, p. 581.

9. Fehrenbacher, Vol. 2, p. 652.

10. Stern, p. 591.

11. Fehrenbacher, Vol. 2, p. 290 and p. 402.

12. Fehrenbacher, Vol. 2, p. 396 and p. 541.

13. Fehrenbacher, Vol. 2, p. 657 and p. 699.

14. Stern, p. 225.

15. Stern p. 223.

16. Fehrenbacher, Vol. 2, p 646.

17. Stern, p. 592.

18. Stern, p. 296.

19. Fehrenbacher, Vol. 2, p 18.

20. Stern, p. 689.

21. Wikipidia: [Histories of] “National Republican Party,” “Federalist Party” and “Whig Party (United States).”

22. Wikipedia: “Whig Party (United States)” and “raccoon” from Stern, p. 507.

23. Stern, p. 674.

24. Wikipidia: “Andrew Johnson”

25. Ibid.

26. Wikipidia: “Ulysses S. Grant.”

27. Wikipedia: “Theodore Roosevelt”  So much so that it was TR who caused the Indian Head cent coin to be replaced with the “Lincoln penny.”

28. Wikipedia: “Theodore Roosevelt.”

29. Ibid.

30. Wikipedia: “U. S. Presidential Election, 1912.”

31. Wikipedia: “Seventeenth Amendment to the U. S. Constitution,”  “Nineteenth Amendment to the U. S. Constitution” and “Woodrow Wilson.”

32. Wikipedia: “Warren G. Harding,” and “Calvin Coolidge.”

33. Wikipidia: “Herbert Hoover”

34. Wikipidia: U.S. Presidential Election 1932,” “U.S. Presidential Election 1960,” and “U.S. Presidential Election 1992.”

35. U.S. Department of Labor, Bureau of Labor Statistics (Website): “Labor Force Statistics from the Current Population Survey, Multiple Job Holders, Minimum Wage Data [and] Characteristics of the Employed;”  “The Distribution of Wealth In America” Survey of Consumer Finances, sponsored by the Federal Reserve Board, 1983-2004 printed in parts at: http://www.faculty.fairfield.edu/faculty/hodgson/Courses/so11/stratification/income&wealth.htm.; and CNN Money “Income Gap Widens” by Tami Luhby April 9, 2008 as printed at their web site.

36. Statistics at Common Cause (website) “Money In Politics…Clean Elections for Congress…”; and narrative histories compiled and quoted by Harwood and Seib, Pennsylvania Avenue, Profiles in Power, Random House, 2008, especially at pp 68-85.

37. Fehrenbacher, Vol. 2, p. 134.

38. The GOP Congress of 1862 enacted the very first federal income tax to help finance the Civil War which by 1864 consisted of three tax rates of: 5% on annual incomes of $600 to $5,000, 7.5% on incomes of $5,001 to $10,000, and 10% on incomes above $10,001.  “History of the Income Tax in the United States” at Info Please (web site); and Tax History Museum (web site) “The Civil War 1861-1865.”

39. “The Service Sector: Projections and Current Statistics,” Fact Sheet 2006, Department For Professional Employees, AFL-CIO as printed at their web site; and U.S. Department of Labor, Bureau of Labor Statistics, op.cit. end note 35.

40. Fehrenbacher, Vol. 2, p. 203.

41. Fehrenbacher, Vol. 2, p. 275.

42. Fehrenbacher, Vol 2, p. 652.

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