Tariq Nelson

Former House Speaker Newt Gingrinch is opposing the Republican bailout. What he says here makes a lot of sense in many of the points he makes:

Lobbyists are a consequence of big government not a cause of it. The more money centered in government the more value there will be in hiring a lobbyist. The more lobbyists are hired the more politics will be dominated by the political contributions of the lobbyists and their employers. The more power the lobbyists and their employers amass over the politicians the more politics will define the economy. It will become more profitable to influence a politician than to invent a product. If the market rejects you or your ideas fail to compete, the help of your lobbyist may be all you need. Your lobbyist may be able to get government to protect you from your own failure.

The failure of politicians to solve the systemic and fundamental economic problems has led them to paper over these failures with your money. Using your money inevitably increases the power and size of Washington bureaucracy. In the long run, centralized bureaucratic planning will inevitably make the United States less competitive, less creative, and less capable.

If we do not stop the current lobbyist driven, politician enhancing, and bureaucracy empowering trend, America will be poorer, weaker, and less capable for a long time to come.

I especially like points 3 and 10 in the solutions he offers below:

3. Third, institutions that are too big to fail have turned to be too big to manage. It is vital to get Freddy Mac, Fannie Mae and AIG away from the Washington politicians, lobbyists and bureaucrats. A method of orderly receivership and sound return to market disciplines is essential. A policy of capitalism for the successful and socialism for the failures is unsustainable. A policy of welfare for the Wall Street rich will sicken the entire political system and cripple the economy. Fannie Mae and Freddie Mac clearly should be broken up into smaller companies because they are clearly far too big to manage and far too dangerous and over time they should be weaned from their government endorsements and they should cease to be government sponsored enterprises with future loans made only with market security.

4. Fourth, the institutions in receivership should be barred from hiring lobbyists or encouraging political contributions. It is intolerable to have those who are soaking the taxpayers use the taxpayers own money to manipulate the system to get even more money out of the taxpayers. .

5. Fifth, we should insist on new transparency for financial systems so people in the future will know when cunning and clever people are manipulating reality in the pursuit of ill-gotten wealth.

6. Sixth, we should replace the snapshot, instantaneous measures of the current mark-to-market system, which has created the worst of all worlds. Because it is instantaneous in changing values, on the way down, it makes the deflation dramatically worse, and it bankrupts companies that otherwise might survive. And on the way up, it increases the amount of liquidity beyond reality, and allows companies to be overleveraged. What we need is a rolling three year average mark-to-market system, and in the interim, we may need to suspend it for six months to a year, to allow the system to get right, because people don’t yet understand, that the adoption of these accounting rules is a major factor in the liquidity crisis which is leading companies to go bankrupt, and it is pretty destructive to have artificial accounting rules ruin companies that would have otherwise survived under previous rules.

7. Seventh, we should adopt a tax code which encourages investment, savings and job and productivity growth within the world market. Start with the Irish corporate tax rate, which is 12 %, eliminate the capital gains tax so we can match China and Singapore, which have no capital gains tax,  restore strength to the markets by eliminating the capital gains taxes rather than by increasing the power of bureaucrats, lobbyists, and politicians.

8. Eighth, repeal Sarbanes-Oxley. It has clearly failed. It didn’t get the job done, and yet, it adds enormous costs to small businesses, it is driving companies to go private. Virtually everyone I’ve talked with who is actually in business has said it is amazingly destructive, and the right answer is we need real  transparency and real accountability, but since Sarbanes-Oxlyey has failed, it should be repealed, and we should start over with a fundamentally different and more modern system .

9. Nine, adopt an ‘all sources, all of the above” American energy policy which combines drilling for oil and gas, oil shale, clean coal, biofuels, flexfuel cars, wind, solar, hydrogen and nuclear power into a deliberate strategy of creating the most abundant energy economy in the world. Return to the American economy at least $500 billion of the $700 billion a year we currently send overseas for energy. The result would be an explosion of new jobs and new prosperity. Foster a building boom in St Louis, Cincinnati and Detroit rather than in Dubai and other countries which are currently getting our money so they can come back and buy our companies.

10. Ten, recognize the central role math and science will play in economics and national security in the 21st century and adopt a science driven research and development budget. Replace the current anti-investment, anti-growth Budget Act with a new 21st Century Budget Act for Investment. Increase in science investment including research, development and education to the level science opportunities make desirable, not the level some political budget bureaucrat defines.

11. Eleven, put children first and replace “No Child Left Behind” which has focused on improving change resistant unionized bureaucratic failures with “Every American Gets Ahead” which would put children before bureaucracies and use technology, incentives and competition to give every American of every age a chance to learn what they need when they need it.

12. Twelve, extend the 21st Century Budget Act for Investment to include new approaches to rebuilding our infrastructure so our economy can regain its advantage as a continent wide system of travel and transportation that can compete with any other country in the world.

13. Thirteen, create a space based air traffic control system which increases the air travel in the Northeast by 40% with no delays and cuts the airline use of aviation fuel by 10% thus improving the environment,  increasing jobs, increasing economic efficiency and increasing traveler satisfaction simultaneously.

14. Fourteen, replace the current deadlocked and failed efforts at health reform with two major initiatives and these come from the Center for Health Transformation. First, create a health based health reform which identifies every best practice in the country and incentivizes federal health spending to migrate the weak practices to best practices. The result will be a huge savings in lives and a massive savings in money (maybe as much as $160 billion a year by 2012).

Filed under: Politics