As a strong fiscal conservative who believes that individually and collectively people should spend less than they make, I have become very disillusioned by the Republican Party of the 21st Century.
more after the jump
I believe that each and every American should not spend more than they make, except if they are in school or have some unanticipated family, medical, or personal crisis develop where they have a clear plan to pay back the loans. I also believe that as a society, Americans should not be operating at a deficit – that means that the U.S. government should not be charging its excess spending by borrowing from the Chinese and the average American should not be charging its excess spending by taking out home equity lines of credit or charging up their credit cards to "keep up with the Jones’". Additionally, everybody and every level of government should have a "rainy day savings fund".
This is the heart of fiscal conservatism, and the Republican Party that espouses to be fiscally conservative has acted for years in ways that are diametrically opposed to this philosophy. To me, it is no wonder that the Republican Party has lost its way and will have a day of reckoning from top-to-bottom next Tuesday on Election Day in 2008. Fiscal conservatism and smaller government used to be hallmarks of the Republican Party, but today it is an oxymoronic statement to say that Republicans are in any way in favor of fiscal responsibility when they more than doubled the national debt in 8 years; similarly, the Republican Party cannot espouse that they are for smaller government when they just nationalized much of the banking industry, which is at the very heart of capitalism, an economic philosophy that they claim to hold so dear.
You must understand that I have been a life-long Moderate Republican who came of age in the Reagan era, who interned for a Republican Congressman, who is an evangelical Christian, and who up until this election had never voted for a Democrat. I was drawn to Barack Obama’s message of change, hope, and plain-old common-sense during the Democratic Primary but have become thoroughly convinced after looking at their policy positions and seeing how they handle crisis that Barack Obama is our last, best hope to remain a strong player on the world stage. John McCain has shown himself to be erratic at best and dangerous at worst; rather than diffuse conflict, McCain seems to pour gasoline on a fire to make it burn that much hotter and more deadly. Obama, on the other hand, handles crises like the series of bank failures in an even-keeled and steady manner, using common-sense, logic, and clearness of thought. During a time of crisis, like the period that we are now facing due to the failed policies of neo-conservatism, we need someone as President who is intelligent and thoughtful in the way that they make decisions, is willing and able to work across the aisle, is a realist who is not a deeply entrenched ideologue who says it is my way or the highway, and who seeks many advisors from different political vantage points – a la governing in the spirit of Abraham Lincoln’s "Team of Rivals". This describes Barack Obama to a tee in my opinion.
I have looked at both McCain’s and Obama’s financial plans, and what I see is that McCain’s plan will increase our debt and our deficit while Obama’s plan might or might not increase our debt and our deficit. As such, Obama is the more fiscally responsible candidate in the Presidential race. Let’s talk specifically about why this is the case.
Looking at the revenue side of the equation, McCain plans to lower taxes on every bracket of income and will give the largest tax break (in both percentage and real dollar terms at 4.4% and $270,000 per year, respectively) to those making more than $2.87 million per year. This makes no sense to me, as obviously the people making close to $3 million per year are not hurting too badly, even in this economy, and by decreasing tax rates on every income bracket, this ensures a decrease in the government’s revenue base, barring some sort of unanticipated surge in economic activity across the board that would offset the loss in revenue associated with the tax cuts – which seems very unlikely given that we are entering a "recession" and possibly even a "depression" era.
Conversely, Obama plans to decrease taxes on all but the uber-wealthy. For those making less than $225,000 per year, there will be a huge tax decrease. For those making between $225,000 and $600,000 per year, there will only be an increase of $12 in taxes (for "elitists", that is less than 3 Starbucks lattes). For those making more than $600,000 per year, there will be a fairly sizable increase in taxes – but it will be graduated, as all taxes are since we live in a progressive tax system, and if you are making that amount of money, I think (like most Americans probably do) that you can afford a tax increase, especially since that tax increase will likely help your investment portfolio out because when there is a virulent middle-class, studies show that there is a healthy economy, a more robust stock-market, and a stable democracy. So, McCain’s plan will definitely decrease governmental revenue whereas Obama’s plan might increase governmental revenue or, at the very least, it will not decrease governmental revenue by as much as McCain’s tax plan. See Obama v McCain financial plans for more details.
Looking at the expense side of the equation, McCain talks an awful lot about earmarks, but earmarks are really just a rounding error compared with the big governmental expenditures of defense spending, entitlements (i.e. Social Security, Medicare, Medicaid, Unemployment), and interest on debt. (See 2007 Federal Budget). There is not much that either candidate can do with regard to entitlements and interest on debt, short of refusing to pay those expenditures which most people (including myself) would say is not politically or realistically possible, at least in the short-run. I mean how can you deny an elderly woman her sole means of survival – her monthly social security check - or deny the person who just became unemployed due to this "economic downturn" their unemployment benefits or refuse to pay China the interest payment that we owe on our astronomical debt. These are, in effect, fixed expenditures that cannot be decreased very much (if at all). So, that brings us to the only other big (i.e. Over $100 billion per year) governmental expenditure – defense spending. Defense spending is, theoretically, a discretionary expenditure that while there needs to be some sort of floor for (minimum amount spent), probably could be decreased by some significant amount if the political will to do so existed. So, let’s look at the candidates and how they view defense spending.
To my knowledge, McCain has not said whether or not he would be willing to cut defense spending, but given his hawkish stance on national security and his saber-rattling of Russia and Iran, there is very little reason to presume that he would be willing to cut this huge $550 billion expenditure – the 2nd largest expenditure in the 2007 budget. If anything, based on McCain’s desire to stay in Iraq which costs $120 billion per year until "we win" without defining winning and his aggressive stance toward countries that do "not have the same worldview as America", I am inclined to believe that defense spending will either stay constant or actually increase if McCain were to become President. In contrast, Obama wants to have a steady withdrawal of forces from Iraq (which would save us $10 billion per month), wants to engage in diplomacy with our enemies, and wants to increase our military presence in Afghanistan in order to defeat Al Qaeda. Obama’s policy of having a heightened military presence in Afghanistan sounds like it will be less expensive (in terms of both money and human lives) than McCain’s plan of having a perpetual military presence in Iraq, a heightened military presence in Afghanistan, and an aggressive stance toward Iran and Russia.
Both candidates have said that they would go line-item-by-line-item through the budget to decrease reckless and unnecessary spending, and there is no reason to believe that either of them would not do so. Both candidates also have plans to increase America’s energy independence and other pressing, domestic issues like healthcare reform. While these efforts will surely cost money, there is little reason in my humble opinion to believe that one method will cost significantly more than the other (though I do believe that we as the American people need to hold the eventual President’s feet to the fire in order to make sure that there is accountability, fiscal responsibility, transparency, and pragmatism in the way that these reforms are enacted).
So, in terms of fiscal implications, it appears that McCain’s financial plan would be more costly than Obama’s plan in terms of government expenditures but would also bring in less revenue than Obama’s plan. This means that for fiscal conservatives, Barack Obama is the most likely Presidential candidate to actually balance the budget deficit and get our country back on track in terms of fiscal responsibility.
I am reminded of the scripture in Hebrews 12:11 that says, "No discipline seems pleasant at the time, but painful. Later on, however, it produces a harvest of righteousness and peace for those who have been trained by it." I think the American people and the American government once again need to be disciplined in terms of spending, just like "America’s greatest generation" was after the "Roaring 20s" by the Great Depression and World War II; once this discipline occurs, which will require sacrifice and a likely decline in the American standard of living for a time, America and its people will emerge stronger, more at peace, and more refined than they have been in the last 30 years of excess and deficit spending. I, for one, hope that President Obama will be able to accomplish even 10% of what I think he is capable of in order to once again make America live up to its promise of being a land of opportunity, ingenuity, and hard-work that has made the U.S. a beacon of hope to the world for the last 200+ years.