Here Are Five Things Republicans Won't Tell You: Caroline Baum
Commentary by Caroline Baum
Sept. 5 (Bloomberg) -- The Republican national convention opened under a cloud, not to mention a hurricane, and by all appearances had emerged into the sunlight by week's end.
It would have been tough to underperform expectations. All vice presidential nominee Sarah Palin had to do was walk onto the stage in an upright position to demonstrate she wasn't some kind of four-legged grizzly from the Alaska wild.
And when presidential nominee John McCain showed up to accept his party's nomination last night without his walker and nasal oxygen catheter, why it was enough to convince folks the 2008 presidential election might be a horse race.
So now that the ballyhoo is over, what were Republicans really thinking that they chose not to share with the crowd?
1. Taxes are going up.
Accepting his party's nomination for president of the United States on July 19, 1984, Democrat Walter Mondale said the country was ``living on borrowed money and borrowed time.''
Then, in perhaps the only memorable moment of his acceptance speech, he said: ``Mr. Reagan will raise taxes, and so will I. He won't tell you. I just did.''
Incumbent President Ronald Reagan won 525 electoral votes to Mondale's 13.
Candidates no longer advocate tax increases, except on the wealthy -- the one class it's still OK to discriminate against.
GOP presidential candidate John McCain plans to keep the top tax rate (35 percent) and capital gains and dividend tax rate (15 percent) where they are and lower the corporate tax rate from 35 percent to 25 percent.
I've got news for you: Taxes are only going up in our lifetime. I don't know which ones or when, but I'm certain of the direction.
Spending on Social Security and Medicare is on automatic pilot. It's projected to grow faster than the economy and revenue from payroll taxes, according to the Social Security and Medicare trustees' 2008 annual report.
Within 10 years, benefits will exceed revenue for both programs. (The disability insurance fund has run a cash-flow deficit since 2005.)
The combined cost of Social Security and Medicare will skyrocket from 7.5 percent of gross domestic product in 2007 to 17 percent of GDP by 2082. In other words, entitlement spending will eat up the entire federal budget.
Social Security's problem is demographic. In 1950 there were 8.6 workers paying Social Security taxes for every retiree receiving benefits. Today there are 3.3 workers, dropping to 2.7 in 2017, at which point ``there will not be enough workers to pay scheduled benefits at current tax rates,'' according to the trustees.
McCain says he will save Social Security without raising taxes. Unless the U.S. produces more babies or imports more immigrants, we the people can look forward to paying higher taxes.
2. Thank God he didn't show up!
With Hurricane Gustav bearing down on the Gulf Coast last weekend, President George W. Bush made an executive decision to skip the GOP convention in St. Paul, Minnesota.
He did such a ``heck of a job'' responding to Hurricane Katrina three years ago, he figured he better be at mission control when the hurricane hit.
Bush ended up addressing the convention via satellite Tuesday night, but most GOP operatives were glad he was MIA.
McCain's best hope for the November election lies in distancing himself from the Bush presidency. If a natural disaster happens to put some physical space between them, so be it.
3. Energy independence is a myth.
Presidents have been preaching the virtues of energy independence for more than three decades. The drumbeat got louder as crude oil prices doubled from July 2007 to July 2008, with the sound traveling across the aisle from Democrats to Republicans.
The idea of reducing our dependence on foreign oil -- the U.S. imports almost two-thirds of its energy -- seems to have broad appeal. Why send U.S. dollars to autocratic Middle East regimes that harbor terrorists?
A better question is, why is the party of free trade advocating a mercantilist energy policy? Why not shoot for auto independence or coffee independence?
Energy prices are set in the global marketplace. As long as the Middle East has a comparative and absolute advantage in finding and extracting oil, closing the U.S. off from imports is a good way to impoverish the nation.
4. Reality of Bush tax cuts underperformed theory.
President Bush reduced the top marginal tax rate to 35 percent from 39.6 percent and cut the rate on long-term capital gains and dividends to 15 percent. Such ``supply-side'' tax cuts are touted as an incentive to work, save and invest.
Oops. Saving and investment were ``anemic'' during the Bush years, according to Paul Kasriel, chief economist at the Northern Trust Corp. in Chicago.
The plunge in the personal savings rate to a post-World War II low of zero during the Bush years coincided with a decline in the labor participation rate, Kasriel says.
Business investment seems to have missed the tax-cut incentive as well.
``The only time the net stock of nonresidential fixed assets grew slower than in recent years'' was when Poppy Bush was president, Kasriel says.
5. Bristol Palin, the 17-year-old unmarried pregnant daughter of our vice presidential candidate, won't be the poster child for our ``abstinence education'' platform.
