Conservative's Conscience

Conservative Quandry - Who to support

 The survivors are Romney and Gingrich: Take your pick

Conservatives in the 2010 election took control of the House and almost did the same in the Senate.  And they eagerly looked forward to the 2012 presidential election.  They would support one of their own and he/she would lead them to the White House.   

Choose either Mitt Romney or Newt Gingrich.

Or choose Ann Romney or Callista Gingrich.The first wave of disillusion set in when their favorite warriors refused to enter the presidential primaries. Gov. Mitch Daniels (IN) said no because of family problems; Gov. Christie (NJ), Gov. Jindal (LA), Sen. Rubio (FL) and Rep. Ryan (WI) did not respond to the call because most of them felt it was too soon for them to bid for such a high position.  Most disappointing was ex-Gov. Palin’s (AK) decision to stay out of the race because she believes she can serve her country better as an outsider.  Whatever their reasons, the absence of the most active conservatives from the race was a disappointment to those who caused the 2010 upheaval, and who wanted more of the same in 2012.     

 The serious startup lineup for conservatives in the primaries was: Rep. Michelle Bachman (MN), Gov. Rick Perry (TX), Rep. Ron Paul (TX), ex-Sen. Rick Santorum (PA), Herman Cain (businessmen), ex-Speaker Newt Gingrich (GA), Gov. Mitt Romney (MA).    

 Bachman, Perry and Santorum were ideal candidates – conservative on social, economic, and military matters.  Paul stood as a constitutionalist with small government objectives.  Cain had a bit of everything for everybody.  Gingrich at the beginning was somewhat of a mystery to most.  Romney from the outset was labeled by some – fairly or not -- as the establishment candidate who was least likely to effect major change in Washington.   

 Bachman surged in Iowa.  Then she gave way to Perry and Santorum, who preached the same message but had superior resumes.  When Perry imploded in his first two debates he left the pure conservative mantra to Santorum – who has never had full conservative support.     

 Cain had a short run of popularity, but he was soon destroyed by the liberal establishment that characteristically attacks conservative African-Americans.  It is telling to notice that the scandals that plagued him as a candidate disappeared as soon as he dropped from the race. 

Romney and Paul continued to poll steadily in Iowa.  Gingrich surged to the top until Romney’s well-oiled political machine and Santorum’s hard work finally paid off and brought him back to earth – Santorum beat Romney by a hair in Iowa.  Gingrich seemed to be through.

 After Iowa, polls said that conservatives would have to choose between Romney and Santorum.  After New Hampshire, Romney stood alone.  Then came South Carolina where once more Gingrich, based on his performance in two debates, surged to the top.  For color, Paul continued to lure libertarians and the anti-war youth. 

 Florida: Romney should win the state easily.  Gingrich and Santorum have lost their momentum.  If conservatives do not want Romney, their only chance to defeat him is to consolidate the conservative vote -- persuade Santorum to resign and support Gingrich (Gingrich would never agree to do the same).  But before urging this, conservatives should be sure that what they would get is what they want.  Romney may not be as bad as some think; Gingrich may have more minuses than pluses, for example:  

•   Romney: Apart from Romneycare, which he explains well, Romney brings no blemishes to a presidential campaign; he, as a person, would not be a campaign issue; it is likely that he could keep the spotlight on Obama.  History says that Romney, as president, could negotiate with Democrats.  The Romneys as a couple would be a living example of wholesome family life.  Romney promises America a smaller, affordable government.  Some words that capture Romney? – Smart, smooth and stable.    . 

• Gingrich: Gingrich, a facile and informed debater, would need all of his skills to deflect charges that would be hurled his way because of his controversial public and private life.  He, as a person, could become a campaign issue; it is unlikely that he could keep the focus on Obama and his policies.  History says that Gingrich, as president, would have trouble negotiating with Democrats.  The background of Gingrich and his wife would not be helpful from a public relations standpoint.  Gingrich promises America a smaller, affordable government, but he is a man with huge visions.  At a time when cost-cutting must be the rule of the day, does he fit today’s demands?  Some words that capture Gingrich? -- Brilliant, confrontational and erratic.  

 Republicans had plenty of chances to load the primaries with their pet candidates, or to support those who came forth.  But they didn’t and, so far, Romney and Gingrich seem to be the survivors.  Romney might ease the nation back to its roots too slowly; Gingrich might turn Washington upside-down too drastically.  These are different men with different ways.

Take your pick.

Romney the Capitalist

Leveraged buyouts got into the primary contest because, in Iowa, Newt Gingrich was systematically attacked by TV ads.  As Gingrich sees it, they caused his drop from the upper echelon of competitors to the lower one.  Mostly, he blames Romney for this and, he decided to get even when he had the money (recently) to do so. 

 Gingrich aims to prove that Romney is not an honorable capitalist, but a predatory investor who made millions by closing up businesses and destroying jobs.  He chose this target because Romney’s business career is his most important credential    Destroy it, Gingrich reasons, and Romney’s credibility as a presidential candidate is ruined.     

 Gingrich points to some of Romney’s acquisitions that went sour and cost jobs, but nevertheless brought profit to Romney’s firm.  This formula, Gingrich asserts, is predatory.  And a heartless predator, he argues should not lead the Republican Party.   

 If Gingrich believes this, he is badly misinformed about leveraged buyouts.  If he doesn’t believe it, his attempt to destroy an opponent in this way is simultaneously an attack against the capitalistic system – unacceptable behavior for a Republican. 

 Bottom feeders exist in the capitalistic system.  They close down debt-ridden companies, sell the assets, pay the bills and pocket whatever is left.  Those who do this work are not people haters or destroyers of jobs -- the jobs are already destroyed.  Only the assets remain and converting them to cash is the sensible thing to do.  They are the vultures of the business world.  

Bain Capital is “one of the world’s leading private, alternative asset management firms….  It has five Divisions….”  This description of the huge firm destroys one of Gingrich’s inferences – that Bain, under Romney, was a bottom feeder whose mission is  to close companies, destroy jobs and sell assets at a profit.  This fringe business isn’t worthy of Bain’s attention.     

 Romney, as a young man, went to work for Bain and Company as a consultant.  In 1994, he founded Bain Capital and he headed the firm until 1999 (with time out for a Senate race in 1994).        

 Bain initially concentrated on start-up businesses, but as time went on it moved into the risky leveraged buyout field where problems for the acquirer are larger, but the potential reward is higher.  Acquired companies are heavily in debt, and have lost the ability to turn a profit. 

 When someone like Bain steps in, takes over, and assumes debt it must be because it sees a chance to develop a profit on operations backed up by, if that effort fails, a chance to bail out by selling assets.  This game is not for the faint hearted.

 Turnarounds always require organizational shake up.  A dozen different things might cost jobs as the fixer reshapes the company into profitable mode.  He may start with 2,000 employees and end up with half that number.  Those who leave hate him and those who survive love him; the bank will be happy.  The acquiring company has options: sell the rejuvenated company at a profit, or enjoy dividends or management fees.  From the outside, a Gingrich can look inside and see nothing but the 1,000 jobless workers and the profits of the acquirer.  Others will see 1000 protected workers and a healthy company, and they will applaud the acquiring company.

 Sometimes the acquiring company cannot fix the acquired company in a reasonable amount of time.  In such a case, the fixer will close the business, sell the assets, pay the bills and hope that the net proceeds cover its investment.  From the outside, a Gingrich will look inside and see nothing but the lost jobs and (maybe) the profit the fixer made by selling assets.  Others will see a noble attempt to fix the unfixable.      

 Gingrich’s shots at Romney deal with his leveraged buyouts.  According to Yahoo Finance, 77 of these investments were made during Romney’s tenure; 30 percent didn’t work out.  Some jobs were lost, perhaps in every company.  But 70 percent of those companies, and the jobs that went with them, were protected.  The net return to Bain from those investments was better than 50 percent. 

 If there were not companies like Bain to assume the inherent risks that are attached to leveraged buyouts, the aforementioned 77 companies would have been shut down and all of the jobs would have been lost.  The existence of companies like Bain is a part of the capitalistic system that should be applauded, not reviled.  And if these risk takers hit gold when they make the right gambles, who will deny them their rewards?  

 Mitt Romney was CEO of a huge firm that has international reach.  He can be criticized on several fronts as a presidential candidate, but to denigrate his effectiveness as an executive because he successfully participated in a legitimate aspect of the capitalistic system is an insult to him and to the system that has made America great.  It is also a blow to the Republican Party that will be felt at some point in the presidential campaign.

 Newt Gingrich! -- Shame on you.              

Robert Kelly is a retired CPA/Management Consultant, author of several books on baseball, politics and the national debt, and a freelance, award-winning journalist whose work has appeared in many newspapers.  His latest book, Neck and Neck to the White House, is available at Amazon and the better bookstores. His e-mail address is bobkelly17@comcast.net

2012 - When the Rubber Hits the Road

 Southern states in 1860 were threatening secession.  If Abraham Lincoln or Stephen Douglas became president in 1860, secession was almost certain; if Vice President John C. Breckenridge won the election, the status quo may have been maintained for a few years.  This was the most important election in American history in terms of the survival of the United States as a unified nation.    

 Lincoln overwhelmingly won; predictions proved to be accurate.  South Carolina seceded in December 1860.  Fort Sumter was attacked in April 1861 and the Civil War was on.  It lasted until April 1865.

 Without Lincoln, the United States could have morphed into a two nation arrangement with an uncertain future for both.  

 The nation was on the brink of bankruptcy in 1980.  The national economy was a mess -- the misery index (unemployment, inflation and interest rates added together) was at an all-time high (36.0).  Foreign policy (the Iran crisis; the Cold War) was embarrassing; the national mood was negative. 

 The 1980 election was one of the most critical in American history in terms of economic survival and the maintenance of international prestige.  Four more years of Carter and unrestrained government spending could have sent the nation on a downward spiral to nowhere.       

 Reagan won the 1980 election overwhelmingly.  Four years later, the misery index was 35 percent lower; eight years later, unemployment and inflation were under control and interest rates were not far behind.  American international prestige was as high as it had been under President Eisenhower because the Iran crisis had been quickly resolved and, more importantly, despite a constant eight-year barrage of criticism from Democrats and from the elite press, Reagan’s policies, with an assist from Pope John Paul II and others, brought the Soviet Union to heel and ended the Cold War that had begun under President Truman. 

 Without Reagan, the United States could have collapsed as an economic power, and could have lost whatever was left of its international prestige.   

 Lincoln’s problem was to keep the Union together.  Reagan’s problem was to restore the nation’s economic vitality and its international prestige.   Had either of them failed, only God knows what America would look like today.  They were the right men who appeared at the right time to keep the American dream alive. 

 America once again needed a special leader in 2008.  President Obama was elected to deal with a banking crisis that was caused by a collapse in the housing market, which in turn had an adverse effect on the general economy.  And he was charged with the duty to at least maintain the nation’s international reputation.

 Obama had the best possible tool to deal with his problems – a veto-proof Congress.  For two years, he could do as he wished, and for his last two years, he retained control of the Senate.  In terms of the economy and the state of the union, his scorecard looks like this:

• The housing market has not yet bottomed out; Freddie Mac and Fannie Mae, key players in the housing collapse were untouched by so-called “reforms,” and their balance sheets contain billions of possible losses.
• Banking and automobile industries were temporarily stabilized with TARP funds but banks are not functioning normally and automobile companies substantially owned by government and unions have yet to prove themselves.     
• Obama’s so-called stimulus program, of about $800 billion, protected government jobs and did nothing for the general economy.  The unemployment rate increased from 7.2 percent to 8.6 percent (Dec. 2011).
• Obama went to war against those who produce energy from fossil fuels or from nuclear power.  His investment focus has been on renewable energy projects.  About $21 billion was released, 80 percent of which went to companies run by, or owned by, financial backers of Obama.  No positive results are visible.  Scandals have arisen and are being investigated by Congress.  And while Obama plays politics with energy, the price of gasoline at the pump has gone from $1.61 to $3.38 (Dec. 2011), an increase of 110 percent.  Home heating oil has been similarly affected.  To the middle class, this is a crushing trend.
• National debt will increase by 63 percent (estimated) by the end of 2012.  The level of debt plus the demonstrated unwillingness of Obama to reduce spending is a cause of national and international concern.

 On the international front, relations with China are more strained; North Korea is more of a threat; gains made in Iraq may be lost; Afghanistan is as unpredictable as ever; relations with Pakistan have worsened; Iran’s belligerence increases daily; the Israeli/Palestine problem is worse, etc.  Except for the elimination of Osama bin Laden, American foreign policy has been a dismal failure.  

 America needed a great leader in 2008; it got a great speech maker.  If he is re-elected, America will be on its way to the historical ash heap, too far gone for any leader to rescue.

 Obama is the worst president in American history because of the damage he has done.    He is not unintelligent; he is wrongheaded.  His mentor, Saul Alinsky, would be proud of him; George Washington wouldn’t appear in the same room with him.

 America crosses the Rubicon in 2012.  If Obama wins, America loses; if he loses, America has a chance to restore itself over a very long period of time.    

Robert Kelly, author of several books on baseball, politics and the national debt is also a freelance, award-winning journalist whose work has appeared in many Massachusetts newspapers.  His latest book, Neck and Neck to the White House, is available at Amazon and the better bookstores. His e-mail address is bobkelly17@comcast.net

Christmas 2011, A Reflection

Jesus Christ was born about 2000 years ago.  If you search his name on Amazon, you get about 180,000 results.  Do the same for Aristotle, 14,000; Plato, 16,000; Aquinas, 14,000; Muhammad, 23,000; Hitler; 16,000; Stalin, 6,000; Churchill, 11,000; Roosevelt, 36,000; Eisenhower, 7,000; Reagan, 12,000; Luther, 2,000; Knox, 15,000.

 Based on the above, it’s safe to say that President Grant was on safe ground in 1870 when he made Christmas, December 25th, a national holiday out of respect for the man whose birthday is celebrated on that day, Jesus Christ.  Religion aside, Grant recognized the obvious when he made his holiday decision – the uniqueness of Christ’s message during his ministry was the most powerful and durable ever uttered.  He wanted to memorialize Christmas because he thought it was fitting for the nation to celebrate the birthday of the most influential man who ever lived. 

 Those who try to reduce Christmas to a “seasonal” celebration, or to a day that has no reference to Christ, demonstrate an unwillingness to, at the least, celebrate greatness or, at the most, to celebrate the birthday of the man who many have adored for centuries as God in human form. 

 Those who refuse to say “Merry Christmas” during the holiday season, or those who attempt to eliminate all symbols that relate to Christ, his birth and his influence are out of touch with why the holiday was created in the first place.  Celebrating Christmas is not an attempt to Christianize the nation; it is simply allowing a large segment of the body politic to recognize the unique greatness of the man who has had the most influence over humankind than any other person who ever walked the earth.     

 Christmas undeniably brings to the every-day environment a feeling of goodness that infiltrates the hearts of most people.  Children sense that something special is happening.  The stern faces of hard-working adults begin to relax.  Goodwill fills the air.  Christians would attribute this to the hand of God as He, for a few weeks, increases the supply of love and respect for others in the human heart.      

 Perhaps that explains why a man in the early 20^th century penned the following lines that many believe capture the power of Jesus in just a few words.

One Solitary Life

He was born in an obscure village the child of a peasant woman.

He grew up in another obscure village where he worked in a carpenter shop until he was thirty

 He never wrote a book.

He never held an office.

He never went to college.

He never visited a big city.

He never traveled more than two hundred miles from the place where he was born.

He did none of the things usually associated with greatness.

He had no credentials but himself.

He was only thirty three (when he was crucified).

 His friends ran away.

One of them denied him.

He was turned over to his enemies and went through the mockery of a trial.

He was nailed to a cross between two thieves.

While dying, his executioners gambled for his clothing, the only property he had on earth.

When he was dead he was laid in a borrowed grave through the pity of a friend.

 Nineteen centuries have come and gone and today Jesus is the central figure of the human race and the leader of mankind’s progress.

All the armies that have ever marched,

All the navies that have ever sailed,

All the parliaments that have ever sat,

All the kings that ever reigned, put together, have not affected the life of mankind on earth as powerfully as that one solitary life.

 Orthodox Christians accept Christ as God, the second person in the Holy Trinity who, in the form of man, was on the earth for 33 years.  Jews regard him as a "false messiah," meaning "someone who claimed … the mantle of the Messiah but who ultimately did not meet the requirements laid out in Jewish beliefs.”  Muslims recognize Jesus as a great Prophet, but the Koran rejects “with absolute vehemence the insinuation that Jesus is God or the son of God.”  Mahatma Gandhi, a Hindu, said: “During many years of my life I considered Jesus of Nazareth a great Master, perhaps the strongest the world has ever known.  I can say that Jesus holds a special place in my heart as a teacher who has exerted a considerable influence on my life."

 Christian, Islam and Hindu -- about 4.9 billion people in our 6.9-billion- people world belong to these three religions.  At a minimum, they have the highest respect for Jesus Christ and, once again, they will celebrate his birthday -- once again they will ignore those who try to secularize or eliminate the holiday that was established for a serious purpose -- to honor Jesus Christ.   

Merry Christmas.

 END

 Robert Kelly, author of several books on baseball, politics and the national debt is also a freelance, award-winning journalist whose work has appeared in many Massachusetts newspapers.  His latest book, Neck and Neck to the White House, is available at Amazon and the better bookstores. His e-mail address is bobkelly17@comcast.net

The Best Man - Cain, Gingrich Or Romney

Gingrich, Romney, and Cain are the leaders in the current primary race.  Momentum is with Gingrich. 

 In match-ups with Obama, Gingrich loses by eight percent, Romney by one and Cain by nine.  On the other hand, likely voters who strongly approve of Obama dropped from 45 percent to 25 percent in two years.  He should lose, based on his record.  Republicans could win the presidency and a veto-proof Congress if they present a focused message that is understandable and powerful.

 No conservative likes the current tax system, but the appetite to change it was not a central issue in 2008.  Nevertheless, the tax code had gotten most of the coverage during Republican debates.  Cain started this with his 999 plan.  Romney responded with a modified version of the current tax system and a vague promise that, at a future date, he too would offer a flat rate plan.  Gingrich offered flat tax rates lower than current ones.  Like Cain’s, his lower rates would be applied to a non-traditional, somewhat vague, tax base. 

 Cain and Romney have concentrated on tax systems because they have pounced on the notion that job creation is the principal issue in the campaign.  It isn’t.  Unemployment is important, but Obama’s leadership and his failed policies, especially Obamacare, are the primary issues.      

 Conservative voters must not allow some primary contenders to woo them away from their central 2008 concerns, which are even more valid today.  They must remember what has driven their uprising – fear of losing their country because of an arrogant, amateurish leadership that is destroying America.    

 Getting lost in the weeds of tax policy is unproductive.  It’s apparent that any Republican candidate will change tax policy.  Enough said about that.  But their positions on the basic tax and spend questions are not so clear.  1) Will they seek to eliminate Amendment XVI (the right to tax income)? 2) Will they seek a balanced budget amendment with spending and taxing caps? 3) Will they eventually seek a national sales tax? 

 Bad tax policy, past and present, did help to create the fiscal crisis that faces America.  But it is not what energized conservatives in 2008.  The triggering issues included: 1) Health care; 2) Entitlement spending; 3) Other spending; 4) Regulations; 5) Energy; 6) Defense; 7) Immigration. 

 Analysis will be limited to the positions taken by Cain, Gingrich and Romney as their responses to the above issues are presented on their websites.     

 Health care: All would repeal Obamacare.  All would sponsor Health Savings Accounts; all would protect seniors and near-seniors.  Cain makes a brief and vague statement about free-market solutions; Romney and Gingrich are ready to fix the system with specific cures.  Romney will have trouble selling himself as an advocate for change because he installed Romneycare in Massachusetts, which is troubling.

 Entitlement spending: All candidates would protect seniors or near seniors.  Otherwise, Cain’s comments are brief and uninformative.  Gingrich speaks of block grants, personal savings accounts and finding solutions “with the people.”  Romney, like Cain, relies on general language, with a few more specifics. Each candidate shows an awareness of the sensitivity attached to Welfare State issues.  There is no crusader here who speaks boldly.  It will take a clever man, who knows the system, to wade through the political bushes of the Welfare State and emerge upright and victorious.  The task could be over Cain’s head.                                        

Other spending:  Cain in effect, calls for zero-based budgeting, with few specifics.  Gingrich has little to say on the subject.   Romney would call for an across the board cut of discretionary spending; he would consolidate job training and other programs and, in general, he would improve management practices.  One gets the impression that Cain has no clear ideas on what he would specifically do; Gingrich would leave such trivia (my word) to others, and Romney sees it as a management problem.  Ron Paul is the only candidate who sees the problem properly.  Government is bloated with unconstitutional duties.  The management of departments and programs is not the central problem; their existence is.  Get rid of some of them.  These three candidates have yet to face up to that solution, as Ron Paul has.  The underdog has a lesson to teach. 

 Regulations: Cain would repeal Dodd-Frank (Wall St. reform bill that hasn’t worked); he would review and rescind Obama regulations that hinder safe growth – few specifics.    Gingrich has page after page of reforms that are ready to go as soon as he has the power; Romney’s contribution to this subject is modest.  Gingrich emerges as the candidate who is best prepared to deal with this issue, which is a key to the development of a growing economy, especially in the energy sector.   

 Energy:  Cain again says the right things with few specifics.  There is little doubt that he would fully exploit U.S. resources, but he doesn’t persuade readers that he’s the man to do it.  Gingrich has a six-point detailed plan of how he would fix the energy problem.  Romney, like Cain, says the right things, but no details.  Gingrich is a drill, drill, drill man; Romney seems more tentative.     

 Defense:  Cain would maintain military strength and he would support America’s friends.  He offers no details.  Gingrich emphasizes the need for a global strategy to deal with Islamists.  From writings, debates and speeches one learns that Gingrich would favor reshaping the military to meet modern challenges; Romney has page after page on what he would do to keep America strong.  All would maintain military strength; Gingrich is more apt to correlate it to an informed foreign policy.         

 Immigration: The candidates would seal the border before they would deal with in-country illegal aliens.  To different degrees, all disapprove of treating illegals as American citizens with American rights.  Cain and Romney are clearly opposed to any form of amnesty; Gingrich’s position is more subtle, which is something he’ll have to explain as the campaign continues. 

 So far, things are going Romney’s way.  He is building his campaign on the issue of jobs, and he flashes his resume as a job creator.  Those who have offered their tax plan as the centerpiece of their campaigns have played into Romney’s hands.  Tax plans are job plans, and job plans are Romney’s playing field. 

 The candidate with the broadest vision gains strength when the debate is enlarged to include the issues that motivated conservatives of 2008.  That man is Gingrich, although Romney proves he is more than a one shot gunman – he runs close to Gingrich on both broad and narrow issues.     

 Both Romney and Gingrich carry baggage.  With Romney, it’s professional; with Gingrich, it’s mostly personal.  By some, Romney is viewed with suspicion; Gingrich,   with distaste.  Take your pick.  According to currently available information, one of them is likely to be the Republican nominee.          

                 Robert Kelly, author of several books on baseball, politics and the national debt is also a freelance, award-winning journalist whose work has appeared in many Massachusetts newspapers.  His latest book, Neck and Neck to the White House, is available at Amazon and the better bookstores. His e-mail address is bobkelly17@comcast.net

Trying To Make Sense Out Of Herman Cain's 9-9-9

There is no need to review the current tax system here, or to prove that it is an anchor around America’s neck.  Both political parties recognize this, although their proposed remedies are vastly different.  On the upside, the tax problem is finally on the table for all to see, and within two years it is likely that a new tax system more geared to growth and stability will be in place.  

 Republican debates have consistently headlined the tax issue.  If they win the presidency and maintain sufficient power in Congress, they will change the system.  If they do not win the presidency, they will keep the heat on to get it done. 

 Herman Cain was the first of the candidates to propose an attention-getting flat-tax plan that, he claims, will put America back on the road to recovery. 

 9-9-9

 Cain wants a nine percent tax on corporations and individuals and a nine percent sales tax.  This sounds simple, but it isn’t.

 Corporate tax

 The tax base upon which tax rates are currently applied is net profit.  Current tax rates range from fifteen percent to thirty-five percent.  Under the Cain plan, the tax base changes.  Only purchases from U.S. companies (including capital expenditures – no maximum) and net export sales are deducted from revenues; the nine percent rate is applied to the new tax base. 

 Question: Does nine percent of the new tax base result in a lower tax burden than the current tax rates applied to the current tax base (net profit – after deducting all business expenses and up to $500K of capital expenditures).   

 Cain insists that his tax plan will result in lower corporate taxes and will make America more competitive in the world market.  This may be true, but it hasn’t been demonstrated.  A few comments might make clear the reasons to be skeptical: 1) Purchases (excluding fixed assets) vary considerably from industry to industry.  In manufacturing, for example, purchases could be fifty percent or less of sales; in retail, they could be eighty percent; in the professions, they would be minimal.  Under the Cain plan the higher the purchases the lower the tax base – looks good for retail; bad for manufacturing; terrible for professions.  2) Applying a flat rate to net profit makes sense; applying a flat rate to Cain’s tax base, which hits the wide variety of American businesses in different ways, is another thing; 3) Allowing a deduction for capital expenditures sounds dramatic, but it is not new.  Current law is already liberal on this issue.  

 Conclusion: I’m from Missouri on Cain’s corporate proposal.  I like the idea of a flat rate, but I’m uncomfortable with his plan to change the tax base to something other than profit.  I like the elimination of the current tax code.  But I’m not sure that his idea will benefit the competitiveness of corporate America. 

 Cain’s plan is silent on how to handle a profitless company.  He has made provisions for more allowable deductions for companies who are located in unidentified “empowerment zones.”     

 Individual Tax

 Tax rates currently range from ten percent to 35 percent.  Under the current system, a married couple over sixty-five can deduct more than $20 thousand from gross income before they are taxed. 

 Cain again changes the tax base.  He eliminates the tax on dividends, capital gains and estates (death tax); he allows only one deduction against gross income – contributions.  I wonder why he doesn’t eliminate the tax on interest, which is a precious income stream to those on fixed incomes.

 Again we have the same question: Will a lower tax rate applied to a higher base, plus the elimination of some income, yield a lower tax burden than higher tax rates applied to the existing base?

 Cain must be more explicit in his presentation if he expects to sell this plan.  I appreciate the dumping of the tax code, but I’m skeptical about his claim that his plan will be beneficial, and to whom?  The tilt seems to be toward those with large capital gains and dividend income, and those with large estates.  The lure to lower income groups is the elimination of the payroll tax. 

 Cain’s plan does not speak to those who currently pay no tax because their income is too low.

 Sales tax

 All states except Alaska, Delaware, Montana, New Hampshire and Oregon have sales taxes.  The sales tax in more than a dozen states is above eight percent.

 Cain’s federal sales tax has, thus far, been his most controversial proposal, but it is the easiest to rationalize in a general sense.  Retailers, for example, since they’re buying from suppliers who (according to Cain) will have a lower cost base, may have lower purchase prices, which could result in lower consumer prices.  And since retailers too will have no payroll tax to pay, the price reduction could be even higher.  Also, the consumer has more income because the once-deducted payroll tax is now in his pocket.  In short, Cain’s sales tax is not a new tax; it is a replacement tax that will be offset by lower retail prices and by the extra cash the consumer has because the payroll tax is gone.     

 This may be true, but it’s a tough sell.  At the present level of understanding, those states with a sales tax add Cain’s nine percent tax to their own and say “no way.”  This reaction isn’t fair or accurate, but it’s understandable.    

 Conclusion

 Cain’s system may be uncomplicated in practice, but it’s enormously difficult to explain.  Changing tax systems is hard.  Adding rules that only techies will understand makes it more difficult.  Axiom: The more radical the change, the better the explanation must be.  Cain has not met that test.

 There has been much disagreement with the tax system over the years, but two things are generally accepted: 1) Corporate net profit is the fair base against which tax rates should be applied; 2) Disposable personal income is the best tax base for individuals, a goal that has not been reached but which is tacitly recognized in the code in the form of exemptions and the standard deduction.  To radically depart from these accepted practices in an income tax system introduces complexities that will be difficult to turn into tax law.  

 I regard the Cain proposal as an incomplete idea that should be mixed with others to produce a tax system that will restore America to good government and to prosperity.

 A better alternative would be to abolish all existing taxes, to close the IRS as we know it, to eliminate Amendment XVI (the power to tax incomes), to impose the so-called Fair Tax (a national sales tax), and to pursue a constitutional amendment that requires a balanced budget (with an allowance for wars and recessions) and a cap on spending of twenty percent of GDP.       

Robert Kelly, author of several books on baseball and history/politics, is also a freelance, award-winning journalist whose work has appeared in many Massachusetts newspapers.  His latest book, Neck and Neck to the White House, is available at Amazon and the better bookstores. His e-mail address is bobkelly17@comcast.net

Herman Cain - Is he serious?

Herman Cain has come out of nowhere to become the frontrunner in the Republican primary process.  This is so primarily because of his 9-9-9 tax plan, which he sells with a natural charm that has drawn voters to him.

 Two questions have thus far been raised about Cain: 1) Is he serious about his candidacy?  2) Is his 9-9-9 tax plan a realistic proposal for tax reform?  In this column, only the first question will be addressed.

 Is he serious?

 This question is raised because of the doubts of some about Cain's general qualifications, his lack of foreign policy and political experience, and the absence of the kind of political organization that serious candidates usually have.

 General qualifications 

 Anyone who understates the brainpower of Cain is making a serious mistake.  After getting his college degree in mathematics, he went to the Purdue graduate school and he earned a Master's degree in computer science. 

 Initially, Cain worked for the U.S. Navy in its ballistics programs.  Then he began a remarkably successful business career.  For example, Cain, 36, managed 400 Burger King stores, and he changed that subsidiary of Pillsbury from a loser to a winner in three years.  Pillsbury then assigned their new-found troubleshooter to another troubled subsidiary, Godfather's Pizza.  He made it profitable too, and he ended up buying it -- he resigned as its CEO in 1996.   

 Honors followed Cain after his retirement: Honorary degrees from eight colleges; CEO of the National Restaurant Association; a member of the board (eventually chairman) of the Federal Reserve Bank of Kansas City and of five other commercial operations including, Nabisco, Whirlpool, and Reader's Digest.

 Cain has been married for 43 years to his wife, Gloria.  They have two children and three grandchildren. 

 Cain's personal life is spotless; his education is superb; his executive and financial experience is superior.  Based on such things it can be said that he is qualified to run for president.    

 Lack of foreign policy and political experience       

Cain does not have foreign policy experience.  The question is: Does this disqualify him as a serious candidate.  Two observations shed light on this issue: 

• As presidential candidates, Eisenhower and Nixon had deep foreign policy experience; Ford had some; Carter and Reagan had none; George H.W. Bush had plenty; Clinton, Bush and Obama had none. Presidential candidates often have had minimum experience in foreign affairs. But a legitimate question arises when this is the case: Does he/she have a record of applying the personal and executive skills that are needed to cover a weakness in experience? For example: 1) A record of hiring a strong and informed staff; 2) the demonstrated ability to quickly get up to speed on complex matters. Cain's background suggests that he has such skills.
• Cain's closest competitors, Mitt Romney and Rick Perry, do not have foreign policy experience. So the question is: Which of the likely candidates is apt to cover this weakness quickly and efficiently? Cain doesn't suffer in this comparison, which after all is the only one that counts.

Cain has not held political office, but he is no political neophyte.  He was the senior economic adviser in the 1996 Dole/Kemp campaign; he briefly sought the Republican nomination for president in 2000 (Bush won -- he endorsed Steve Forbes); he ran and lost in Georgia's 2004 senate race. 

 Helping, trying and failing in politics are not as valuable as serving, but Cain has been around the track and, although his unfamiliarity with the national stage may lead him to make occasional verbal gaffes,  he isn't likely to be hornswaggled by the slick pros in Washington.  Similar to the foreign policy question, however, it's true that Cain's personal and executive skills would be tested in this area if he became president. 

 Cain is an outsider with minimal insider experience.  This is a virtue in some ways and it could account for his ability to communicate face-to-face with voters.  But there's also a downside, and voters will have to weigh his experience deficit in the political world against his strengths and abilities relative to the economy, budget, taxes, finance and in meeting overall executive challenges.   

 Political Organization       

 Typically, depending on available cash, candidates have organizations in as many critical states as possible, which keep the pot boiling for their man/woman, and they organize personal appearances and speeches.  Cain has not followed this pattern and, because of this, some pundits write him off as an insincere candidate who will soon drop by the wayside.  One of them recently pointed out that Cain was campaigning in Tennessee when he should have been in Iowa or New Hampshire.

 Recent polls show that Cain leads the pack in Iowa with 26 percent of the vote; his closest competitor is Romney - 22 percent.  Nobody has spent more time in that state than Bachmann and Santorum - together they have about 14 percent. 

 New Hampshire is generally conceded to Romney - 40 percent.  Who is closest to him?  Cain.  Every other candidate has spent more time and money in New Hampshire than Cain.  

 Cain leads in South Carolina with 32 percent; Romney is 10 points behind; nobody else is close.  And he leads Romney in Florida, 31 vs. 30 percent.   

 Compared to Romney, Cain is cash and organization poor, yet he is ahead of the former governor in national polls as well as in several crucial state polls.  And he's way ahead of everybody else.     

 Is Cain demonstrating that a good candidate with good ideas and skills doesn't need the trappings that have been typically attached to political campaigns for decades?  Could it be that he is bringing to political campaigns the same organizational and planning skills that made him an outstanding businessman?

 Don't write Cain off.  He is no fluke.        

Election 2012-Republican Candidates

The GOP choices

Republican presidential debates are underway; the public has been introduced to the candidates.  It's time to form a few basic ideas about them, and about the relationship of their messages to the mood of the nation. 

 The Election Landscape

 The election landscape is not favorable to President Obama.  A few poll numbers demonstrate this:

• According to Gallup, Obama's approval rating was 70 percent when he took office. With few variations, it has consistently dropped ever since to its current level of 41 percent.
• Gallup reports that 77 percent of Americans do not believe that the economy is improving.
• About 61 percent do not expect improvement in the near future.
• According to Fox News (Real Clear Politics), 72 percent of Americans believe the nation is headed in the wrong direction.
• Concerning foreign policy, the position of the U.S. vs. China and Russia has deteriorated; the Israeli/Palestinian problem is worse; North Korea and Iran are more dangerous than ever; the delicate relationship with Pakistan has weakened.

Obama is vulnerable, but he still has bite.  Dedicated Democrats will support him; his personal charm will woo others (Give the nice guy another chance), and his hair-raising ability to give a stump speech will continue to attract emotional voters.  To beat him, the Republican nominee must focus on what Obama has done, not on what he says he will do. 

 Republican Candidates

 Nine candidates are in the field -- Michele Bachman, Herman Cain, Newt Gingrich, John Huntsman, Gary Johnson, Ron Paul, Rick Perry, Mitt Romney and Rick Santorum.

 There are two ways to evaluate the candidates: Who can win?  Which man has a message that correlates best to the needs of the nation?

 Who Can Win?

 According to a Fox News poll (September 2011), the candidates rank as follows: Romney (23%); Perry (22%); Cain (17%); Gingrich (11%); Paul, Bachman, Santorum, Huntsman, Johnson (below 10%). 

 Paul may have peaked.  He has a loyal base, but his age (76) is a major drawback. 

 Bachman has a good war chest, and she should last for at least three primaries.  But time is running out - she must recapture the voters that left her for Perry if she is to survive. 

 Santorum performed well in all of the debates, but he hasn't drawn much voter support - his cash reserves are minimal.  At the present time he must be ruled out.

 Huntsman and Johnson have never drawn much voter support and they will probably soon withdraw.

 Newt Gingrich is the smartest Republican candidate; in many respects he is the most qualified to lead.  His performance in debates has been impressive.   But he confronts two things over which he has no control that could permanently disqualify him: 1) Age - he looks like, and he sounds like, a voice from the past, which may not work well for him; 2) His personal history, which features multiple divorces, could alienate much of the conservative base despite his more recent conversion to a faith-driven life style.  Gingrich has a small war chest and he must show well in Iowa and New Hampshire primaries.  It's too soon to count him out, but he's hanging on by his fingertips.    

 Herman Cain may be the most charismatic Republican candidate.  He has done well in debates, especially the last one in Florida, which was followed by a straw poll that he won (37%) with almost as many votes as the next three candidates combined (Perry, Romney, Santorum).  This victory was followed by a Fox News national poll that placed Cain in the top three4 - a major upgrade for Cain.  Watching his progress could become the most interesting aspect of the primary season.      

 Perry entered the race a few weeks ago with a big splash.  In the process he made Bachman a second tier candidate.  The debates have brought the personable Texan down to size as questions concerning Social Security, the education of illegal aliens, border control and foreign policy brought to light some of his positions that do not sit too well with conservatives.  Once the top man in the polls by a wide margin, he has dropped to second place.4  Perry has not yet established his fund raising capabilities and it's fair to say that he'll have trouble matching Romney on this score until he develops a more favorable public image.

  Romney, a seasoned campaigner, is saddled with Romneycare, which he introduced in Massachusetts, and which is similar in many respects to Obamacare.  All Republicans (including Romney) and 56 percent of likely voters want to repeal Obamacare.  Romney   handles this problem deftly, but the fact remains that if he's the nominee, Obamacare will not be the issue that conservatives want it to be.  Romney is the best fund raiser of the group - his war chest is four times larger than the nearest competitor (Bachman).  Considering poll trends, money and Perry's public demeanor, Romney must be considered the favorite in the nomination contest.

 According to Real Clear Politics (October 2011), Obama would beat the Republican frontrunners despite the record he has created domestically and internationally.  Personality, promises and rhetoric won the election for him in 2008, and so far the same formula is holding him up in the polls.  Republicans have not yet made their substantive case for change in a way that captures the public mind.

 Which Man Has The Message That Correlates Best With The Needs Of The Nation?

 This is a special election.  The nation has reached a crossroads, forced by different views of how Government should work.  Should the original constitution limit, as it had for more than a century, the scope of federal power, or should the living constitution free the federal government to expand without restraint, as it has for more than a half century?

 Adherence to the original constitution brought wealth and power to the United States. After the 1960s, guided by the living constitutionalists, America has morphed into the largest Welfare State in the world, bringing with it a back-breaking level of debt. 

 If Obama (a socialist in deed if not in intent) is re-elected, or if he is defeated by a go-along, get-along, backslapping Republican politician, America will sink into oblivion - it will become in decades (or less) one more bone in the graveyard of once-great nations.   

 Maybe a Romney or a Perry can fill the curative roll that history has created for them. But there is no certainty in that statement.  There are, however, existing candidates who seem more surely to have the backbone and the brains to lead America back to the size and the form that was wisely envisaged by the Founders.                     

 ·        Herman Cain: One must listen to a man who holds that the present tax system must be junked.  He would probably be the best candidate of all for the economy - he would need a professional team to help him on foreign policy.  Cain is a highly under-rated candidate whose fortunes are rising rapidly.  

• Michele Bachman: A true conservative motivated by principle and passion. She would need good advisers, but her instincts are sound and her drive unquestioned.
• Newt Gingrich: No question about brain power. His principles are sound. But is he too institutionalized?
• Ron Paul: Unquestionably, the most principled man in the group. Good advisers and common sense would round off his rough edges - he would lead the effort to restore constitutional government. Age for him (76) is a major problem - maybe a disqualifying one.

  Conclusion

 Any one of the above four candidates would lead America to a better tomorrow.  One would hope that either Perry or Romney would do the same, but certainty is not as high.  Of the two, Romney would be the better bet because he has a life outside of politics -- he could afford to be more courageous.

 A dour prediction: If a constitutionalist is elected, and if he institutes all of the corrective policies that are needed, the public will probably reject his bid for re-election in 2016 on the grounds that he's heartless.  A liberal would succeed him and he/she would proceed to re-establish Obama's socialist agenda. 

 In other words, America may no longer have the moxie to tolerate the cure for its ills          

END

Robert Kelly, author of several books on baseball and history/politics, is also a freelance, award-winning journalist whose work has appeared in many Massachusetts newspapers.  His latest book, Neck and Neck to the White House, is available at Amazon and the better bookstores. His e-mail address is bobkelly17@comcast.net

Obama's Jobs Program Or Obama's Copycat Campaign Strategy?

President Obama has proposed a joint session of Congress on September 7, 2011 at 8 p.m. as the forum for his next speech.  The subject matter, allegedly, will be his proposals for stimulating the economy and accelerating job growth.

 Is this a sincere attempt to deal with a national problem in a bipartisan way? Or is it a blatant attempt to establish a campaign 2012 strategy for Obama that hopes to be a successful carbon copy of Harry Truman's campaign of 1948 when he defeated Tom Dewey by, essentially, campaigning against the "do-nothing" Republican Congress? 

 TRUMAN'S ELECTION STRATEGY

 Truman's popularity was above 90 percent in the early 1940s, but the problems he had after the end of World War Two caused it to plunge to about 38 percent in 1948.  Truman was an unpopular president in that election year.

 He wanted the nomination of his party but he'd be lucky to get it.  He had an impressive war record, (which was dimming) and an engaging personality going for him, but he couldn't brag about a good economy (unemployment was rising), and the antics of well known Democratic allies left him vulnerable to charges that he was "weak on communism." 

 He had to fight for the nomination.  Feeding on that doubt, two men, Strom Thurmond and Henry Wallace, walked away from the Democratic Party in protest, promising to run   against Truman in the election (they did). 

 So Truman won his nomination, but at a high cost, and he badly needed a strategy that would take the spotlight away from him, and the economy, and at the same time redirect it to a weak spot in his opponent's armor.  Attacking Dewey directly wasn't the answer -- he was squeaky clean.  So they turned their eyes to the Congress

 Republicans in 1946 won control of both houses of Congress.  To turn this administrative disadvantage into an electoral advantage Truman, once he had the nomination, called Congress into a special session and presented a list of his desired legislation.  He knew his plan would be rejected.  But most of his proposals, even though they didn't address fundamental problems at hand, were attractive to voters - and he got Republicans to reject them. 

 And Truman, gleefully, for the balance of the campaign, made it known, from whistle stop to whistle stop, that the problems in the nation could be directly blamed on the "do-nothing" Congress that wouldn't work with him.  And - he almost accidentally reminded voters - things would get even worse if that stuffed shirt from New York became president of the United States.  

 OBAMA'S COPYCAT STRATEGY

 The parallels between Truman in 1948 and Obama in 2011 are vivid.  And how Obama is beginning to take lessons from the Missourian is becoming plainer every day.   

 ·        In 2010, Republicans won the House and considerably increased their strength in the Senate.  Obama's days of veto-proof- rule were over.  Like it or not, ever since he has had to contend with Republicans, and their ideas for a smaller government.  Truman had the same problem. 

• Obama's popularity, Truman-like, has skidded steadily from about 70 percent to about 38 percent in less than three years.1
• The economy under Obama is poor; his attempts to fix it have been misdirected and hapless. Like Truman, he has no economic record to brag about.
• Unlike Truman, national debt under Obama has mushroomed because of his costly, and unsuccessful, spending programs. And unlike Truman, Obama's foreign policy is - to be kind - incoherent.

 Even more than Truman, Obama needs a scapegoat, someone (anyone) to blame for the condition of the nation, economically, internationally and financially. 

 President Bush, a favorite target for more than two years, will continue to be useful to (and used by) Obama - but blaming Bush is wearing thin. 

 The Republican nominee can't be demonized yet (as he/she will be) because he/she isn't known yet.  But something must be found to take the heat away from Obama - he can't wait (as long as Truman did to make his play) to set up the only campaign strategy that is currently available to him.

 He must demonize Congress, especially the House, where Republicans rule. 

 This explains Obama's call for a special session of Congress on the same night, and at the same time, as the Republican primary debate in California.  In this way, if Republicans agree to the special session, he will monopolize television time and reduce the positive impact of the debate.  More importantly, he'll present ideas that, relative to the nation's current problems will be trivial.  But if Republicans disdain them, and if they do not offer challenging proposals, their dismissive action will provide the basis for Obama's future campaign against the "do-nothing" Congress that obstructs him.  And, the rhetoric will continue, if a Republican is elected president, things will get even worse. 

      No attempt by any politician from either party should be taken seriously of it doesn't first deal with unaffordable social programs that have destroyed the federal budget for more than a half-century.  Obama never deals with that problem in any specificity because it's politically toxic - a brew he refuses to face.  Republicans (bravely or foolishly) did so, and it could cost them votes if Obama doesn't join them. 

 He will not join with Republicans next week, nor is he likely to do so in the foreseeable future.  Therefore, his congressional address will be nothing more than another edition of Obama-theater.

 END

 Robert Kelly, author of several books on baseball and history/politics, is also a freelance, award-winning journalist whose work has appeared in many Massachusetts newspapers.  His latest book, Neck and Neck to the White House, is available at Amazon and the better bookstores. His e-mail address is bobkelly17@comcast.net

A Writer's Woes

 The advent of the computer and its word processing program was a revolutionary development to many writers.  As a matter of fact, legend has it that many older writers resist modern technology, and they cling to, and use, their old Royal or IBM typewriters. 

             My imagination tells me that forcing an accomplished writer like, say, Margaret,  to make the switch from the old to the new, had it taken place in Biblical times, might have gone something like this ....

 0000

 ...and Margaret said: "Do I doeth it wrong?"

     The wise man gently removed the pencil from her delicate hand and smiled.  "Yes, my child.  Thou doeth it wrong.  The heavens now frown on work created with this vile instrument."  Then with surprising ferocity, the wise man flung the pencil away.  Through the window it sailed, out of the room, out of Margaret's life, seemingly forever.

     "But what can I do?" Margaret asked her eyelids aflutter.  "I am a writer and thou hast just flungeth my scribing tool through yon window."

     The wise man stretched his short body to its full height, placed his palms on his belly, and laughed a jolly laugh.  "Never feareth.  I cometh with new tools favored by the gods.  Soon, thou shalt loveth me much."

     "Oh?  But I was happy with my pencil and the work I produced was hailed throughout the kingdom."

     "Happy?  Who needeth happy?  Groweth up my child.  More words per minute, from talented fingers, is the goal of the faithful writer, as more milk from swollen udders is the goal of the faithful cow.  So sayeth the modern gods."

Imperiously, the wise man waved an arm; four slaves appeared, each one carrying a box.  Each box was quickly opened, the contents placed in position -- a keyboard, a CPU, a CRT and a printer.

     Powwweth!  Just like that - a computer.

     The sound of a harp filled the air.  Heaven smiled.  Angels harmonized.  Citizens lifted their eyes knowingly.  Magic was afoot.

     The kindly wise man brushed his lips against Margaret's forehead and dropped thick instruction manuals in her lap. 

"Readeth these," he whispered, "and typeth in peace."

 0000

And so it was that the writer, Margaret, was moved from the times of darkness to the times of light. 

But all was not well.  The expected click, click of the word processor was not heard by townspeople.  Chronicles throughout the empire no longer received her work.

Something was amiss.

The kindly wise man returned to investigate.

0000

Alas, no more is known of that tragic day except that the body of the wise man was found on the floor of Margaret's office, his heart pierced with four number two pencils and his mouth stuffed with instruction manuals -- a brutal crime, still unsolved. 

            The writer, Margaret, is suspected by authorities as being the killer. 

When interviewed, the consul stated: "She dideth it, or my name isn't Aristophlioniusocopulas, the Younger." 

     Margaret's whereabouts is unknown.  Some believe she is hidden by exiled writers in the far reaches of the empire's mountain country, the land of number two trees once used to make pencils for scribes who weren't witheth it.

0000

Many writers can sympathize with the frustrations of Margaret, the heroine/villain of the above fiction.  I'm one of them.  Moving from a typewriter to a computer was a laborious process filled with frustrations that went well beyond the problem of, say, changing a typewriter ribbon.

 But change is inevitable; a writer must bend or be defeated - or one must join Margaret in the mountain country that is still used to make number two pencils.