The Weekly Sift

[This is part of a series of articles on the speeches of 2016 presidential candidates. The overall vision of the series and links to the other articles can be found here.]

Paul and his candidacy. Rand Paul is in many ways the most interesting of the potential Republican candidates, the one whose positions are most idiosyncratic and least in step with GOP groupthink. He usually tries to sound like an Ayn Rand libertarian — which already sets him apart on some issues — but occasionally a bit of Occupy Wall Street anarchy gets into his rhetoric as well.

Most other Republicans argue that the Republican Party just hasn’t been Republican enough. It needs to double down on its principles, not move to the center or compromise with Democrats to get things done. Good stuff will happen only after the last Democrat has been driven into the hills.

Paul, on the other hand, is arguing that both parties are the problem: Both are part of a culture of corruption that makes government spending and government power constantly increase.

If he could quit there, he’d have an attractive message. Paul’s “Stop the Washington Machine” slogan sounds really good to people with a wide range of views. Consequently, like Barack Obama in 2008, Paul has a chance to expand the electorate by attracting people otherwise too alienated to vote. But it leaves his campaign with two problems:

1. He’s running for the nomination of one of the parties he’s attacking. So he somehow has to get Republicans to vote for a candidate who says that Republicans are part of what’s wrong with America. But Republicans view acknowledging mistakes as weakness; they don’t want their candidate to go on an apology tour for the sins of George W. Bush.
2. Once he stops the Washington machine, what is he going to put in its place? Other candidates are in a position to be vague and hopeful, but Paul’s record includes a lot of white papers and proposed bills whose details (if they become common knowledge) will turn off a lot of the people his slogan attracts.

The speech’s theme. [All unattributed quotes are from Time‘s transcript of the speech Paul gave Tuesday in Louisville. Watch out for The Independent‘s “full transcript”; parts of the speech are missing.]

A typical announcement speech is a blend of autobiography and political vision. Sometimes (as in Ted Cruz’s speech), those are two separate segments. But Paul’s speech is organized by issue, and biographical details are sprinkled in as they seem relevant. That structure sends a message in itself: Who I am is not important compared to what I want to do. Where Cruz frames himself as a prophet raised up to do God’s work, Paul frames himself as Cincinnatus temporarily putting aside his farming (or, in Paul’s case, his practice as an eye doctor) to save the Republic.

Paul begins his speech saying: “We have come to take our country back.” This is a common trope for any party out of power, and (depending on your vision of what America used to be) can mean anything from restoring white Christian supremacy to redistributing wealth. To Paul it means:

The Washington machine that gobbles up our freedoms and invades every nook and cranny of our lives must be stopped. … I want to be part of a return to prosperity, a true economic boom that lists all Americans, a return to a government restrained by the Constitution. A return to privacy, opportunity, liberty. [1]

Debt and spending. Paul’s primary symbol and symptom of too-big government is the $18 trillion federal debt.

I’ve been fortunate. I’ve been able to enjoy the American Dream. I worry, though, that the opportunity and hope are slipping away for our sons and daughters. As I watch our once-great economy collapse under mounting spending and debt, I think, “What kind of America will our grandchildren see”?

It seems to me that both parties and the entire political system are to blame. Big government and debt doubled under a Republican administration. And it’s now tripling under Barack Obama’s watch. President Obama is on course to add more debt than all of the previous presidents combined. We borrow a million dollars a minute.

This mixes some truth with some falsehood: A million dollars a minute is a little high, but in the ballpark. George W. Bush did double the national debt, but Obama didn’t triple it, and isn’t on course to add more debt than all previous presidents combined. (Details in endnote [2].)

The more abstract idea that big government and debt are collapsing the American economy is less easily fact-checked, but shouldn’t be accepted as obvious. Other rich countries (Sweden and Germany, for example) have much higher per-capita government spending than we do, and Japan’s per-capita government debt is almost double ours. The fastest-growing of the world’s large economies is China, which has a far more intrusive government. [3]

Fixing the budget. Paul proposes that we balance the budget entirely with spending cuts.

Currently some $3 trillion comes into the U.S. Treasury. Couldn’t the country just survive on $3 trillion?

The way he wants to make that happen is through a constitutional amendment:

Congress will never balance the budget unless you force them to do so. Congress has an abysmal record with balancing anything. [4] Our only recourse is to force Congress to balance the budget with a constitutional amendment.

Usually, conservatives wave a balanced-budget amendment like a magic wand: It will balance the budget without forcing us to spell out the harsh spending cuts that are required once tax increases are off the table.

Paul can’t be criticized for that. In 2011 he put out a proposal to strip $500 billion out of the budget (almost exactly the current deficit). That proposal demonstrates how draconian a balanced-budget-with-no-new taxes is. As I observed at the time: it cut 28% from the Center for Disease Control, and made similar cuts in the agencies that monitor food safety. The National Park Service got cut 42%. And so on.

When people think “The government spends too much money”, I’ll bet they’re not thinking about Yellowstone, or planning to cut corners on the next Ebola outbreak. But Paul is.

This is the problem when you get specific: The American people dislike “big government” and “spending” in its trillion-dollar abstraction, but the big things that the government spends money on — defense, Social Security, Medicare — are popular. In the rest of the budget, nearly all the easy cuts were made long ago. And when you’re sitting on your rooftop in New Orleans wondering whether the helicopters or the flood waters will reach you first, “big government” sounds pretty good.

Inequality. For a long time, conservatives refused to recognize growing economic inequality as a problem. (Talented ambitious people are out-performing inept lazy people. What’s the problem?) But recently that has turned around. At least rhetorically, conservatives are now addressing inequality.

Trillion-dollar government stimulus packages has only widened the income gap. Politically connected cronies get taxpayer dollars by the hundreds of millions [5] and poor families across America continue to suffer. I have a different vision, … a vision that will offer opportunity to all Americans, especially those who have been left behind.

My plan includes economic freedom zones to allow impoverished areas like Detroit, West Louisville, Eastern Kentucky to prosper by leaving more money in the pockets of the people who live there.

This “economic freedom zone” idea has been kicking around for a while under various names. Jack Kemp first called them “enterprise zones” and later “opportunity zones of prosperity“. (I call them “hellholes”, for reasons that will become apparent. But I’ll try to be nice and use Paul’s terminology.)

The idea is that if you lower taxes and cut regulations in some impoverished region, businesses will sprout there like mushrooms, providing jobs for all the previously unemployed residents. If you just stop there, it sounds like it might work. But Paul put out a 6-page outline of his plan in 2013, so we know a lot more of the disturbing details.

Reducing taxes in economically depressed areas is a stimulus that will work because the money is returned to businesses and individuals who have already proven that they can succeed.

i.e., to rich people.

These “Economic Freedom Zones” allow blighted and bankrupt areas to remove the shackles of big government by reducing taxes, regulations, and burdensome union work requirements. These zones give parents and students the flexibility to find better schools, allow talented immigrants to pursue entrepreneurial and job-creating endeavors, and will provide additional incentives for philanthropy to help those in need.

So how does that work? Let’s start with the tax part. When an impoverished area like Detroit or West Louisville is declared a hellhole — sorry, an Economic Freedom Zone — both the individual and the corporate tax rates go down to 5%. Payroll taxes (Social Security and Medicare) are reduced for both the employer and the employee. And the capital gains tax goes away for “stock or tangible assets that are located within the area”.

This is supposed to encourage new businesses. I know immediately the new business I would want to be in: turning abandoned buildings into tiny cheap condos that rich people could buy to establish residency, even though they would never be caught dead there. With all the zoning regulations suspended, I could probably build them for $20,000 each easy. Then I sell them for $100,000, and a guy with a billion-dollar income saves hundreds of millions in taxes by buying one. Everybody wins!

Mailboxes Etc would also do well, as corporations move their “headquarters” to mailboxes inside the Zone. Now they pay low taxes, and capital gains on their stock become tax free!

You think this kind of stuff wouldn’t happen? Again and again, we’ve been sold the idea that cutting taxes will give rich people lots of money to create jobs with. But why should they? Why not just pocket the extra money and do as little as possible to help anybody? And if you start writing rules to prevent this chicanery, not only would the tax-avoiders always be one step ahead of you, you’d end up creating yet another complex set of bureaucratic rules.

If actual people or businesses did move into the Zones, their enclaves would look like Israeli settlements on the West Bank. They’d be as isolated as possible from the impoverished residents. They wouldn’t, for example, lift a finger to improve the local public schools, because part of the program is that everybody gets private-school vouchers.

But one kind of business would be attracted to the Zones: businesses that pollute a lot. That’s because EPA non-attainment designations would be suspended. The Zones would also be exempted from regulations on municipal storm-sewer run-off, and they could waive land use restrictions like “Wilderness Areas, National Heritage Sites, or Wild & Scenic Rivers”. Also, construction permits under the National Environmental Policy Act would be “streamlined”.

So, if a real-estate corporation wanted to take over a Zone’s wilderness areas and heritage sites, the local government could sell to them. And it might be motivated to sell, because the program specifically forbids any government bailouts if the municipality gets into financial trouble. (But they would be authorized to renege on their pensions.)

So there you have it: Polluted districts populated mainly by phony residences and fake corporate headquarters, with abandoned public schools, pensionless local residents, and all the beautiful or historic areas privatized. Hellholes.

Meanwhile, enormous tax loopholes have been created that require even more massive spending cuts than the ones Paul has already laid out.

Infrastructure. But wait, there’s more:

I want to see millions of Americans back at work. In my vision for America, we’ll bring back manufacturing jobs that pay well. How? We’ll dramatically lower the tax on American companies that wish to bring their profits home.

More than $2 trillion in American profit currently sits overseas. In my vision for America, new highways and bridges will be built across the country, not by raising your taxes, but by lowering the tax to bring this American profit home.

This is the overseas profits tax holiday he co-sponsored with Democrat Barbara Boxer. Multinational corporations like Apple and Google (both headquartered in Boxer’s state) juggle their books to make most of their profits appear overseas, so that they can avoid the 35% corporate income tax. The Paul-Boxer bill would let them bring those profits home and pay just 6.5%. It would create an immediate one-time slug of revenue, but, as Bloomberg Business explains:

It’s not clear that the Paul-Boxer plan would actually raise revenue. The nonpartisan Joint Committee on Taxation, the official scorekeeper for tax bills, said last year that a similar proposal would raise money in the first few years and then cost the government a net total of $95.8 billion over a decade.

That’s because companies would interpret a repeat of a tax holiday enacted in 2004 as a sign that they should shift even more profits outside the U.S. in anticipation of another holiday.

Criminal justice reform. After Ferguson, Paul wrote an op-ed in Time calling for demilitarization of the police. He wrote:

Anyone who thinks that race does not still, even if inadvertently, skew the application of criminal justice in this country is just not paying close enough attention. Our prisons are full of black and brown men and women who are serving inappropriately long and harsh sentences for non-violent mistakes in their youth.

He mentioned the issue in Tuesday’s speech without elaborating:

I see an America where criminal justice is applied equally and any law that disproportionately incarcerates people of color is repealed.

Most other Republicans don’t believe that race is a factor in our criminal justice system, so in the debates I expect Paul to be challenged to name some law that should be repealed because of its unfairness to blacks. It will be interesting to see what he says.

Defense and foreign policy. Historically, Libertarians have been isolationists. For good reasons: War inevitably increases government power, both economically and in terms of civil liberties. In wartime, ordinary political dissent turns into disloyalty or even treason.

For years, this reluctance to involve the United States in foreign conflicts has distanced both Rand and Ron Paul from the Republican mainstream. (In the 2011 Republican debates, Ron Paul said about the prospect of Iranian nuclear weapon “What’s so terribly bad about this?” and opposed even trade sanctions. Just a year ago, Rand Paul told ABC’s Jonathan Karl “The people who say ‘by golly, we will never stand for that,’ they are voting for war.”)

Since he began moving towards his own presidential run, though, Rand has tried to walk that back and sound more bellicose, even supporting higher defense spending. In his announcement speech, he proclaimed “radical Islam” as “the enemy”.

And not only will I name the enemy, I will do whatever it takes to defend America from these haters of mankind.

And he tried to walk narrow line supporting negotiations with Iran without siding with President Obama.

I see an America strong enough to deter foreign aggression, yet wise enough to avoid unnecessary intervention.

which sounds a lot like what Obama sees. So what’s the difference?

The difference between President Obama and myself, he seems to think you can negotiate from a position of weakness. Yet everyone needs to realize that negotiations are not inherently bad.

But it’s not clear what would make a President Paul “stronger” than President Obama, other than simply being a Republican. I’m sure he’ll be pressed on this during the campaign.

Civil liberties. One place Paul is not backing down is on limiting government spying on American citizens who have committed no crime.

The president created this vast dragnet by executive order. And as president on day one, I will immediately end this unconstitutional surveillance. … We must defend ourselves, but we must never give up who we are as a people. We must never diminish the Bill of Rights as we fight this long war against evil. We must believe in our founding documents. We must protect economic and personal liberty again.

This is one issue where his difference with other Republican candidate might be popular even among the Republican electorate. I hope he’ll challenge other candidates to match his day-one pledge.

Summary. To appeal to the Republican primary electorate, Paul will be tempted to shift his positions towards the Republican mainstream and away from this Libertarian roots. To an extent he already has. But his hope of winning also has to depend on drawing alienated voters to the polls. To do that, he’ll have to maintain an image as a different kind of Republican.

That will require a lot of political skill, which Paul has never shown in the past. (He has a tendency to get testy when questioned, as he did this week.) There is a place in American politics waiting for the candidate who can run a pox-on-both-your-houses campaign. But I personally don’t believe Rand Paul is skillful enough to be that candidate.

More of a problem is his record of specific proposals. It’s hard to run an Obama-style hope-and-change campaign when your opponents can so easily pull you into unpopular details you have laid out in your own words.

Addendum. It’s been pointed out in the comments that I said nothing about Paul’s position on social issues like abortion. That’s because Paul said nothing. My take is that he wishes he could avoid talking about these issues. One of the times he got testy with a reporter was when he was asked whether an abortion ban should have a rape exception.

The fact that he doesn’t want to answer that question tells you where he is on abortion in general: He’s against it to the point that he’s willing to consider forcing a woman to have her rapist’s child. That’s where the question starts getting difficult for him.

He has also said that same-sex marriage “offends myself and a lot of other people“, but supports letting same-sex couples have “contracts” with each other, whatever that means.

[1] Paul puts forward a zero-sum view of government and the people: any expansion of government necessarily diminishes individuals. This clearly makes sense with regard to privacy: As the government snoops more, our sphere of privacy shrinks. But it’s less obvious with opportunity and liberty: Liberals would argue that programs like government-subsidized state universities and community colleges can increase opportunity for people born into poverty, and regulations that restrain the power of big business (net neutrality, for example) can increase liberty for individuals. Libertarians have arguments against these points, but Paul usually doesn’t go there: He frames these objections out of the discussion rather than address them.

[2] Kimberley Amadeo does the analysis of debt-added-per-president through Obama’s first five budgets. Paul’s statement about President He-Who-Must-Not-Be-Named (i.e., George W. Bush; the word “Bush” does not appear in the transcript) is accurate: The debt was $5.8 trillion at the end of Bill Clinton’s last budget, and (excluding the FY 2009 spending of Obama’s stimulus plan, which was added to the FY 2009 budget after Bush left office) he added another $5.849 trillion. So yeah: doubled.

In Amadeo’s analysis, President Obama added $6.167 trillion in his first five years, including the FY 2009 spending taken out of Bush’s total. The current CBO projection of the FY 2015 deficit is $486 billion. FY 2016 and FY 2017 come in at $455 billion each. Total: $7.563 trillion.

So “tripled” is only accurate if you mean that the debt has (more than) tripled since Bush took office, which is a generous way to read Paul’s statement — certainly not the way the typical voter hears it. Obama himself is nowhere near tripling the debt; he hasn’t even doubled it. (And if you want to spin the numbers Obama’s way, he inherited a $1.6 billion annual deficit and has whittled it down to under $500 billion.)

The bit about “more debt than all of the previous presidents combined” is simply false. If you add up just the last three Republican presidents — Bush II at $5.849, Bush I at $1.554, and Reagan at $1.86 trillion — you get $9.263 trillion of debt, which is considerably more than Obama is projected to add by the time he leaves office. (In inflation-adjusted numbers, the comparison is even worse for the Republicans.)

If you want try juggling numbers to make Paul’s statement accurate, you can charge Obama with the full FY 2009 deficit (including the part already run up before Inauguration Day), and give the next president credit for the FY 2017 projection. That adds $1.177 trillion and brings Obama up to $8.74 trillion, which is still less than half the projected national debt at the end of FY 2016. (Also, giving Obama the full blame for FY 2009 ruins Paul’s claim that Bush doubled the debt.) So no, you just can’t make Paul’s claim work no matter what you do. It’s a lie.

And a million dollars a minute? Close enough for this kind of analogy. There are 60 x 24 x 365 = 525,600 minutes in a year. Times a million is $525.6 billion. The projected deficit for this year is $486 billion.

[3] The major disagreement between the parties is over why the middle class is vanishing, and I hope the campaign centers on that debate. Republicans largely back Paul’s view, that the problem is the growth of government. Liberals blame the effects of the Reagan Revolution: By lowering taxes on the wealthy, freeing corporations from anti-trust regulations, and making it nearly impossible for workers to unionize — policies that Clinton and Obama never managed to reverse — government has allowed the 1% to squeeze all the juice out of the economy.

Liberals have timing in their favor: wage growth stopped tracking productivity growth with the jump in oil prices in 1973, but the gap really started opening up during the Reagan administration and has not closed since.

Conservatives have to explain why the explosive growth of government that began with FDR went together with the growth of the economy and the middle class until the mid-1970s.

For a completely different view of the meaning of the national debt, see Warren Mosler’s Seven Deadly Innocent Frauds of Economic Policy.

[4] In Republican circles, the Clinton surplus just never happened. What’s more, the way it happened — a combination of controlled spending and increased taxes — is a theoretical impossibility.

[5] This popular conservative talking point seems to refer to the sustainable-energy part of stimulus, which made the famous failed loan to Solyndra. But in spite of extensive congressional investigations, no big corruption scandal ever emerged. According to The Hill, the House Energy and Commerce Committee’s final report “does not provide specific evidence to back up GOP allegations aired over past months that administration officials provided the Solyndra loan as payback for campaign donations.”