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GOP leaders should be expressing support for Egypt's freedom advocates as the way to advance America's interests, rather than lamenting the loss of Mubarak or exaggerating claims about the Muslim Brotherhood

Will Inboden is a Distinguished Scholar at the Strauss Center for International Security and Law at the University of Texas-Austin, and a Contributing Editor at Foreign Policy magazine.

The Obama Administration should not have been caught by surprise by the Egyptian protests this week.  But it was, and as I have written over at Shadow Government, the White House’s lack of anticipation and contingency planning marks a foreign policy failure.  The Administration has been struggling to keep up ever since, and how they handle the still-unfolding events of the coming hours and days will do much to define President Obama’s legacy.

What has also been surprising is the relative silence of most leading Republicans thus far.  Even allowing that the executive branch has primary responsibility for conducting the nation’s foreign policy, Republican leaders have an opportunity to help frame the debate, shape events in Egypt, and distinguish themselves and their ideas.  In particular, prospective GOP presidential candidates and Congressional leaders should be making themselves heard this week.

The few conservative voices that have sounded thus far have focused mostly on concerns of a possible Islamist/Muslim Brotherhood takeover in Egypt, or in a related vein have lamented the potential loss of a reliable American ally in President Hosni Mubarak.  While legitimate to a point, those concerns are also overstated, and risk overshadowing what is a real opportunity for American leadership that Republicans should embrace.

Mubarak is not “pro-American”; he is pro-Mubarak.  For three decades his rule has focused on maintaining his own power.  Doing so sometimes has converged with American interests – such as his tilt away from the Soviets in the Cold War, his support for Egypt’s peace treaty with Israel, or his periodic assistance in counter-terrorism.  All of these are significant and demonstrate the value that his government has been as a regional US partner.

But Mubarak’s cooperation with the US extends only so far as he believes it to be useful to him.  Meanwhile, on the other side of the ledger he has actually increased the strength and appeal of Egyptian Islamist movements by ruthlessly suppressing any secular, pro-Western democratic opposition voices; he has overseen the sometimes vicious persecution of Christians, both Copts and evangelicals; he has presided over a state media that produces slanderous anti-Semitism and anti-American conspiracism, and he has refused to implement the free market economic reforms needed  to grow the stagnant economy and provide jobs to a generation of frustrated, despondent Egyptians.  In short, the Mubarak regime is responsible for many of the problems that beset it, and has outlived its usefulness as an American partner. 

Fortunately, even despite Mubarak’s misrule and repression of secular pro-Western reformers, the Muslim Brotherhood is only supported by a minority of Egyptians and has been a marginal player in the current protests.  The vast majority of the protestors are not calling for Shari’a law, but rather desire for themselves the same things that America stands for – liberty, opportunity, and prosperity. Such as the ability to choose their own government, to think and speak freely, and to provide a better life for themselves and their families.  Insofar as any of them express anti-American sentiments, these stem from their frustration that the Obama Administration has appeared to be on the side of their oppressive government rather than on the side of their freedom.

Moreover, as understandable as the protestors’ grievances are, the current disorder is very worrisome and threatens to spiral out of control.  Far, far preferable would have been an orderly, gradual transition to democracy willingly overseen by Mubarak over the last several years.  Instead he chose the baser path of tightened repression and sham elections, while the Obama Administration stayed largely silent and reduced its already meager support for Egyptian democracy advocates.    

Now, for GOP leaders, Egypt presents an opportunity to advance American interests and values – by supporting the aspirations of Egypt’s freedom advocates.  Should a new Egyptian government emerge soon, its leaders will remember if America supported their goals during their hour of need.

What should leading Republicans say?

1. Encourage the Egyptian military to keep playing its positive role in preserving order and protecting citizens from harm – and warn the military not to turn and use force against the reformers;
2. Express unequivocal American support for human rights, religious freedom, and democratic government in Egypt;
3. Urge the Obama Administration to work publicly and privately for a transition to democracy in Egypt through an interim caretaker government and a commitment to free and fair elections soon.    

Egypt is in the crucible, and the coming days will determine if the country descends into further chaos, violence, and even state collapse, or if order can be restored on a clear path to a democratic government.  Republicans should do all they can to support the latter.

Paul Revere: Republicans should hold a hard line on deep spending cuts in exchange for the debt ceiling hike

Paul Revere is in his 20s, and is concerned about the impact of the growing national debt on his generation. Not much younger than when his namesake made his historic ride, he works in the wake of a tea party to warn his fellow patriots of impending doom - unless they exercise the courage to act now. He will be posting regularly at ConservativeHome on spending issues to encourage his fellow patriots to find that courage.

With America’s national debt approaching $14.3 trillion, and requiring a hike of the debt ceiling to prevent a defaulting of America’s debt, the political parties and casts of characters are taking up positions for potentially a major showdown in late February/early March. While the opinions vary, the Chairman of the White House Council of Economic Advisers, Austin Goolsbee, laid down the gauntlet to Republicans a few weeks ago. According to Goolsbee, playing chicken with the debt ceiling is “insane.” This sets a rather strong challenge to Republicans, who I am certain will be portrayed as irresponsible by liberal media sources if they don’t kowtow to President Obama’s wishes.

Both parties are responsible for the skyrocketing national debt. Democrats created Social Security, Medicare and Mediciad, the major drivers of our national debt in the long run. Republicans refused to hold the Defense Department to the same efficiency standards they claim to want to hold other departments to, and created an unaffordable drug program in 2003. Both parties have allowed corruption and incompetence to reign in Iraq and Afghanistan, conflicts that will cost America trillions in the long run. Both parties also supported TARP, a major bailout of GMC and the first stimulus under Bush, and the Democrats pushed the 2009 stimulus through with some Republican support.

It is with this backdrop that the debate over raising the debt ceiling arrives. With the gauntlet thrown by Goolsbee, Republicans have to respond with decisiveness and intellectual honesty. With three options available— raise the debt ceiling with no cuts; compromise on the ceiling rise with spending cuts; or cut so much raising the debt ceiling is merely an academic question— Republicans have to sit down and make some real tough decisions about the future of the party, its members, and the nation as a whole. Below is my take on the three options available to Republicans:   

 1. Raise the debt ceiling with no spending cuts - otherwise known as political suicide and more signs they are not serious about spending. If they do this, both parties will likely be severely diminished in power by 2015 as our spending trajectory gets steeper. I predict that at a minimum a strong third party will come to fruition, and at the other end of the spectrum rebellion and/or a fiscal implosion will happen.

2. Compromise with Democrats - say that they will raise the debt ceiling if $500 billion (slightly under 25% of the rest of the fiscal year’s budget) is cut out of the budget this year and get a public promise out of the president and the Congressional Democratic leadership to balance the budget by the time October 2012 rolls around. Senators Coburn and Paul (R-KY) have offered their votes only if $300 billion is cut from the budget and “a balanced budget rule” is attached to raising the ceiling, respectively. While neither of these options is good enough, they are responsible steps in the right direction, and Paul’s recent release of $500 billion in cuts is reason for some optimism. Unlike some Republicans who oppose raising the debt ceiling out of the same partisan reasoning then-Senator Obama (D-IL) and then-Senate Minority Leader Reid (D-NV) used in 2006 against raising the debt ceiling then, these senators are acting like the responsible leaders we the people hope all politicians will be. With just the spending cuts and entitlement and defense reforms I have offered cutting $500 billion this year and balancing the budget by 2012 is a very doable pair of goals, and I think Republicans should use them to the advantage of the party and the nation.

3. Don't raise the debt ceiling at all - which means the nation defaults OR Democrats are forced to work with Republicans to cut enough money out of the budget to not default for the rest of the fiscal year. Given that we will put $300 billion into the debt in three months, this means we would have to cut at least $800 billion to have a tiny amount of breathing room until the end of Fiscal Year 2011s. 

I'm torn on the last two options. I like #3 best, but it would simply be a political impossibility. Cutting 40% of the rest of the year’s budget is something that cannot work with so many politicians more willing to be re-elected than help the country. I think #2 is the most workable option. Politically it gives Republicans breathing room public relations-wise with both moderates and the Tea Party. It also, most importantly, gives the nation some breathing room while its leadership and grassroots activists find ways to bring the scope of government at least to affordable levels, if not to the small size at which it belongs.

The flaw with #2 is the same one Peggy Noonan noted helped create the Tea Party Movement – compromise is usually more liberal than conservative. In this case, however, I think compromise works in the favor of Republicans, the conservative movement and America. 

The real problem with rising health care costs? Purely preventable diseases. Better health, not just better health care, is the challenge of our times.

Dr. Gratzer, a physician, is a senior fellow at the Manhattan Institute. Most recently, he is the author of Why Obama’s Government Takeover of Health Care Will Be a Disaster, part of the Encounter Books Broadsides series.

This is the fifth and final in an exclusive, five-part series by Dr. Gratzer on why the debate over Obamacare is just beginning, what a Republican strategy should look like over the next two years, and what real health reform in America should consist of. To get up to speed, read parts one, two, three, and four.

The discussion in Washington has focused now for almost two years on health care – how to regulate it, reform it, and pay for it. That discussion has been captivating if narrow. The President focused on bending the cost curve, bringing coverage to millions, and making insurance companies more accountable. Here’s what didn’t make that bold list: addressing rising obesity rates, helping Americans live longer, or reducing morbidity. The March 23 signing speech, for the record, didn’t promise better health. The myopia has been bipartisan. Critics attacked his ideas because they could empower government bureaucrats and grow future deficits; Republican proposals never talked about improving health outcomes either.

We live in an era of medical miracles: childhood leukemia, once a death sentence, is now curable; polio is confined to the history books; death by cardiovascular disease has dropped by two thirds in the last sixty years. Yet, for all the medical science, Americans are profoundly unhealthy. America doesn’t have an obesity problem. It has a bad health problem – and obesity is just one aspect of that. 1 in 4 adults is obese; 1 in 5 smoke; 1 in 3 don’t take the medications prescribed by their physicians.

We need to focus on health, not just health care. The fix will be real only when individual Americans have more of an economic incentive to take care of their own health, and less incentive to shift the high cost of their own irresponsible health-care decisions to others within their insurance pool. American health care and health insurance must promote better health, and not just promote better health care. The fastest, cheapest and most effective way to treat preventable diseases is to prevent them in the first place.

It’s important for Republicans and moderate Democrats to understand what liberal Democrats refuse to acknowledge. Namely, the great new driver of rising health care costs isn’t exciting American technology. It’s not the high cost of drugs, although this certainly contributes. No, the fastest rising pressure on health care costs that can be controlled is the rising cost of entirely preventable diseases to the system.

Look at health care as a health system, and not as a sick care system, and we are increasingly our own worst enemy when it comes to health risks and diseases. Smoking, obesity, binge drinking, drug use and preventable cancers are collectively killing the American health consumer faster than many of the unpreventable headline diseases of the last century. Estimates price the cost of obesity to the American health care system at $167 billion this year – and that figure is certain to rise as obesity rates skyrocket across America.

A new liberal ideology is emerging to explain away this spike in preventable diseases as something that Americans are helpless to prevent. Worse, millions of Americans are not getting the message that their behavior is killing them: a recent study published in the Archive of Internal Medicine found that 8% of Americans in a test group had “body size misperception” – meaning, they wrongly believed that their own medically unhealthy weight levels were actually healthy and normal. The vast majority of obese Americans in the study, incidentally, saw no reason to lose weight. Sometimes blindly and sometimes carelessly, Americans are choosing self-gratification and self-destruction every day. And everyone paying into government and private insurance systems shares in the ultimate economic price.

Americans should be free to be as gluttonous as they choose to be. But should everyone be equally free to expect subsidies for the consequences of those self-destructive choices? America’s leaders should be free to call attention to those consequences, to encourage people to make better choices, and to reform policies accordingly. And make no mistake: the national obesity epidemic has consequences. The average American is now too fat to fight a war, too fat to be a productive employee, and fat enough to be a net burden on the American taxpayer over their lifetimes.

It’s time for Republican leaders to be bold enough to lead Americans in the other, healthier direction. It’s time to lead Americans in a personal, voluntary effort to be as healthy and fit as Americans were in previous generations – or at least, as healthy as most Americans were. All that’s needed is a return to 1960s portion sizes, calorie counts and levels of exercise. National sacrifice isn’t needed to save billions and save lives; all that’s needed is a bout of national moderation.

Shifting from a sick care agenda to a health care agenda will take time. But short of actually wiping out Medicare and Medicaid, it’s the only strategy that will save real health care dollars in the long run 

An obvious place to start is with obesity in the youngest generations, since the costs of that epidemic will be with us longer than for the elderly. Since millions of American children now pick their values up from schools, classmates, and corner stores, a little government leadership within the budget system may be important in the form of better school lunches, attacking inner city ‘food deserts,’ or promoting fitness in schools where physical activity has been slashed to a minimum in recent decades.

With this strategy, Republicans have a chance to carve up ObamaCare, yet replace it with a positive, health-centred plan instead. It’s a strategy the President’s allies will find it hard to criticize. It’s a free-market strategy Republicans can rally around. And most important, it’s a strategy that can actually deliver real savings and healthier lifestyles to the ordinary American health consumer.

What we call "drastic measures" may just be the new normal we need to embrace

Paul Revere is in his 20s, and is concerned about the impact of the growing national debt on his generation. Not much younger than when his namesake made his historic ride, he works in the wake of a tea party to warn his fellow patriots of impending doom - unless they exercise the courage to act now. He will be posting regularly at ConservativeHome on spending issues to encourage his fellow patriots to find that courage.

Freshmen Members of Congress often talk big and carry a small stick. Senators Pat Toomey (R-PA) and Rand Paul (R-KY) speak big and carry a gigantic stick. Since entering office earlier this month, both members have put forth legislation that would do great things for the conservative movement and America as a whole.

What are these drastic measures they wish to take? Paul is targeting $500 billion in spending (seen in some detail here) between now and the end of the 2011 fiscal year, and Toomey has put forth legislation that would allow the debt ceiling to stay in place while the Treasury prevents a meltdown for much of the rest of the 2011 fiscal year.

Paul’s ideas don’t even really touch health care or defense spending, and ignore Social Security spending, showing what just how much inefficient (immoral?) spending there is in our federal government. Hopefully, these will come in another bill. Toomey’s idea, meanwhile, proves the lie behind the liberal claim that conservative fiscal discipline will send America into default. Additionally, Toomey’s bill would dovetail nicely with Paul’s ideas; the (admittedly small-ish) RSC Spending Reduction Act cuts; Congressman Ron Paul’s audit efforts against the Federal Reserve; and Senator Coburn’s (R-OK) health care and defense spending efforts.

America is close to its financial tipping point. Toomey and Paul clearly intend to make the most of their first six years in Congress, the political consequences be damned, in order to save the country. I hope they continue to act like this — their ideas will be called "drastic," but we have to ask: can we afford NOT to push "drastic measures" such as these?  

Phil Levy: Four reasons why demonizing trade is costing American workers their jobs

Philip I. Levy's work in AEI's Program in International Economics ranges from free trade agreements and trade with China to antidumping policy. Prior to joining AEI, he worked on international economics issues as a member of the secretary of state's Policy Planning Staff. Mr. Levy also served as an economist for trade on the President's Council of Economic Advisers and taught economics at Yale University. He writes for AEI's International Economic Outlook series. 

In a companion piece, I argued that it was strongly in the U.S. national interest to pursue a policy of open trade and to take the lead in bolstering the global trading system. But enthusiasm for such prescriptions is often tempered by concern about what open trade has done to American labor. Prominent voices have claimed that trade agreements have cost American jobs and exacerbated wage inequality. These claims cause particular alarm in a time of high unemployment and have taken a toll on public support for trade.

In fact, there is little evidence to support the claim that trade is responsible for job woes. The public has been misled. The misplaced blame is particularly dangerous because it offers voters false hope. If only we block trade from China, or repeal NAFTA, or avoid an FTA with Colombia, the critical voices seem to suggest, we can return to the halcyon days of a labor market in which workers with limited educations enjoyed lifetime employment, good pay, and generous pensions. Not true.

Today, four arguments about what really ails the American labor market and the role trade plays.

1. Trade deficits are not driving job loss and trade is not the main driving force behind wage inequality. The trade deficit ballooned at a time when the economy was booming. That’s not a coincidence. When people feel flush, they consume more. Some of that new consumption is domestically made, but some comes in as imports. When the United States plunged into the most recent recession, unemployment soared and consumers recoiled in horror, the trade deficit plunged, too. That would seem to belie facile arguments that equate every billion dollars of trade deficit with thousands of jobs lost. The question of rising American inequality and job tumult is more subtle, and the voter can easily be forgiven for confusion. Even in healthier economic times, there is enormous turnover in the American labor market and concern that conditions have worsened for workers at the lower end of the pay scale. There are three prime candidates for roiling the job market: technological change, domestic competition, and international competition (trade). The only one that can be blocked by policy is the last, but most of the evidence points toward the first. Technological change is what leaves domestic manufacturers looking for skilled machine operators with math training while laid-off factory workers with less education search in vain for jobs.
2. Misreading the causes of labor’s discontent can lead to policies that are counterproductive. Consider two popular targets of anti-trade fervor: service outsourcing and American investment abroad. It is tempting to think foreign call centers are stealing jobs from Americans and that U.S. multinationals are opting for foreign labor instead of U.S. labor. Yet studies of outsourcing have shown that it creates American jobs, on net, by lowering business costs. On foreign investment, Dartmouth’s Matt Slaughter concludes: “Academic research…has consistently found that expansion abroad by U.S. multinationals tends to support jobs based in the U.S. More investment and employment abroad is strongly associated with more investment and employment in American parent companies.”
3. The American job market of the future looks to be a dynamic one, in which workers hold multiple jobs over the course of their careers. The misguided focus on trade as a culprit has distracted from the need to create institutions that address this unsettling dynamism, such as savings schemes, effective worker retraining programs, safety nets that work, and health insurance that is not dependant on a prolonged stint with a single employer. Instead, we have excessively narrow programs to provide trade adjustment assistance, as though only trade-driven job loss required a response.
4. In the long run, the well-being of American workers will depend on their education and productivity. The President, in this week’s State of the Union address, described the recent economic progress of India and China and said “We need to out-innovate, out-educate, and out-build the rest of the world.” Yet this language of competitiveness misleads. It suggests that if only these new competitors had remained quiescent, we could rest on our laurels. In fact, American prosperity would depend on American productivity in any case. We certainly should improve our educational system and business climate, but we should do it for the right reasons.

It is worth sorting this out, not only because doing so will build support for an essential program of trade leadership, but also because a clear articulation of these points will demonstrate that Republicans have a positive vision for how to prepare the country for the economic challenges of the 21^st century.

These issues need not be partisan. If Democrats and Republicans can work together to effect these changes, so much the better. We have yet to see leadership, however, that makes this case. Republicans have the opportunity to move beyond stale and defensive rhetoric on trade and push a broader, more thoughtful program for American prosperity. 

Part 4 of Dr. David Gratzer's series on the future of the GOP battle with Obamacare: the "12 cent problem"

Dr. Gratzer, a physician, is a senior fellow at the Manhattan Institute. Most recently, he is the author of Why Obama’s Government Takeover of Health Care Will Be a Disaster, part of the Encounter Books Broadsides series.

This is the fourth in an exclusive, five-part series by Dr. Gratzer on why the debate over Obamacare is just beginning, what a Republican strategy should look like over the next two years, and what real health reform in America should consist of. To get up to speed, read parts one, two, and three. Part 5 will appear on Friday.

At the end of the day, Republicans and moderate Democrats need to remember one thing: the Administration is right – there really is a problem with American health care. With each passing year, costs rise without a clear increase in the overall value of care. The Administration may be wrong in its prescription, but the diagnosis is solid.

Since Inauguration, the Administration has attempted to explain to Americans why health costs keep rising. The President toured the Mayo Clinic, one of the best hospitals in the world and noted that these physicians are on salary. Translation: your fee-for-service doc is greedy. The President used his Congressional address to criticize the dearth of competition in the health insurance industry. Translation: insurance companies are greedy (and running a cartel). The President has spoken of two pills –“a red pill and a blue pill” – that are equally good, but one is half the price. Translation: drug companies are greedy.

If greed is the trouble, the White House seeks to address these woes with a raft of new regulations and rules. ObamaCare will cut the profitability of pharmaceutical companies; it will create a committee to pay doctors for what the committee views as quality medicine; it will regulate insurance companies right down to the percentage of profit they can make on a dollar of revenue.

But the problem with American health care isn’t greed, its structural. Food and clothing are organized around the profit motive, too. And despite the hyperactivity of the White House, at no time have they contemplated initiatives to regulate department stores or the nation’s grocery chains.

The problem, ultimately, is the number “12.”

A bit of background: American health care is an accidental system. Private coverage – the type most Americans have – has its origins in the wage controls of the Second World War as employers offered rich health-insurance benefits in pre-tax dollars. Public coverage like Medicaid and Medicare, on the other hand, takes its inspiration from the Beveridge report in Britain, drafted in the early 1940s; Lord William Beveridge believed in zero-dollar health care – that people ought to pay nothing at the point of use. Today’s American health care fuses these two systems, but with a common economic flaw: people are overinsured, paying pennies directly on every dollar of health service they receive.

The end result: for every dollar spent on health care in the United States, just 12 cents comes out of the individuals’ pockets. Imagine what food costs might be if your employer paid 88% of your grocery bill or what a trip to Saks might be like if your company covered the vast majority of the cost of the shopping spree.

Far from addressing the 12 cent problem, Obamacare exacerbates it with further subsidies and grants, which only increases the share that insurers will pay. Americans are being pushed further from the financial consequences of their health-care decisions.

Republicans and moderate Democrats can seek to tame the worst aspects of ObamaCare, but the overall problem of American health care remains. In the coming years, the prescriptions need to be bold: strengthening health savings accounts; empowering patients with meaningful health information; moving Medicaid to the states to allow experimentation; recognizing the overly generous commitment of Medicare and tempering it.

Phil Levy: Four reasons why the new GOP majority needs to support a bold trade agenda

Philip I. Levy's work in AEI's Program in International Economics ranges from free trade agreements and trade with China to antidumping policy. Prior to joining AEI, he worked on international economics issues as a member of the secretary of state's Policy Planning Staff. Mr. Levy also served as an economist for trade on the President's Council of Economic Advisers and taught economics at Yale University. He writes for AEI's International Economic Outlook series.

This is the first of two posts by Dr. Levy on why the GOP should embrace a bold trade agenda. The second post will run on Thursday.

As new GOP members of Congress settle into their offices and assemble their staffs, they are already feeling pressure to take a stance on international trade. The House Republican leadership, particularly on the Ways and Means Committee, has made clear that it supports an ambitious agenda of trade liberalization. The White House has called for the U.S.-Korea Free Trade Agreement to be passed by mid-summer. At the same time, FTA opponents have begun to target conservatives with warnings that linking the Korea agreement to a variety of imagined evils.

For many new conservative arrivals in Washington, the trade issue is a difficult one. It was only rarely the subject of campaigning last fall and members of Congress who won on domestic issues may never have dealt with the arcane issues of World Trade Organization dispute settlement or non-tariff barriers. These members will likely be aware of conservatives’ long-standing principled attachment to free trade. They will also note growing public wariness about the effects of trade and ‘outsourcing’ on jobs. 

In fact, the trade issue presents an opportunity for the GOP to show political courage and articulate a vision for American economic leadership in the 21^st century. It need not be a partisan vision, but there is a leadership vacuum on trade now that is begging to be filled.

To carry this mantle, it is important to see not only how a vigorous trade policy benefits the country as a whole, but how it is integral to preparing individual American workers for the challenges they face in the economy of the future.

On Thursday, I will examine trade and worker insecurity here at ConservativeHome.  Today, I focus on four reasons why an open trade policy is good for the United States.

1. This is America’s economic future. When we produce goods and services, they are sold either at home (domestic consumption) or abroad (exports). If we are to grow the economy while paring back excessive consumption, we need to expand exports. As the Obama administration has discovered, this global rebalancing is not easy, but it is necessary and the country will need to have access to an open, rules-based trading system if it is to succeed economically.
   Right now, U.S. trade deficits are the necessary counterpart to U.S. borrowing from the rest of the world. In years to come, when the world begins to demand repayment, it will be cashing in its dollar bills and government bonds to get American goods and services.
2. We live in an integrated global economy. The days are long gone when one country made wine, another made cheese, and they sent them back and forth on tall sailing ships. Now, leading manufacturers use components and tools from all around the world. It is not possible to have world-class businesses if they are shut off from competition and cannot benefit from the best supplies the world has to offer. Some of those top-notch supplies are certainly made in the United States, but others will only be available from abroad. For too long, an antiquated view of modern commerce has bred a mercantilist approach, under which exports are glorified and imports are shunned. The country benefits from both.
3. Free trade follows directly from the principles of limited government, free enterprise, and entrepreneurialism. Just as open domestic markets reward effort and ingenuity, so do open global markets. American manufacturers, farmers, and service providers have done exceedingly well in these competitions. Despite its substantial borrowing-induced trade imbalance, the United States remains one of the top exporting nations in the world.
   Just as there are clear parallels between the virtues of open markets at home and abroad, there are equivalent perils to government intervention. The alternative to open markets is a policy that erects barriers to competition. In practice, the erection of these barriers offers opportunities for influence very reminiscent of earmarks. The difference is that the transfers go directly from the pockets of jilted consumers to favored industries, without passing through federal coffers.
4. The distinction between global economic leadership and foreign policy leadership is small and shrinking rapidly. The quest for economic prosperity is so central to the mission of governments around the world that it has become increasingly difficult to have warm diplomatic ties but frosty economic ones. This is a major reason the Obama administration ultimately backed the Trans-Pacific Partnership talks begun by President Bush in late 2009 and then moved to pass the KORUS FTA in late 2010. The same arguments apply with Colombia and Panama and at a global level as well. It was no accident that G-20 gatherings to address the recent financial crisis repeatedly featured vows to bolster the global trading system. Unfortunately, those vows have not been fulfilled. That, in no small part, is because of a void in global trade leadership left as the United States has tried to adopt a diminished role. This is a prime area in which the world looks to the United States for leadership and judges the country on the basis of its ability to fill that role. In 2008, a popular theme in the U.S. presidential campaign was the restoration of America’s popular standing in the world. The United States will not enjoy that esteem until it once again takes up a leadership role in trade.

The danger of portraying trade this way is that it can come off as bitter medicine – you swallow it with a grimace, only because you’re told it’s good for you.  In reality, many of the downsides attributed to open trade are inescapable features of any modern economy. Thus, crafting a sensible approach to meet this challenges in the trade context is an essential part of crafting a broader, workable vision for American economic success. 

Paul Revere's wish list of politically impossible spending cuts that should be debated anyway

Paul Revere is in his 20s, and is concerned about the impact of the growing national debt on his generation. Not much younger than when his namesake made his historic ride, he works in the wake of a tea party to warn his fellow patriots of impending doom - unless they exercise the courage to act now. He will be posting regularly at ConservativeHome on spending issues to encourage his fellow patriots to find that courage.

Between my low-hanging-fruit proposals for spending cuts, and my mid-term, more aggressive suggestions for additional cuts, I identified several hundred billions of dollars in various reforms and cuts to the annual federal budget. Today I will finish my spending series with  my so-called “wish list” of ideas that are a) controversial, and b) ideas that would likely send a politician’s career into a deep, dark hole. Which is, of course, why they need to happen— if eliminating the deficit and gouging into the debt was politically easy, it would have been done already.

I hope you have enjoyed the series, and I welcome your comments and thoughts after reading the following. Enjoy: 

Eliminate the Department of Education and the Transportation Security Administration. According to its website, “the Education budget was $63.7 billion in FY 2010, with $96.8 billion in discretionary funding provided under the American Recovery and Reinvestment Act of 2009.”

The Department of Education was created in January of 1980 by then-President Jimmy Carter. Since its creation America’s educational quality has dropped precipitously; the cost per pupil has skyrocketed; and we have failed to stay ahead of the international curve. In short, to quote Rachel Sheffield of the Heritage Foundation: “This process of taking taxpayer money from states, filtering it through the DOE, and then sending it back to states is inefficient and has done little to boost academic achievement.”

In a global economy such as ours, I could support a Department of Education with a small group of employees. These employees would have one job: create a national test, administer said test and correct said test. That is it. Given the utter failure of the ever-more-expensive Education Department, however, I’d rather err on too-small a federal bureaucracy than too big a one. We can always correct things later, and it’s not as if we would be missing out on any grand successes from the Education Department.

Revamp military contracts entirely, including no more non-competition contracts. Additionally, cut out the middlemen who skim percentages off the top of their contracts before subcontracting to yet another middleman who does the same thing. Our government must improve its accountability to its own citizens. While I don’t necessarily support everything brought up by these Members of Congress, Barney Frank (D-MA) and Ron Paul (R-TX) have found $100 billion to cut each year for a decade, and Coburn wrote a devastating paper showing how America is getting less for more with our defense spending in a variety of areas.

Foreign policy hawks strongly and articulately have decried cutting defense spending. However, Secretary Gates’ proposed savings will perhaps save over $20 billion per year – assuming Congress listens to his recommendations for the next five years - and I encourage you to read what Victor Hanson wrote in a November 2010 defense of defense spending:

After all, the United States will spend over $680 billion on defense this year alone — slated to rise to $712 billion next year — and well over $1 trillion when you include defense-related expenses that are not counted in the official Pentagon budget. Depending on how one categorizes the figures, defense spending now represents over 19 percent of the federal budget and is nearing 5 percent of the nation’s GDP. Over the last nine years, the Pentagon’s budget has grown on average by about 9 percent each year, more than triple the rate of inflation — quite apart from the supplementary spending on the Afghanistan and Iraq wars.

$400 billion of the defense budget is contracted work, and there is no question much of that money is not used effectively. Additionally, Hanson was intellectually honest enough in his defense of military spending to note its exorbitant spike in the last decade. Do foreign policy hawks really think making defense contracting 10% more efficient (which is not the same as the semi-arbitrary cuts proposed by the Deficit Commission) through competition and accountability will actually hurt America’s security or our people in uniform?  

Part 3 of Dr. David Gratzer's series on the future of the GOP battle with Obamacare: 3 strategies for getting rid of the law's worst parts

Dr. Gratzer, a physician, is a senior fellow at the Manhattan Institute. Most recently, he is the author of Why Obama’s Government Takeover of Health Care Will Be a Disaster, part of the Encounter Books Broadsides series.

This is the third in an exclusive, five-part series by Dr. Gratzer on why the debate over Obamacare is just beginning, what a Republican strategy should look like over the next two years, and what real health reform in America should consist of.

Part 1 appeared here and part 2 here last week. Parts 4 and 5 in Dr. Gratzer’s series will appear here at ConservativeHome on Wednesday and Friday of this week.

Full implementation of Obamacare will not happen.

But let’s be clear: if a complete Democratic win on health care is unlikely, Republicans must accept that their wish for full repeal will be limited until at least 2012. As robust as the November victories were, the GOP still lacks enough votes to overturn a Presidential veto. And, into the future, full repeal will be difficult since Republicans will not see a Filibuster-proof majority in the Senate for years to come.

If the debate will stretch over the coming years, there is opportunity to reshape and ultimately win that debate – but only if Republicans and moderate Democrats are focused and disciplined.

In the next three posts, including this one, I will lay out a three-step agenda: first to change the worst aspects of ObamaCare, then to push meaningful, patient-centered reforms for health care, and then to better our nation’s health (not just our health care).

So, today, I focus on the first strategy - changing the worst aspects of the law.

Opponents of the plan in any new Congress should be open to opportunities for incremental success that can outflank the President’s veto – and provide real hope for American patients, families, and medical professionals in the process. The best approach? Steal a page from the liberal playbook. For years, liberal Democrats have used opportunities to eke out small but significant victories in their quest to expand government’s influence in health care. Thus, they have looked to quietly amended legislation (and not just health-care legislation) with tweaks and used budget battles to push their agenda.

Republicans and moderate Democrats can easily focus on three of the most significant – and controversial – aspects of the law: a tax on medical devices that will impede innovation, a new technocratic committee to “guide” health care spending; health-insurance exchanges meant to spur competition that will instead strangle it with heavy regulations. 

First, Congress should take a scalpel out and cut away at the medical device tax, a new tax levied on American companies that design, manufacture, and distribute surgical instruments, MR scanners, and countless other tools used in the practice of modern medicine.

The research-intensive, high-wage sector produces $200 billion in domestic and export activity for the United States. Republican and moderate Democrats alike should be able to rally around the total elimination of this improvised, short-sighted tax on jobs and innovation. Since ObamaCare is so expensive, the device tax actually represents a tiny fraction of the funds needed to pay for it. But in strategic terms, the tax could cost the economy a great deal by making American medical devices more uncompetitive, just as Chinese and European device industries are running at the heels of this successful American industry.

Second, Congressional leaders should consider wiping out IPAB, or the Independent Payments Advisory Board.

IPAB is really a spin-friendly name for a Medicare rationing panel, designed to bring experts together to tell your doctor how to save money from the safety of a Washington conference room. Britain’s experience with a similar panel was harsh, since the only practical way for the National Institute for Health and Clinical Excellence to achieve its mandate was to ration drugs and treatments.

Washington needs to learn: health-care systems don’t respond to top-down innovation. Many liberal economists with no frontline health experience trumpet the Board as a “game changer” that will reverse the deficit painlessly. But Congress knew better. The panel’s value was already so oversold that it was only budgeted to save a (relatively) modest $15 billion by the end of 2019 in the final plan. Yet the danger that IPAB will grow into a rationing machine remains. As former Senate Majority Leader Bill Frist asked rhetorically in a recent interview: “Is it too much power to allow 15 unelected individuals the absolute authority to unilaterally dictate with the force of law how to cut Medicare for as much as 2% a year every year?”

Kill the Board off in 2011. 

Third, Republicans and moderate Democrats in Congress should focus on an immediate priority: health-insurance exchanges. 

The plan adopted in the Patient Protection and Affordable Care Act calls for state-based exchanges, not a national exchange – meaning markets are exactly as uncompetitive as they were before the Act was passed. Worse, the Act adds new federal benefit mandates, adding new costs to future insurance plans with little value to most Americans. Finally, the Act does nothing to reverse the rapid growth of state insurance benefit mandates. To take just one example of dozens, Wisconsin already had 34 separate benefit mandates in 2009. But this summer, legislators added even more rules. Among them: a law forcing all health insurance plans to charge for and cover birth control costs – even if those insured were seniors or middle-aged couples who don’t need birth control coverage.

Actually, it’s worse: the state-based health-insurance exchange could easily lead to a single-payer option in many states. “There is no specific language in [the president’s health plan] that would prohibit an exchange from denying certification to every private plan that applies,” the analysis finds. Who authored this damning report? The Congressional Research Service.

What’s to be done? The President himself acknowledges the lack of competition. Yet his own plan does nothing to address such anti-competitive regulations – unless you believe the introduction of fifty taxpayer-funded websites is somehow going to make intra-state markets more competitive. The reason millions of Americans can’t even access a basic care plan isn’t the lack of a website to buy it from; it’s the lack of a basic care plan to buy. Regulations force insurers to sell Porsche-level coverage to Americans, when what most people really need is an opportunity to buy a late-model Ford.

If a true national health market is off the table, perhaps a set of regional or multi-state markets could overcome a veto. Congress could create the legal room (and maybe even some incentives) for states to harmonize down their insurance mandates to a similar standard to form state market alliances. Where efficient harmonized rules are achieved, insurance could then be easily purchased across borders.

It’s a short drive from Kansas City, Missouri to Lawrence, Kansas, and the health needs of a Kansas City data entry clerk aren’t likely to be much different from those of a clerical assistant in Lawrence. There’s no reason why insurers shouldn’t be allowed to compete by offering insurance to both on the same basis.

John Fonte: America Should Not Oppose the Re-Democratization of Europe - Part 3 of 3 in our mini-symposium on American sovereignty and exceptionalism

John Fonte is a Senior Fellow and Director of the Center for American Common Culture at Hudson Institute.

Part 1 in this mini-symposium appeared here Wednesday, and Part 2 appeared here yesterday.

Since the early days of the Cold War, American foreign policy has always promoted increased European political integration. In the second decade of the twenty-first century, this “EU over democratic nations” approach to Europe serves neither American interests nor American values.

When considering American interests, a truly “common European” foreign and defense policy would, as a practical matter, inhibit not facilitate serious support for tough-minded American initiatives including military, intelligence, and economic operations against our adversaries. A common EU approach means that support for American policies would, by definition, fall to the lowest level of support that all EU members could agree upon. In contrast, democratic nation-states in Europe, acting as independent states, (e.g., Britain, Poland) have been among America’s most reliable allies. 

Clearly, American values are consistent with the protection and promotion of self-government, liberty, and liberal democracy. Since Joschka Fischer’s 2000 Humboldt University address, the leadership of the European Union has admitted to a “democratic deficit.” Unfortunately, the current euro monetary crisis has only encouraged EU leaders to seek greater “integration” and thus expand their power at the expense of democratic states. At the same time, across Europe today, there are significant forces (including America’s best friends in the British Conservative Party) who are attempting to re-democratize EU institutions and return power to democratically elected, accountable national governments.

As this conflict between the forces of democratic sovereignty and post-democratic EU elites escalates (as it surely will), the United States should not “weigh-in” on the side of the EU centralizers against those Europeans seeking greater self-government and democracy. Specifically, there should be no official support (financial or political) by the US to prop-up an ill-conceived supra-national Euro-monetary zone. In sum, consist with our values and interests, the United States should not oppose the coming re-democratization of Europe.