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Politics : American Presidential Politics and foreign affairs -- Ignore unavailable to you. Want to Upgrade?

To: E. T. who wrote (27085)	3/25/2008 2:18:02 PM
From: TimF	Respond to of 71588

Government spending in general pulls down the US economy (at least the portion of spending that isn't on important infrastructure or generally keeping the peace and settling disputes so that the private sector can create wealth without being severely disrupted). So yes Iraq does pull down the US economy, but not as much as the other 95% of government spending.

To: E. T. who wrote (27085)	3/26/2008 10:02:17 AM
From: Peter Dierks	Read Replies (2) \| Respond to of 71588

I have to admire you and the committed leftists. When things are going well you find a new angle to try to criticize success. It was sectarian violence and "journalists" reporting the violence custom delivered to the Green Zone where they were cowering. That problem was fixed by the surge so then Iraqi political progress was not fast enough. That problem has been mitigated so now it is the cost of supporting freedom. Did these jokers ever complain about the cost of supporting Germany, Japan and our many other allies through the Cold War?

To: E. T. who wrote (27085)	3/29/2008 11:22:06 PM
From: Peter Dierks	Respond to of 71588

Bogotá Eyes the Irish Model By MARY ANASTASIA O'GRADY March 24, 2008; Page A14 When Colombia's trade minister visited the Journal's New York offices two weeks ago, the last thing I expected to come up in our conversation was Ireland. To my surprise, it was the first subject he raised. No sooner had Luis Plata sat down then he started talking about the Irish economic transformation -- from impoverished ugly duckling to swanky swan of Europe in just two decades -- and why a similar growth model is just what Colombia needs. Some of the necessary policy adjustments are already under way in Bogotá, he said, and with any success, the reforms can be deepened. But the big question mark is whether the U.S. Congress will approve the pending Free Trade Agreement. The FTA, Mr. Plata explained, is as important to Colombia's growth as European Union membership has been to Ireland's. To think that Democrats might undermine Mr. Plata's visionary agenda is troubling. In 2006, U.S. official development assistance aimed at alleviating poverty around the globe was $23.5 billion and it was pretty much money down a rat hole. That's because development requires economic liberalization, and leaders of poor countries have little incentive to disturb the status quo of monopolies and protectionism that put them in power. Their incentives are even less when rich-country handouts are flowing. Now along comes Colombia, with a leader -- President Álvaro Uribe -- who is willing to risk political capital to open domestic markets, cut taxes and spur competition in a bid to grow fast à la Ireland. All his government asks from Washington is two-way trade, but Democrats want to slam the door in his face. Before Mr. Plata became trade minister last year, he headed a government export agency. "We starting going to Ireland several years ago, he says, "because we were looking at countries around the world that had been successful in attracting foreign direct investment. What we found was that Ireland had lowered its corporate tax rate from 40% to 12.5%," and as a result "was attracting investment, had lowered tax evasion and had increased tax collection. We went back to Colombia and said, 'why don't we just bring [our corporate rate] from 38% to 12.5%.'" That wasn't a popular view with Colombia's treasury department. "It got me kicked out of their offices," Mr. Plata recalls. No surprise there. Bean counters in every treasury in Latin America have tax-cut phobia in their DNA. It explains why they often get jobs at the International Monetary Fund in Washington after the collapse of the governments they've served back home. At the fund they can put into practice their deeply held convictions that the only responsible fiscal policy is one built on a static analysis to discover the "right" tax rate. Embracing the notion that production creates its own demand, and that government revenues expand under a low-tax regime, is considered high-risk behavior. Mr. Plata is more sympathetic toward his treasury colleagues. He says that they have to balance the medium- and long-term benefits of tax cutting with the more immediate need to finance the government. Nevertheless, he was convinced that Ireland's experience could be applied to Colombia. Despite the initial reaction, his team "went to work" on the idea of attracting investment through tax cuts. In a perfect world, he would have won a flat corporate rate. But he had to compromise and instead came up with the "single-enterprise free-trade zone." It expands the low-tax treatment that companies receive when they are located within a "free trade zone" -- normally an industrial park -- to any company that meets certain investment criteria. Businesses (excluding mining and oil) that qualify by meeting minimum investment amounts and employment targets now pay a 15% flat tax instead of 33%. They also import all raw materials with no tariffs and pay no value-added tax. In addition to offering these tax advantages, the government is writing "stability contracts" to guarantee that the rules will not change when presidents do. It is also working to reduce the regulatory burden, since red tape is one of the most common complaints from foreign investors. The "single-enterprise free-trade zone" was launched last May, and to date it has attracted about $864 million in foreign direct investment. That number would be higher under a pure flat tax, and if Colombia is to rival the Irish miracle, it will have to move in that direction. But to persuade the treasury to adopt a broad-based flat tax, Mr. Plata will have to show some results with his initial experiment. That's why the FTA is so important. Companies investing in Colombia are looking beyond the domestic market and, as the minister notes, the recent dustup with Venezuela -- in which President Hugo Chávez threatened to close the border -- demonstrates the fragility of Colombia's export market. About half of Colombian exports now go to Venezuela and Ecuador. Access to the U.S. market and to duty-free imports from the U.S. are both crucial for producers. All of this begs the question of why congressional Democrats want to reject the Colombian trade agreement. They say it's because Mr. Uribe hasn't done enough to quell violence against labor leaders in the country. But murders are down dramatically, and as Mr. Plata says, "you can't make the case that killing the FTA will make things better." What will make things better is investment, which is fundamental to reducing poverty. Peru, Mexico and Central America all have FTAs with the U.S., which means that Colombia is automatically disadvantaged if it is denied one. And that could harm national security, which is so fragile. As Mr. Plata pointed out, "You don't win the peace with soldiers alone. You have to have a functioning economy." Surely Democrats can't be against that. Write to O'Grady@wsj.com online.wsj.com

To: E. T. who wrote (27085)	4/16/2008 9:33:46 AM
From: Peter Dierks	Respond to of 71588

McCain-omics April 16, 2008; Page A18 John McCain gave his big economic speech in Pittsburgh Tuesday, and many of the policies he proposed are laudable – the highlight being an optional flat tax for individuals. The weakness – especially heading into a general election amid a struggling economy – is that his pudding still has no theme. Being able to provide a guiding economic narrative is not just a matter of having a catchy soundbite, a la the "ownership society." It's essential for two reasons. First, it offers voters an explanation of how we got to the current moment, which means why the economy is struggling. The two Democrats already have their story: The 1990s were a golden age for the middle class that has been ruined by Republican tax cuts that rewarded only rich lenders and speculators. Mr. McCain needs a different policy narrative. Second, a guiding philosophy shows voters that future decisions will be made according to a set of principles they can understand. Example: A month ago, Mr. McCain gave a speech saying it wasn't the government's obligation to rescue those who took out loans they couldn't afford. Then last week he, ahem, supplemented that view by supporting an FHA-guaranteed loan-restructuring program in what looked to be a bid to compete with Democrats in the housing bailout auction. Without some guiding principles, voters are left to wonder whether Mr. McCain's next lurch will be to the populist left, where his instincts sometimes run, or to the fiscally conservative right, where he is also sometimes found. True to form, yesterday's speech offered support for both McCains. On the pro-growth side, he spoke out strongly for tax reform and endorsed the specific idea of an optional flat tax. "We are going to create a new and simpler tax system – and give the American people a choice," he said. Tax reform is precisely the kind of big domestic proposal that will let him plausibly campaign as the real agent of "change." And by making it optional, he can deflect Democratic claims that he'll rob Americans of their tax deductions. We were also glad to see Mr. McCain repeat his proposal to cut the corporate tax rate to 25% from its current 35%. This is a competitive necessity, as the rest of the world marches its way down the corporate Laffer Curve. The U.S. now has the second highest corporate tax rate in the developed world – after Japan – and every CEO we talk to says the punitive U.S. rate is one reason so much investment is being made overseas. The Senator also took a hard line on spending, saying "we need to make a clean break from the worst excesses of both political parties." And he put some specific ideas behind it: A promise to veto any bill with earmarks, and a "one-year pause in discretionary spending increases," except for defense and veterans. You can already hear the squealing on both of those from Capitol Hill, where spending increases have long been automatic and earmarks are nearly a matter of natural right. This attack on spending is credible given Mr. McCain's voting record, and it will serve as a contrast with either Democratic candidate, who will be promising vast new spending programs. Less credible is Mr. McCain's call for Washington to suspend the 18.4-cent-a-gallon federal gasoline tax between Memorial Day and Labor Day to help consumers hit by high oil prices. There are few tax cuts we don't like, but this one smacks of poll-driven gimmickry. If Mr. McCain wants to cut the price of gasoline, he should tell the Federal Reserve to stop fueling the commodity boom by cutting interest rates. Mr. McCain had almost nothing to say about prices and inflation, yet both are among the major concerns of voters in the polls. Like most of today's politicians, he seems to see gasoline prices only through the prism of energy policy. But the single major cause of the recent oil and gas price spike is monetary policy. Mr. McCain needs to find a way to tell voters, as Ronald Reagan did, that inflation is the great thief of the middle class and that he wants a Federal Reserve that will protect the value of the dollar and personal thrift. Which brings us back to the matter of an agenda without a theme. To win in November, Mr. McCain is going to have to do more than mimic the Democrats by blaming the housing bust on greedy lenders and rich Wall Street CEOs. If voters believe that narrative, they'll elect a President Obama. He needs to be the tribune of the middle-class family that pays its bills and didn't gamble on property. He'll also need to say more than that Democrats will raise taxes while he will cut them. He needs to explain to voters why low tax rates are vital in an increasingly competitive world; why they can help revive growth at home; and why growth and economic security go hand in hand with national security. In yesterday's speech, Mr. McCain tried to show voters he feels their pain. What they need and want to hear is a speech that shows that he understands and is willing to fight for the policies that produce prosperity. online.wsj.com