This opinion piece is provided as a response to Scott Nance’s article, The Democrats Promise a “New Direction” If They Win the House.
Mr. Nance outlines in his article the various agenda items presented by Democratic Representative, and Speaker of the House hopeful, Nancy Pelosi if Republicans manage to lose control of the House of Representatives in the November mid-term elections. I say if Republicans lose because a change of command in the House would be more a response to Republican scandal than a craving of the American people for a Pelosi / Murtha led chamber of Congress.
The normal Democrat talking points are listed in the article, and I chalk these up to typical Washington propaganda, of which both sides of the aisle are guilty. But several of the agenda items proposed by Ms. Pelosi must be countered in the interest of fairness and balance. I offer the following counterpoints as a means for opening real debate on important issues affecting American society, and not as a promotion or endorsement of the Republican Party’s agenda.
Ms. Pelosi stated that if the Democrats take control of the House, they will immediately work to raise the minimum wage, which has not seen an increase in nearly a decade. Many Americans see an increase in the federal minimum wage as a means to help the poor and raise the standard of living in America. But in reality, any rise in required wages does little to help anyone living in poverty and interferes with normal market processes.
The truth is that an incredibly small percentage of Americans work for minimum wage. Those most likely to be employed at the federal minimum rate include high school and college students and other part-time workers. Additionally, most of the bigger corporations, including Wal-Mart and McDonald’s, already pay starting wages that far exceed the minimum rate. Another important fact to note is that average earnings in America have risen steadily since 1995, without a corresponding increase in the minimum wage. So people are making more money without interference from the government.
Forcing businesses to pay employees a minimum rate is not without costs. Basic economic theory dictates that an increase in labor costs that is unrelated to market forces will encourage businesses, small and large alike, to let go of unnecessary workers, cut back on shift lengths, and delay potential new hires.
But even if companies decide not to cut back on labor costs to compensate for the increase imposed by the government, real costs will be passed on to consumers in the form of higher product prices. To think that Wal-Mart or any other company will simply absorb these increased expenditures out of goodness and kindness, or because they can afford it, is just pure foolishness.
The goal of business is profit, not welfare, and companies will take necessary measures to preserve profits. Otherwise, there is no incentive to be in business in the first place. Raising the minimum wage makes people feel like government is doing something to help the little guy, but in reality the little guy ends up being the one to get hurt by fewer employment opportunities and higher prices.
Another Democratic proposal outlined in Mr. Nance’s article is to repeal tax incentives so that more jobs will stay in the United States. Again, interfering with natural market forces is not without cost. Forcing companies to employ workers in the United States increases labor costs, forcing cuts in other areas. The likelihood is that fewer people will be employed and consumer prices will rise. Since it will cost more to produce items in the United States than in, say Mexico, the final price of the item will be higher. Again, companies will maintain desired profit levels by passing on costs to consumers. And such protectionist measures will be met with retaliation-in-kind by other nations, resulting in restrictive trade policies that ultimately limit consumer choice and product availability.
Ms. Pelosi also proposed increasing the maximum Pell Grant amount to $5,100, cutting interest rates on student loans, and implementing more educational tax credits, all while cutting the deficit. The only way to increase government spending while cutting the budget deficit is to raise taxes.
Ms. Pelosi proposes that any tax cuts or incentives be targeted at middle-class families. So who gets taxed? The rich, of course. It’s always popular, politically, to propose raising taxes on the people who can afford it the most. But this is economic nonsense. To begin with, the redistribution of wealth is unfair to the people who have earned that wealth. To say that Bill Gates should pay more in taxes because he can afford it is not only ridiculous, it is socialist. Mr. Gates, and all the other American millionaires and billionaires, already pay a disproportionate amount of federal taxes. And they earned the money!! What right does the government have to take it away and give it to someone else?
Data released in October 2005 by the IRS reveals that the top 1% of wage earners in the United States pay over 34% of all federal taxes. The top 5% pay nearly 55% of all taxes and the top 10% pay over 65%. Now let’s take this a step further. The top 50% of all wage earners, that’s half of all wage earners folks, pay almost 97% of all federal taxes. That means the top 1% of American wage earners pays nearly ten times the federal taxes that the bottom 50% pay combined!! And we want to tax them even more? Like it or not, the wealthy in this country are most responsible for investment and job creation. Taxing them more will have negative consequences for the economy as a whole, and typically the market has reacted poorly to federal tax increases.
Of course, Ms. Pelosi wants to help the middle-class because they are the ones hurting the most right now. According to Ms. Pelosi, “Here is what is wrong: corporate profits are up, but the incomes of middle-class families have declined for five straight years…” According to a Forbes.com article from October 17, though, the median annual income in the United States is 32% more than in the mid-1960s, even when adjusted for inflation.
As Forbes says, “Throw in the low inflation of the past 20 years, a deregulated airline industry that’s made travel much cheaper, plus technological progress that’s provided the middle class with not only better cars and televisions, but every gadget from DVD players to iPods, all at lower and lower prices, and it’s obvious that Mr. and Mrs. Median are living the life of Riley compared to their parents and grandparents.”
Forbes concludes by saying, “The fact is that in real terms, the Medians are going great. Mr. Median makes 25% more than his father did 30 years ago, even after holding for inflation. Mrs. Median is a lot more likely to work in the professional ranks than her mom was, and to be paid about three times as much doing so….They also pay less tax to the federal government and have 8% more purchasing power than they did 20 years ago, including 5.7% more than they had just ten years ago.” Seems things are not so bad for the middle-class after all. Propaganda is fine, Ms. Pelosi, but you have to be able to back it up with facts.
Now, on to my favorite topic: Iraq and the war on terror. Ms. Pelosi claims that if Democrats win the House, they will begin withdrawing troops from Iraq by the end of the year. That’s going to be tough to do since the newly-elected Democrats won’t take office until January. But leaving that important fact aside, the consequences of premature withdrawal are of more immediate concern.
Three and a half years into the fight in Iraq, the American-led coalition is the only thing preventing the violence in the country from devolving into all out civil war. I know, a lot of media pundits and Democratic leaders say Iraq is already involved in a civil war, but that is a stretch.
Yes, the violence is worsening with each passing day. And yes, Sunni and Shiite death squads are conducting attacks along ethno-sectarian lines. But a true Iraqi civil war would see a level of violence involving Sunnis, Shiites, and Kurds that would force American soldiers to hunker down in their bases to ride out the storm. Our troops would no longer be able to conduct the mounted and dismounted patrols, logistics convoys, and humanitarian missions that are going on every day, if a real civil war were to break out.
An American pullout would not only allow the security situation in Iraq to deteriorate into a full-blown civil war, it would abandon the 25-plus other countries with troops on the ground and the fragile Iraqi government, leaving a power vacuum in the region that would inevitably be filled by the Iranians. It is easy to see that the current strategy is not yielding results, but to propose a wholesale withdrawal of troops is a weak and irresponsible strategy.
But perhaps my biggest problem with Ms. Pelosi’s position on the war in Iraq is her assertion that the fight there is not part of the war on terror. An intelligent and well-informed argument can be made that Iraq was not a terror hub at the time of the U.S.-led invasion in March 2003. But there can be no doubt that the ongoing violence in Iraq is most certainly part of the war on terror now. Al-Qaeda in Iraq and multiple other fundamentalist Islamic terror groups have flocked to Baghdad, Fallujah, Mosul, Ramadi and other cities to take join the fight against the United States.
Saddam Hussein’s regime sponsored various terrorist organizations conducting attacks against Turkey, Iran, and Israel. The former dictator reportedly offered cash payments to Palestinian suicide bombers, and one of the world’s most ruthless terrorists, Abu Nidal, was a regular visitor to Saddam Hussein’s Iraq. Nidal died in Baghdad in August 2002.
Saddam’s terrorist links were not directed against the United States. But that does not change the reality on the ground in Iraq: terrorists from across the globe are engaged in battle with the United States in the cities and villages of Iraq. They are attacking us there because they cannot attack us here. Our aggressive prosecution of the war on terror has forced a new battleground far away from our shores and no amount of Ms. Pelosi’s rhetoric can change that fact.
The Republicans in Congress have done a terrible job leading this country. They have been plagued by scandal and corruption and they have strayed far from their ideological roots. Voters have the ability to force change in Washington, but to do so properly they must be informed.
Now, more than ever, it is important to look at candidates individually, and not based on their party affiliation. Intelligent debates on real issues will yield informed voters who can make choices that will steer America in the right direction. The Republicans in Congress have failed. But the new direction proposed by Ms. Pelosi and the Democratic Party is not any better than what we have now. In short, the Democrats’ New Direction is the wrong direction for America.