Denninger: a Real Gameplan for the GOP

Karl Denninger writes for the outstanding Market Ticker blog, mostly on economic issues, and his predictions have been eerily prescient. Eerily, I say.

Once in a while, Denninger weighs in on political matters and yesterday was such a day. He offered his take on Sarah Palin but, most interestingly (for me, at least, which is all I really care about) is his roadmap for GOP victory in 2010 and 2012.

The formula is as clear-headed and easy-to-follow as any I've read (emphases mine), which is probably why it will be discarded by the same GOP leadership that brought you John McCain and who believe Sarah Palin is less qualified than, say, one Barack Obama.

I have heard exactly nothing out of The Republicans since the election that shows me that they "get it"... Here is what the [party leadership] put forward as the Republican Agenda:

1. Tax relief to stimulate the economy.
2. Domestic energy exploration.
3. Full funding for border security and missile defense.
4. Support for small businesses that create jobs.

Nice rhetoric. Note that we did #1 under George Bush and it was ineffective in preventing the mess. Note also that #3 was claimed after 9/11 but in fact wasn't done, but there were multiple attempts to pass "in the dark of night" amnesty for the illegal aliens, when in fact it would take nothing more than computer verification of SSN records to start sending out thousands of ICE workers to arrest and deport illegals. #4 is a nice premise too, but let's face it - "small business" and "illegal immigrant labor" are joined at the hip, and this is yet another codeword for amnesty...

What's important is what's missing from this missive.

* Any understanding or admission that it was fraud that fueled the economic mess, not "too high taxes", and yet The Republicans have steadfastly refused to demand that those who committed that fraud go to prison.

* Any understanding of the fiscal realities of a $2 trillion budget deficit that came about due to too much spending, and that cutting taxes, while it sounds nice, just makes that worse.

* Any admission that Gingrich promised among other things to rid us of the Education Department; instead The Republicans more than doubled its size and George Bush allowed Senator Kennedy to write the Education Bill in the last Congress.

* Any admission that Medicare Part D was the largest single entitlement program ever passed by any Administration in the history of the nation, and George Bush was its proponent and chief architect!

If The Republicans want to gain in the 2010 mid-term elections and have a shot at unseating President Obama in 2012, they need to do all of the following:

* Begin pushing hard for investigation and prosecution of everyone, individual and corporate, who did and still is falsifying any form of accounting or other financial matter... The Republicans are supposed to be the party of law and order... let's see special prosecutors, investigations, indictments and prison sentences.

* Demand that those who made bad investments in insolvent firms be forced to EAT THEM. This means no more bailouts - instead, it means cramdowns. Lots of cramdowns. If pension funds are caught short by this (including PUBLIC pension funds) then they are.

* Demand that PUBLIC SERVICE EMPLOYEES be cut back to the same standards as PRIVATE SECTOR employees, both for retirement benefits and current working benefits and salary. The "gold-plated" games MUST END as WE DON'T HAVE THE MONEY. This includes but is certainly not limited to Representatives and Senators.

* Return ALL entitlement and education programs to the states and END THEM at the federal level. The Department of Education should be dissolved; there is no Constitutional mandate for same. Social Security and Medicare are not properly federal programs and it is their federal locus that makes them non-portable, unowned by the individual and impossible to fix. No citizen would accept a Social Security system at the state level that disappeared if they moved; they would instead insist on individual ownership, vesting, and investment of that account in actual assets (e.g. Treasury bills or notes) and they'd get it too. The Federal Government is able to steal the contents of Social Security annually (and does) precisely because it is cheating on the accounting - that is, the entirety of the program as currently constituted is a lie! STOP IT.

* Cut Federal spending to match the budget. Yes, I know, you'd have to lay off thousands upon thousands of "government employees" in Washington DC and elsewhere. So what? Let's cut The Federal Government back to 1990 levels of employment and spending - right now, today. "Spending cuts" are not decreases in the rate-of-increase - they are actual cuts! Practice what you preach - if we don't have the money, we can't spend it. Period.

* Push HARD to institute The Fair Tax. Yeah, I know some people don't like it. Here's the facts folks: It inexorably ties federal income to GDP and is the only way to do so transparently, containing the tax code for individuals literally in one line of text. It bankrupts nearly all of the lobbying interests on "K" Street immediately. It incentivizes capital formation (no tax on capital gains) and dis-incentivizes going into debt, as there is no tax advantage to taking on debt. It removes all federal tax burden from those who earn less than a poverty level income and eliminates hundreds of billions of dollars of embedded compliance cost in every good and service produced in this nation. It makes America the manufacturing and business tax haven of the world, and will bring millions of jobs back from overseas overnight...

* STOP ILLEGAL IMMIGRATION AND SEND ALL OF THEM HOME. Period. This begins with MASSIVE enforcement against employers of these people; send them all to PRISON. We have some 16% of our population out of work (U6) and more than 20% of our youth. These are US Citizens who want jobs and can't find them - it is an outrage that we have illegals in this country taking jobs from these citizens primarily on the basis of working under the table for less than minimum wage, paying no taxes, then showing up in the emergency room for free treatment when they shoot a nail through their own foot!

If The Republicans want to win, this is the populist message that will win elections.

I agree -- and I'm a centrist.