February 6, 2008 | Commentary on Federal Budget
His State of the Union address began with a focus on our government's foremost responsibility -- national security. This, the first of many bold policy proposals, would reverse the debilitating effects of the generation-long "procurement holiday" that has plagued our military since we prevailed over Soviet Communism in 1991.
The solution: make it the stated policy of the U.S. Congress to adequately fund the "weapons systems, the armament, and the number of troops that we need to secure the nation." That translates into committing no less than 4% of our gross domestic product each and every year on what Pentagon experts refer to as the "base" defense budget.
Turning to the economy, he set forth an exciting alternative vision to the economic stimulus proposal being railroaded through Congress. He urged lawmakers to make the tax system "predictable" by making the current tax rates, which are set to rise dramatically at the end of 2010, permanent.
But giving businesses certainty as to their future tax burden isn't enough. We must enable U.S. businesses to compete in the global marketplace. In the U.S., Uncle Sam socks businesses with one of the world's highest tax rates -- 35%, with state taxes adding, on average, another 5%. That combined 40% rate, he observed, "is running jobs offshore."
Indeed, the latest survey of corporate tax rates in 92 countries confirms that we must radically overhaul the way we tax business profits. The accounting firm of KPMG found that the average worldwide rate has fallen from 38% as recently as 1993 to only 27% today. In the European Union, rates have plummeted even further; the average rate there now approaches 24%. Most alarmingly, as of Jan. 1 China, our second-largest trading partner, lowered its top rate to 25%. The solution: lower our corporate tax rate to 25% "so that we'll at least be able to compete with Europe."
He also demanded that Congress consider a fundamental overhaul of our tax code, one that would make it "simpler" and "more understandable." This translates to an optional flat tax with a top rate of 25%.
His proposals to rein in runaway federal spending were similarly ambitious. Enact a balanced budget amendment that makes it impossible to raise taxes. End the pernicious congressional practice of earmarking thousands of special interest projects. And, perhaps most dramatically of all, "stop spending Social Security [taxes] on other things." This last item questions the legitimacy of some $100 billion of unrelated, and wasteful, federal spending each year.
As if those reforms weren't enough, he also proposed redirecting our health care system toward the consumer and making insurers actually compete for our business. To foster that competition, Congress must give individuals personal tax relief so they can purchase health plans on their own. And individuals must be allowed to choose any plan offered nationwide, rather than being restricted to what is offered in their (often over-regulated) home state.
But, as Dr. Seuss' Cat in the Hat once put it: That is not all. Oh, no. That is not all.
He has lost patience with the "corrupt" and "anti-American" United Nations. According to a Heritage Foundation study, the U.N.'s pronounced anti-American streak reaches its pathological heights among those countries that receive the largest infusions of U.S. foreign and military aid. In fact, on important votes in the U.N. General Assembly the 30 largest aid recipients opposed the official U.S. position nearly 70% of the time. Economically free nations, in contrast, sided with Uncle Sam on these tough votes 72% of the time.
Congress, he said, must withhold the overly generous U.S. contribution to the U.N. until its leaders adopt a comprehensive list of financial and other reforms.
By now, you may be wondering which State of the Union address I was watching. It wasn't available on any of the networks. C-SPAN missed it, as did talk radio.
That's because it was delivered by the chairman of the Senate Steering Committee, Sen. Jim DeMint (R-SC). It's available only on YouTube (seen, as of mid-day last Thursday, by more than 7,000 hardy souls) and was delivered from a dimly-lit perch in the Russell Senate Office Building immediately following the president's address.
DeMint's creative move in recording and posting his alternative State of the Union fills the vacuum many conservatives feel these days. They yearn for an all-encompassing and visionary agenda to prove that credible alternatives still exist to the pandering mentality that dominates Washington and gives us endless earmarks and lowest common denominator stimulus plans.
"Replay"? You bet.
Michael Franc is Vice President of Government Relations for The Heritage Foundation.
First appeared in Human Events Online