The Ron Paul Plan

I spent three days trying to write this, because I kept getting interrupted.

Ron Paul released his plan to "Restore America" which includes cutting $1 trillion in federal government spending during his Paul's first year in office (2013) and is schedule to deliver a balanced budget in 2015. Before I get into that, I want to start with Thomas Jefferson and Alexander Hamilton.

Paul's strict-interpretation view of the United States Constitution is in the vein of Jefferson, who believed in lassiez-faire economics, a limited central government, state rights, and a non-interventionist foreign policy. Like Paul, Jefferson believed that it was the duty of government to ensure the protection of individual liberty -- at least for Paul, augmenting the Bill of Rights with the basic belief that government should just stay out of private lives. This is a generalization, but in fairness it does capture the major premise of Paul's political beliefs in comparison to Jefferson's philosophy on what's proper American democracy.

The unique feature about the American Constitution is how ambiguous it was when it was composed and ratified as to how it should be interpreted, not withstanding the Federalist Papers, whom scholars and jurists use as the source of intent with the Constitution -- something that James Madison, one of the authors, didn't intend. Jefferson, along with primary Constitution author Madison, disliked the idea of a strong national government because, although not explicitly stated, would go against the whole point of fighting for and winning independence from Britain. Their rival, Federalist Party leader Alexander Hamilton, the first Secretary of the Treasury in the United States, pushed for a more "loose" interpretation of the Constitution that would provide for a stronger central government, spearheaded by a strong military, the assumption of state debt by the federal government, and a central banking system.

Don't worry: I'm not trying to delve deep into American history so much to the point where you feel like you're sitting in a history class. The reason why I'm bringing this up is because the debate between Jefferson and Hamilton over what's really the proper  of the Constitution is relevant to today because in the wake of exploding federal debt, we're now coming to the point here in the United States where the size of government in proportion to the population is coming in to question. As most of the people that have regularly read my blog know, I've written about this already.

Paul believes that government is too big, that the central bank is the root of all evil, personal responsibility must be promoted, and his budget plan looked to resolve these issues and more. You can view his plan here.

So here's the itemized list, for those that do not want to read:

• The termination of the Department of Energy, the Department of the Interior, the Department of Commerce, the Department of Housing and Urban Development, and the Department of Education
• Abolish the Transportation Security Administration
• End corporate subsidies
• Abolish foreign aid
• Ending all foreign wars and entanglements
• Lower the corporate tax rate to 15% and eliminate the death tax
• Repeal of "Obamacare", the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2009, and the Sarbanes-Oxley Act of 2002 and terminate all "onerous" reforms by Executive Order
• Audit the Federal Reserve and "implement competing currency legislation"
• Cut the Federal workforce by 10%, cut Congressional pay, and take an executive pay cut
• Spending freezes on various departments and agencies including Medicaid, State Children Health Insurance Program (SCHIP), Food Stamps, Child Nutrition, the Department of Justice, Agriculture, Transportation, State, Homeland Security, Food & Drug Administration (FDA), Centers of Disease Control (CDC), and the Environmental Protection Agency (EPA)

So, here's the score card:

• Generally, most people do not really see the point of any of those five agencies existing. However, that largely comes from an ignorance from what functions they serve and why the departments are seen as useless. The Department of Energy is responsible for nuclear waste, and the focus of the department is cleaning up the mess left behind by the Cold War and has never seen any worthwhile investment in the department until the Obama administration. The Department of the Interior manages all lands owned by the federal government which suffers from severe backlog and has a history of corruption -- who the hell will buy these lands in a privatization move is anybody's guess. The Department of Commerce does a lot -- from administering the Census, to promoting economic growth, to monitoring the weather, to establishing industrial and technological standards; I would assume that most of these duties would move to the private sector, which will produce mixed results. The Department of Housing and Urban Development provides a means for the poor to acquire housing even though the real issue with HUD is the quality of housing.
  
  The Department of Education is a different story because throughout the existence of the Department, its Constitutionality has been debated, with opponents citing the Tenth Amendment and the lack of the mention of education in the Constitution with proponents citing the Commerce Clause. A significant function of the Department of Education is providing collegiate student aid. Other than that, a lot of the functions of the Department of Education are largely symbolic. The only way that the Department of Education would work is if the American educational system would be nationalized to provide for a uniform, mandatory educational system across the States. In other words, the first four would be better served overhauled more so than absent; as for the Department of Education, it either has to go the way of the chopping block like Paul desires or actually become a full blown regulatory body.
• The Transportation Security Administration's failure is in personnel and in training. Some people only consider the TSA to create only a false sense of security, considering the massive undercover failure in 2006 and the harassment controversy of 2010. However, the creation of the TSA was wholly reactionary and it has been cultivated with inefficiencies since its genesis. However, I think an airline security system has a place -- just not the TSA.
• The ending of corporate subsidies and the rollback of the corporate income tax go hand in hand. However, Paul's plan did not make any specific mention of the closing of corporate tax loopholes, which allows most corporations to avoid paying the 30+% corporate income tax. Paul's website noted that the latter should spur domestic American investment by allowing companies to repatriate capital without facing taxation. This is assuming that these corporations find it more lucrative to invest domestically than to put their foot in the door of globalization. Companies use taxation as an excuse, which is fair, but companies are going to go where labor is cheapest and they can make the biggest return on their investment (i.e., Asia).
• Paul aims to get out of the foreign aid and foreign war business, returning the United States to a non-interventionist foreign policy. There's an upside and there's a downside to that -- the upside that it saves money. The downside is that rooted in whether you not you believe in the "Gospel of Wealth That Can Cover My Ass".
• The federal workforce and the political pay cut: it's nice, but it's political grandstanding.
• "ObamaCare's" failure is not doing anything to address exploding health care costs. In cutting Medicaid and Medicare funding, Paul isn't either. In fact, it's putting too much of a gamble into the private sector, which will be overran by additional health care costs, causing the cost of acquiring health care services to skyrocket as insurance companies try to maintain their profits.
• The Dodd-Frank Act was called a disaster by Paul in a recent debate that levied a cost of $1 trillion on Americans. I don't think that much, but the Durbin Amendment is a screw job and it's why I have to pay $60 a year to use my debit card with Bank of America. I don't think the financial markets should go unregulated, but even I think most of the Dodd-Frank act is rooted in garbage.
• The Sarbanes-Oxley Act of 2002 does two things: forces companies to use proper accounting purposes while at the same time costing companies a whole hell of a lot of money to be compliant. While some people blame the Sarbanes-Oxley act for a drop in IPOs (Initial Public Offering, or when a company goes offers stock to investors; with a Wall Street editorial recording a low figure for 2008), it dropped below 100 in 2001 (before it was passed), averaged over 200 IPOs a year from 2003-2007, dropped back down to 32 in 2008, increasing to 63 in 2009, and 157 in 2010. However, American firms would be better served if the they were forced to comply with IFRS (International Financial Reporting Standards).
• Most of the spending freezes are made with the intent of passing more responsibility to the states and the free market. I hope Paul realizes that the added responsibility to the states would be passed on to the constituencies by way of more taxes. It's inevitable if the States have a desire to remain solvent for that I can assure you that austerity measures really won't fly here in the United States. Not to mention, the free market can't be the solution to everything. 
• He wants to bring back the gold standard. Only issue is that there's more currency than could be supported by gold.

In short, Paul's plan is a wishlist that's partially unrealistic. Any executive order he enforces will come back to bite him as an abuse of power and a violation of his libertarian stance. Most of these dissolution of the departments and federal spending cuts would result in chaos that most consumers and states would not be ready to incur, since most of the resulting burden would be passed on to them. However, I give him credit: at least he came up with a more coherent plan than laughable draconian shit fest of Paul Ryan's budget.