An American ally shows the way for the GOP....
Already, House Budget Committee Chairman Paul Ryan (WI) is off to a running start, with "cut-go" replacing "pay-go" spending rules--the former designed to drive spending cuts, the latter designed to drive tax increases. Ryan has taken temporary authority, as was briefly granted in the late 1990s, to force passage of a federal budget out of Committee; his authority expires upon the new Congress passing a full budget (the 11th Congress having failed in 2010 to pass a single appropriations bill, a record failure).
Ryan's one misstep was failing to calibrate in advance the GOP promise to cut $100B from FY2011 spending, which assumed a full budget year; by this March half the FY2011 budget will have been run via continuing resolution at FY2010 levels, rather than at the FY2008 level desired by the GOP. A pro rata cut for FY2011 is thus $50B, but the arithmetic details are likely, as always, to be lost on the general public.
Israeli PM Binyamin Netanyahu gave a major economic address last month that Republicans would do well to use as a guide to setting new policy for America. It sets six policy goals, some already partly achieved: (1) spending limited to population growth; (2) tax reduction to spur private investment; (3) education investment--real schooling, not feel-good multiculturalist P.C.; (4) infrastructure investment; (5) curtailing the bureaucracy; (6) R&D investment.
Netanyahu set a long-term growth goal for Israel: within 15 years join the top 15 country GDP rankings.
Apropos of R&D George Will makes the case for public-private R&D partnerships in his latest WP column. His best argument comes from Margaret Thatcher, as to the need for taking the long view with R&D:
An iconic conservative understood this. Margaret Thatcher, who studied chemistry as an Oxford undergraduate, said:
"Although basic science can have colossal economic rewards, they are totally unpredictable. And therefore the rewards cannot be judged by immediate results. Nevertheless, the value of [Michael] Faraday's work today must be higher than the capitalization of all shares on the stock exchange.
Will quotes a Noel Laueate who said that 99 percent of discoveries are made by one percent off the scientists.
Israel has become in the past decade an economic powerhouse, partly made possible because Netanyahu, as finance minister under Ariel Sharon, partnered with the Bush administration to shepherd broad deregulation through, breaking the socialist sclerosis that had retarded Israeli growth for half a century.
WSJ pundit Dan Henninger argues that the GOP cannot control spendthrift ways alone from Congress. He cites the Congressional Budget and Impoundment Control Act of 1974 as the villain in our budgetary mess, because Congress almost never has the same incentive to cut spending as does the executive. The 1974 act was enacted by liberals mad at Richard Nixon for not spending more money.
Bottom Line. As Israel turns closer to American-style capitalism, Democrats under President Obama turn towards the socialism and corporatism Israel rejected. Republicans would do well to look to Israel for clues on how to reverse adverse economic trends in America.
Letter from the Capitol, LFTC, Economy, Conservative Politics