Schansberg For Congress 2008

The Issues!

Deficits/Debt and Spending:

We have added $2 trillion in government debt from 2001-2007 from out-of-control spending — $26,000 in new debt for the average family of four. More debt now leads to higher future taxes—to pay back those debts. Plus, debt hurts us now, by devaluing the dollar and increasing the price of imports including gasoline. The Democratic and Republican Congresses and President Bush have been spending money like drunken sailors—and using credit cards to pick up the tab.

Click here for the latest numbers on the federal government’s budget debt.
Do you know why a baby cries when it’s born? As soon as it comes out of the womb, the baby’s share of the national debt is more than $30,000—and more than that in unfunded mandates (such as Social Security).

Bush and his Republican and Democratic Congresses are responsible for the biggest increases in all categories of government spending since at least LBJ.
Baron Hill is a fiscal conservative—for a Democrat. (But that’s like saying that he’s among the best students who earned a D or F in a course.) Mike Sodrel is a fiscal moderate among Republicans—compared, for example, to fiscal conservatives like Mike Pence. (But that’s like going 7–9 in Big Ten basketball— and from what Mike Davis tells me, that's not good enough.) The evidence?

Hill has received 4 F’s and 2 D’s from the National Taxpayers Union; Sodrel received a B and a C+; I (like Pence) would receive an A.
Hill has a lifetime average of 19% from Citizens Against Government Waste and is rated "hostile" to taxpayers; Sodrel averaged 49.5% in his two years and was labeled "lukewarm"; I (like Pence) would receive a grade above 90% and receive the designation "taxpayer hero".
Hill received 15% from the Club for Growth in 2007—ranking him 216th out of 435; Sodrel received 66% and 53%—ranking him 98th and 129th in 2005 and 2006; Mike Pence has averaged 99% and been ranked in the Top 5 each of the three years. Like Pence, I would be at or near the top of the Club for Growth’s list.
Hill and Sodrel have both voted to fund the $500 billion War on Iraq—by borrowing money.
Hill and Sodrel have both voted to take your money and give it to Planned Parenthood.
Hill and Sodrel both want to take your money and give it to energy companies.
Hill and Sodrel both supported the “macro stimulus package” that sent checks to most taxpayers this summer.

The plan is unlikely to help the macroeconomy—a small amount delivered too late.
Ironically, the plan may have contributed to our economic downturn by worrying people so much!
Again, they financed the project with debt, spending money we don’t have. It will feel good to get a check in the mail, but it’s just like spending money you don’t have by putting it on a credit card.
Since it won’t help the macroeconomy, this is an exercise in spending our kids’ and grandkids’ money to try to purchase our votes.

It is also interesting to note that Sodrel voted for only 1 of 19 anti–pork amendments put forward by Jeff Flake (R-AZ) in 2006. Like Pence, I would have voted for all 19 of Flake’s amendments.

Policy Points: It is irresponsible to increase government spending now while making our children pay for it later. Raising taxes is not an option—for the health of the economy or for the well-being of hard-working Hoosier families. We must eliminate wasteful spending, rein in all government spending, and reduce the size and scope of our ever-increasing federal government.
Bottom Line: Neither the Republicans nor the Democrats have any credibility on fiscal restraint. If you want the government to take more of your money—or your children’s money—vote Democrat or Republican. If not, vote for me!

Elementary and Secondary Education

The government has tremendous monopoly power in its provision of education—especially over the poor and the middle class. The results should not be surprising: great concerns about quality, staggering costs ($10,000 per student), and complaints about flexibility (on issues like school prayer and how to teach evolution).
No Child Left Behind (NCLB) is a largely futile attempt to regulate this monopoly. Moreover, it is a federal attempt to do what should be controlled by local and state governments.
The Democrats are captive to the unions who, not surprisingly, want to preserve their monopoly power at any cost. The Republicans don’t have the stomach to fight. Who will speak for the poor and the middle class?

Policy Points: We must find a way to inject competition into the market for education. Money for education should follow parents and students, rather than going to a government monopoly. Control of education should be at the local and state level instead of the federal level.
Bottom Line: If you want more money poured into a government monopoly, vote Democratic. If you want more futile attempts to regulate a government monopoly, vote Republican. If not, vote for me!

Tax Reform—Payroll and Income taxes

More than 80% of wage earners lose more from payroll (Social Security and Medicare) taxes than from income taxes. For example, if a married couple has two children and a $42,850 income, they pay no income taxes but lose out on payroll taxes of more than $6,500.
Any tax credits and deductions available for those who pay “income taxes” should be extended to those who only pay payroll taxes on income.
The Republicans focus on cutting income taxes, but almost all income taxes are paid by those in the upper-income classes. The Democrats are content to criticize the Republicans, but never say a word about a tax that is far more devastating to the working poor and middle class.
Support for profligate spending and the macro stimulus package will make it much more difficult to sustain tax cuts in the future. Republicans talk about cutting taxes, but their spending policies will make it impossible to do so.

Policy Points: Before we cut taxes for the rich, we should cut taxes for the middle class and the poor. Instead of trying to score cheap political points, we should focus on changing policies that cause so much harm to middle–class Hoosier families. We should replace the current tax system with a "flat tax" on income or a "fair tax" on consumption. For more information about the "fair tax", click here.
Bottom Line: If you want tax cuts only for the upper-half of income-earners, vote Republican. If you want to hear politicians complain about tax cuts for the wealthy while ignoring huge taxes on the poor and middle class, vote Democratic. If you want lower, fairer, and flatter taxes, vote for me!

Social Security:

Social Security is funded by taking money from current workers and giving it to current retirees. Given the impending retirement of the “baby boom” generation, it is a fatally flawed program.
Aside from that, it provides a pathetic rate of return on “investments” into the system. For the poor and middle class, it is unjust to insist that their largest “nest egg” would grow at, on average, a 1.2% rate of return. African-Americans “earn” a negative rate-of-return from Social Security, since they tend to die earlier than average.
If one were to invest the same amount in a retirement account that they owned—starting in a minimum wage job, working 40 hours per week from ages 18-64, with no pay raises aside from cost-of-living adjustments, and a 8% real rate of return on their investment, they would have $750,000 in today’s dollars. (If one increases work effort to 50 hours per week and earns a 2% real wage increase per year, the nest egg grows to $1.2 million.)
Social Security fosters dependence on government, rather than personal savings, ownership of one’s retirement assets, investment, and productivity.

Policy Points: We must maintain the “social contract” we have established with the elderly and those near retirement. But for others, we need to reform Social Security’s spending and taxing. We should gradually phase younger workers out of Social Security and implement private retirement accounts as an asset that belongs to the individual not the government.
Bottom Line: If you want to help politicians needlessly scare the elderly and stand in the way of crucial reform, vote Democratic. If you want nervous back-pedaling, vote Republican. If you want to protect the elderly while freeing younger workers to own their own retirement investments, vote for me!

Pro-life and Pro-adoption

Given either21st-century science or my religious views, I am unabashedly pro-life. Ideally, abortion would be illegal (except in a case when the mother’s life is in danger). A commitment to the rights of the innocent and unborn life should be at the core of our defense of liberty.
Reversing Roe v. Wade would be an improvement, but would only move legal decisions about abortion to the states. As a culture, things are improving, but we are still some distance from a day when all states would declare it illegal in most cases. So, our first approach to abortion should be cultural, persuading more and more people about the pro-life position. Over time, society’s views on abortion will continue to change—just as many practices that were socially acceptable have become far less acceptable (smoking, littering, drunk driving, bring tipsy at work, slapping one’s wife to “keep her in line”).
Until the culture is convinced and until Roe v. Wade is over-turned, legislators can play a role as well—in seeking legal restrictions on the practice of abortion (e.g., partial-birth abortions, waiting periods, parental notification). Even better, I support Ron Paul’s HR300 which would remove the federal courts’ ability to interfere with state legislation to protect life. Another option would be a Constitutional amendment that would move the decision back to the states or ban the practice altogether. These would be proper Constitutional approaches to the issue.
Taxpayer funding should never be used to finance abortion or “population control”. And monies should never be allocated to abortion providers such as Planned Parenthood—as was even done by the Republican Congresses from 1995-2006 (e.g., in 2006, under HR 3010), including Mike Sodrel. Unlike Baron Hill, I would support Mike Pence’s HR3043 which would end this practice. Unfortunately, the Republicans did not introduce a bill like this when they controlled Congress!
Pro-life advocates should continue to promote and increasingly practice adoption. Too often, pro-lifers have reduced themselves to “anti-abortion” and have not backed up their talk with enough walk.

Federalism:

Even if one believes the government should be involved in any given activity, there is still a vital question to be asked and answered: What level of government-- federal, state, or local? For example, one might believe that a minimum wage is effective. But why should the minimum wage be set by the federal government instead of state governments? Or one might believe that we should have more police on the streets. How should we solve this? We could take your money; send it to Washington; have them take a cut of it and attach some strings; and then send it back to us— so we can hire more police. Or we could just hire our own police! Too often, we look to Washington, when we would be far better off dealing with state and local issues with state and local solutions.
Libertarians believe in a strong but (quite) limited government-- the protection of life, liberty, and property. Coinciding with this view: At the federal level, government should restrain itself to its Constitutional bounds and areas of clear national/general interest (most notably, national security and border security). In a word, a small corrupt government is better than a large corrupt government. If states, counties, and cities want to pursue government regulation, Libertarians believe those would often be unethical and regrettable. But such regulation would be preferable at the state and local level-- rather than at the federal level.

Small Business:

Libertarians are, by far, the friendliest of the political parties toward small business. This is most easily seen in our support for constitutional levels of government — in particular, greatly reduced taxes and regulations. The SBA estimates that businesses spend $843 billion to comply with government regulations (8% of GDP). Economists estimate that regulations impose a $7000 burden per worker on small businesses vs. a $4500 burden per worker on large companies. Often, big business embraces regulation because it is not particularly painful for them — and more cynically, because they know that such regulation imposes much larger costs on their small business competitors.

Beyond a general reduction in taxes and regulation, I…
a) support tort reform, granting immunity for liability on paternalism issues;
b) am opposed to the government's exercise of eminent domain as allowed by the Supreme Court in Kelo v. New London (CT);
c) support the expansion of HSA's (Health Savings Accounts) for small business;
d) oppose the minimum wage;
e) support the elimination of FUTA (the federal unemployment tax — to pay for the federal administration of a state-based program); and
f) I support the elimination of trade barriers and the estate tax (although the repeal would need to include a "step up to basis" when the asset passes through the estate).

Our on-going efforts in Iraq:

I fully support the troops in Iraq and those serving elsewhere in the U.S. and around the world.
We should celebrate the fact that Saddam was sacked. We know that he pursued WMD’s— in violation of U.S. policy desires and numerous UN resolutions. The UN sanctions were crumbling, including the staggering "Oil–for–Food" scandal. Saddam was a threat to regional stability (although his absence may present even greater challenges) and he was a gross violator of basic human rights.
We won “the war”—in six weeks. But since then, we have been unable to “build a nation” in Iraq. What will come from our activity in Iraq? Bush hopes for a Normandy—where Iraq will be the cornerstone of democracy in the Middle East. More and more, it’s looking like another Vietnam—or at least a lengthy, expensive exercise that shuffles the cards but changes little. I hope for the best, but am not optimistic.
The war has been quite costly—in terms of both lives (4,000 American and untold Iraqis) and money ($500 billion—$6500 from the average family of four). Moreover, the war has been financed through debt, which weakens the dollar and increases the price of imports (including gasoline).
It’s a longer story, but I am convinced that our efforts in Iraq and the Middle East are encouraging terrorism—in a word, because they perceive (correctly or not) that we’re occupying Muslim lands. For two essays I’ve written about one aspect of the fascinating literature on this topic, click here and here.
With respect to the future in Iraq, all three candidates are saying we should get out as soon as possible. But this phrase means something quite different to each candidate.

For Sodrel, this means an indefinite stay and a great deal of trust in the plans of President Bush or a President McCain.
Hill has crafted a political-practical position that is only slightly more aggressive. He votes for non-binding resolutions against the war, but then votes to finance the war over and over again. He’s obviously not very serious about bringing the troops home.
When I say it, I mean get the troops home as soon as possible. Ideally, we would be completely out of Iraq tomorrow. But withdrawal must be planned carefully and done well. Although a firm timeline may be impossible to calculate, we can certainly get out within 8-12 months. In a word, we should have immediate plans, imminent reduction, and impending withdrawal.

Iraq's future successes and struggles are ultimately up to the people and the government of Iraq. Prime Minister al-Maliki and the Iraqi parliament want us to leave. The sooner we let them have control of their future, the better.
We should not keep any troops or bases in Iraq after we leave. Our continued presence there will probably cause more trouble than it might help.

Gas Prices/Energy Independence:

Hill’s hypocritical refusal to debate

In May 2006, Hill repeatedly demanded a debate from Sodrel on gas prices. Sodrel declined. Then I challenged Hill to a debate, but he declined. In May 2008, we asked Hill to debate gas prices—since they had nearly doubled since he took office in January 2007. He declined.
It's ironic that Hill doesn't want to talk with an economist about the demand and supply of gasoline! Neither his refusal nor the subsequent hypocrisy are particularly surprising, but it’s still disappointing.
Hill is in a tough spot here since he argued that Sodrel should be blamed for the higher gas prices that occurred while he was in Congress. Of course, gas prices have increased much more since Hill returned to Congress and so he’s stuck with the silly argument he made two years ago.

Who is to blame?

In a sense, Hill is correct. The dollar has depreciated 40% since 2002—largely because of the big spending and debt of Hill, Sodrel, and President Bush. If our dollar was as strong as in 2002, we’d be paying less than $3 per gallon.
Of course, market forces largely determine the price of gasoline. Worldwide increases in demand and a weakening dollar have led to significant increases in domestic prices. While unpleasant, this should not come as a big surprise.
People criticize gas companies for obscene profits, but they usually earn pennies on the gallon. And yes, their profits are large, but they are also huge companies. The real question concerns rates of return — and theirs are within the standard range.
The government (state and federal) adds more than $.40 per gallon through taxes. Perhaps ironically, the government's "oil profits" are more than double what the oil companies have earned since 1977—even in recent quarters.
Ideally, gas taxes would be pegged to the social costs of using gasoline-- especially pollution and road maintenance. So, gas taxes should be independent of political pressures.

Government policy also affects the market dramatically.

Amazingly, Democrats are fighting the expansion of domestic drilling—in ANWR and off the Gulf Coast. (Why didn’t the Republicans take care of this when they controlled Congress?!)
Democrats have fought the expansion of refinery capacity and the move to explore clean, safe and efficient nuclear energy.
Environmental regulations result in specific types of gas for certain markets — so-called "boutique fuels” — narrowing the "market for gasoline" to the markets for very specific blends of gasoline and additives.
The government (state and federal) adds more than $.40 per gallon through taxes.
Again, Democratic politicians are sad but funny here. They're always telling us to conserve energy, so high prices should be a good thing, right?

What to do—and what not to do…

The Democrats are trying to distract voters with policies that would scapegoat those who are commonly accused of villainy: speculators, price gougers, and oil companies. Their pursuit reveals some combination of remarkable ignorance or captivity to a radical anti-consumption agenda.

Attempts to regulate “speculators” and “price gougers” will not be effective in reducing price significantly if at all. Claims to the contrary reveal ignorance about how markets function. In fact, dramatically reducing the number of speculators would increase monopoly power in that arena and increase the likelihood of trouble!
The effort to force immediate production on “non-producing leases” reveals ignorance about how oil exploration goes forward.
The DRILL Act focuses on the National Petroleum Reserve (NPR) rather than drilling for oil in ANWR. Although the NPR has as much estimated oil as ANWR, it is in an area more than 1000 times larger. Moreover, no drilling is occurring in the NPR at present due to production costs and litigation in response to regulation.

NO CORPORATE SUBSIDIES: Market forces will encourage us to move away from oil-based energy in the years to come — perhaps at a rapid pace. Politicians like to use the government to take money from you to give to corporations—Republicans to oil and alternative energy companies and Democrats to alternative energy—but there should be NO corporate subsidies. More important, the market provides terrific incentives to develop the next best thing in exploration, energy use, conservation, and so on. Imagine how much money is on the table to create the next great innovations in energy!

Immigration (legal and illegal):

Immigration is attractive to immigrants because the United States is such a wonderful place to live — compared to so many other countries. Immigration should be attractive to Americans — as long as immigrants come here to engage in voluntary activity (working as opposed to being on welfare) and to become true citizens. Fortunately, both of those are overwhelmingly the norm. Historically, first generation immigrants have largely embraced our culture and country, while the second and third generations are largely indistinguishable from those who immigrated earlier.
In particular, we should increase student visas and immigration for highly-skilled workers. International students greatly enhance higher ed and are likely to end up as apostles of the freedoms we take for granted here. Highly-skilled workers are most likely to become productive citizens and add the most to our economy.
If we're serious about reducing illegal immigration, we should embrace both strategies available to us: securing the borders and enforcing the laws against businesses who hire illegals. Hill is tepid on this issue. And Sodrel only wants to do the former—ironically, making him the weakest on this issue. (In 2006, Sodrel voted against the Sullivan Amendment.)
That said, I would encourage people to be realistic about the costs and benefits of these approaches. As always, government is likely to promise better results for a lower cost than will really happen. So, we can do both, but let's not fool ourselves into thinking it will be cheap or perfectly effective.
The role of government is to protect lives, rights and property. In this context, government should be most aggressive in working to control entry into our country of foreign nationals who pose a threat to security (terrorists), health (disease) or property (criminals).
Why is illegal immigration attractive? Because we allow relatively few people to immigrate and because INS procedures can be so unwieldy. We should streamline INS procedures—to reduce the temptation to come here illegally. And after we get serious about enforcement, an effective "guest worker" program may be helpful in limiting future illegal immigration and might be helpful in dealing with current illegal immigrants.
We should repeal or modify the 14th Amendment to eliminate the incentives it provides with respect to illegal immigration.
The government should do what it can to avoid illegal immigration having an impact on Census numbers and reapportionment of seats in the U.S. House.
In sum, we should tighten our enforcement of illegal immigration but be open to more legal immigration. In a word (and using two metaphors), we should have a higher fence and a bigger gate.

Minimum Wage:

From the perspective of workers, the minimum wage increases the wages of unskilled labor — seemingly a good thing. From the perspective of businesses, the minimum wage increases the cost of unskilled labor — not a good thing if we'd like businesses to employ unskilled labor! It seems odd to be excited about helping some of the working poor — at the expense of others of the working poor.
The minimum wage is a poor way to reach the goal of increasing the wage of those trying to live on the minimum wage. First, the policy is poorly targeted — since many types of people earn the minimum wage. The policy goal is not to increase the wage of a 16-year old working at a fast food restaurant. Yet, the policy increases wages for all unskilled workers, not just heads of households.
There are three other policies that help the working poor without making them less attractive to hire. One could expand the Earned Income (Tax) Credit which only subsidizes the wages of heads of households. One could also support wage subsidies for heads of household, reaching the same goal through the wage system rather than through the tax code. Finally, the easiest and best policy of all: we should eliminate state income taxes and federal payroll (Social Security and Medicare) taxes on the working poor. If two people have at least one child and are both earning the minimum wage: in 17 states, they pay state income taxes even if they are at the poverty line and they lose thousands of dollars to payroll taxes every year. If we really want to help the working poor, how about we quit taking so much of their money?!
If you remain unconvinced, consider that this should not be a federal issue. In terms of constitutionality and effectiveness, it should be the states that make the decision about how/whether to embrace this policy or not.
This is another issue where Democrat politicians like to score cheap rhetorical points rather than embracing useful reform. If they really cared about the working poor, they'd embrace more effective solutions. Or at minimum, they'd index the minimum wage to inflation so that its purchasing power remained constant over time. Instead, they seem to like it this way, so they can use this as a club to beat on the Republicans.

Health Care:

The primary problem is that health insurance is more like pre-paid medical care. True insurance deals with rare and costly (catastrophic) events. In contrast, health insurance covers everything under the sun. Imagine what would happen to costs, amount of paperwork, etc. — if car insurance covered door dings, oil changes and wiper blades.
The reason we have too much health insurance — low co-pays and low deductibles and extensive coverage — is that health insurance is subsidized through the firm as a non-taxable form of compensation. The best economic solution would be to end the subsidy. But this would be painful politically — and thus, this problem is unlikely to be solved politically.
The probable, long-term solution is playing out in front of us. Higher costs push up premia which encourages people to move toward catastrophic coverage anyway. In a decade or so, the market may take us to health "insurance".
In the short-term, health savings accounts (HSA’s) may help us transition to catastrophic (true) insurance. And the Health Care Choice Act would allow people to purchase insurance from companies in other states.

Finally, in an ideal world, there would be no federal role for health care. It is neither constitutional nor efficient. At present, as with so many other things, we send our money to Washington; they pocket some of the money; they attach strings to the residual; and then they send it back to us so we can solve our own problems. This isn’t very smart! Moreover, the 50 states should be encouraged to try different policies—to see what works.

Both of the major political parties claim to work for “the people”. Instead, they’re busy using the power of government to benefit and pander to special interest groups—and to ignore key issues while trying to score cheap political points against their opponents.
Most politicians like to make empty campaign promises—“I’ll fight to lower gas prices” or “He’s getting things done for us” or “I’ll work hard to bring good jobs to Indiana”—while advocating policies that work against these goals or encouraging us to think that the federal government can solve all of our problems.
Hoosiers, we can do better! Don’t waste your vote this time—vote Dr. Eric Schansberg for U.S. Congress on November 4th.