Thank you very much Rob. I am originally from Massachusetts, but we emigrated to the US when I was younger and now I work as head of Americans for Tax reform in DC. One of the reasons our friends on the left are a little bit cranky and exorcised is that they look ahead to the next twenty five years and they see a House and Senate at the national level that will be run by Republicans.
If you look at the House of Representatives, it’s solid Republican. There are 40 Democrat congressmen who are in seats that George Bush carried their district, there are 18 Republicans in seats that Kerry carried their district. So over the next decade, as people pass on and retire, you are looking at another 20 Republicans in those districts. In addition to that, every time we do redistricting, the country is moving more to Republican states and Republican areas. In 2012, ten House seats will move from blue states to red states and this continues on. In 2030, there are another like 9 congressman in Texas, so Texas has a very important job to make sure we don’t have an income tax in this state and maintain smaller government republican governance.
The Senate’s even more pronounced. The people who gerrymandered the Senate did us a big favor when they created all those square states out west. These are the states that have three people living in them: two are Republican Senators and one’s a Republican congressman. And as a result, when we have close elections, 2000 and 2004, thirty Republican states to 20 Democratic states, over time, a moderately competent Republican party will have 60 Senators in those 30 states to 40. There will be Republican Senators in North and South Dakota and Nebraska and Florida and Montana, and we’ll probably have to give something back in Rhode Island.
But the reason why the Republican Party is the party through which to move ideas and goals is it is the party that will dominate the country at the national level in Washington, DC over the next 25 years. Will we win and lose presidents? Sure. The Democrats regularly lost the presidency when they ran Congress for 50 years. We had Eisenhower, Nixon, and Reagan but at the same time, for most of the time, the Democrats ran the country’s economic policies and other policies through the House and the Senate.
Why does the Republican Party dominate in Washington, DC for the last ten years and why, I believe, for the next 25 years? The reason for that is that we have successfully branded the Republican Party in Washington, not yet in the 50 states, but in Washington, as the party that will not raise your taxes. We talked about the number of people that have taken the pledge: 222 members of the House, 46 Senators, one president. Since the Republicans took the House, Senate, and presidency, we’ve had a tax cut each of the years that Bush has been president. Since 1990, when there was a minor lapse on this subject, there’s not been a single Republican in Washington, DC that’s voted for a tax increase. There’s some who vote against tax cuts, who we consider them Bolsheviks, but no Republican has voted for a tax increase. You can walk into the voting booths in any state in the nation, dead drunk, and vote for the Republican for Congress and Senate, and he or she will not raise your taxes.
We have branded the Republican Party at the national level as the party that will not raise your taxes, and we have succeeded wars, recessions, scandals, all sorts of things and the Republican Party has maintained its position in the House, and strengthened, in the House and the Senate. This is a powerful, powerful issue, and as a result, the Republicans dominate the House and the Senate. This is the blessing that is yet to be learned in the 50 states at the state legislative and gubernatorial level. In fact in Texas, it’s not clear that the state legislature understands that they’re not supposed to raise taxes. The governor’s been pretty good on this subject, but the state legislature keeps doing this mother-may-I thing about tax increases.
The reason this is important is the same reason that Coca-Cola has been so successful. They brand Coca-Cola; they have quality controls. You can walk into the store and you can grab a bottle of Coke off the shelves: you don’t have to taste it, you don’t have to look at it, you don’t have to shake it around, you don’t have to ask your friends about Coca-Cola. You just grab it off the shelf because you know what’s inside it. Now if you get that bottle of coke home and you look at it and there’s a rat head in the coke bottle, you do not say to yourself, you know I’m not going to finish the rest of this coke bottle. You tell your friends about the rat head in the coke bottle and you go on local television and show them the rat head in the coke bottle. And all across the country, and the world, people say I wonder what my coke has? Okay.
Republican elected officials who vote for tax increases are rat heads in a coke bottle. They damage the Republican brand. This is not a victimless crime: oh Fred’s over in the corner raising taxes, but that’s Fred. No! No! Small children everywhere get discouraged if they see Republicans raising taxes because it confuses them, and they don’t know what it means to be a Republican.
This has been a central success of the Republican Party, and the challenge for the next ten years for the taxpayer movement, for the conservative movement, for taxpayers, for Republicans, is to take that success at the national level and move it into each of the 50 states. Okay? We’ve had some terrible setbacks: Alabama Governor Riley, Republican Congressman who never raised your taxes, moved back to Alabama and tried to raise it, a billion dollar tax increase in Alabama because, in Alabama like in Texas, everything goes into the state constitution. They had to actually take that vote on taxes and put it up for vote of the people. The governor of Alabama, in addition to suggesting a billion dollar tax increase would be helpful to the teacher’s union, had an innovative idea that you may see more of later which is that Jesus of Nazareth had particularly signed on to this tax increase: that this was a Christian tax, I’m not kidding he really said this, this is a Christian tax increase.
Luckily due to the growing numbers of Hindus in Alabama, this tax increase was defeated 68 to 32. But, there’s actually a lady in Texas who came up with this theory. I don’t know if you guys have heard about her. She gets in the New York Times every once in a while. She’s a theological student whose theory is that tax increases are good for poor people, Jesus liked poor people, Jesus was for tax increases, and the New York Times goes “Oh wow what a brilliant thought.” We were going to see more of this if we hadn’t buried that Alabama effort, but Governor Riley, the Republican gubernatorial governor of Alabama with his tax increase demonstrates that no one’s life is a complete waste: some people serve as bad examples. I am hopeful that we will not see this come back too soon.
The center-right coalition, the people who voted for Reagan, who voted for Bush, or who would have if we’d been a little more articulate and not mentioned our DUIs until last minute is growing and this is over the next several years. The biggest demographic shift in the United States over the last 25 years is not the number of people whose parents speak Spanish. The biggest demographic shift in the last 25 years in America is the number of Americans who own stock directly: not through their pension plans, not through their insurance, but directly. When Reagan was elected, 20% of Americans owned stock directly. Today, it is 60% of adults; it is 70% of all voters. Okay? This changes the world. In the old days, Gephardt would give a speech and say “I’m going to steal money from the big corporations, give everybody a normal dollar,” and 20% of the people in the room ducked and said “uh, oh that’s me he’s talking about, but there aren’t very many of us and maybe if I hide and cringe, I won’t get bit twice.” And 80% of the people in the room go “I get a dollar, this is great, let’s do this again. This is fun.” Okay? But, Gephardt didn’t run in ‘80. He ran in 2000 and 2004, and you saw he didn’t succeed because when he gave that speech 60% of the adults in the room, 70% of the voters said “that’s my retirement you’re looting. I hate you.” And he didn’t get to be president.
There is some very good polling data on this that Scott Rasmussen at Rasmussenpolls.com put out, and that demonstrates that if you own $5,000 worth of stock, directly, you are 18% more Republican and less Democrat. Every demographic gets better: all income groups, employed, unemployed. African Americans who own no stock: 6% Republican. African Americans with $5,000 worth of stock: 18% Republican. It jumps up dramatically. Every demographic group gets better with one exception. The group that’s already fairly Republican who gets no better who share ownership, this is women who earn more than $75,000 a year. So if you know any women like this, don’t get them any stock because it just doesn’t do any good at all, but if you buy them a gun, it helps. The investor class and the growing numbers of Americans who own shares of stock, changing the demographics of the country, making the idea of taxing businesses no longer a tax on other people or them but a tax on my retirement.
That shift is what allowed George W. Bush to change the world when he suggested we should reform social security. And I know a lot of people are down on President Bush right now because he hasn’t done X, Y, or Z. I believe that 50 years from now, people will say that George W. Bush, as they talk about Ronald Reagan, they say Ronald Reagan won the Cold War, and George Bush privatized social security and made every American an owner that would retire with hundreds of thousands of dollars that they personally own. Well, that’s not going to happen between now and when Bush leaves office. But, Ronald Reagan won the Cold War in 1991: three years after he left office. Now, why do we give him credit? Well because in retrospect, he broke the back of the Soviet Union, and they just happened to be stumbling around after he left office when they collapsed. But he broke the back of the Soviet Union and explained why he did it and what he was doing and we all saw it happen.
George W. Bush announced in 2000 and 2004, I want every American to take their FICA taxes and put it in their personal savings account and own it and control their own personal savings so that they have that. Not some promise from politicians that they’ll lose their grandchildren and pay some money down the road. This is a huge shift. And why did the country elect George W. Bush in 2000 and again in 2004, he went out there not just touching the third realm of American politics but fondling it, licking his fingers and fondling the third realm of American politics and he survived. He not only survived, he won. He performed above expectations. We were not running against incompetents, we were running against two of the toughest guys the other guys could put up who put up competent, good campaigns, they just lost. But Bush understood, better than many others did that what happened was that with 60% of adults and 70% of voters owning shares of stock, when he got up and said tell you what “everybody should take their FICA taxes and put them in their IRAs and 401ks” a majority of Americans said that is a good idea. And many Americans said well I don’t have one of those, but my dad does or my sister does or my son does or my neighbor does. This was not a scary idea to anybody. The people who had the least experience on this were 75 years old, but their not part of the debate because we’re not going to change things for people who are presently retired. So this is a huge, huge shift.
Now, are we going to get social security this week or next week? No! Why? Look, if you go from a country where we have 60% of Americans owning some stock to one where a 100% of Americans at age 18 can look ahead and recognize that they will retire with hundreds of thousands of dollars of stock even if they have a low-income job their entire life. This does not require you to invest wisely or have a high-paying job. Simply, if you take your FICA taxes and put them in a personal savings account that you own and not the politicians. If you do that, it changes the world. The party of trial lawyers, and labor unions, and big city political machines cannot compete if every American is looking forward to serious share ownership. End of discussion. The other teams finished.
The Democrats have to filibuster any social security reform. They have to oppose it. There is no way for them to support it because supporting social security privatization is the end of the modern Democratic Party. They are not stupid; they are evil. We can’t count on them being stupid; we can count on them being evil. They are simply not going to do this for us. There’s that wonderful scene in Hannibal Letcher where he talks the guy into swallowing his own tongue. We can’t talk the Democrats into swallowing their own tongue. They are not going to do this for us. It takes 60 votes to reform social security. It takes 60 votes. Until we have 60 Republicans, we don’t get to privatize social security. It is not George W. Bush’s fault that it hasn’t happened yet. It isn’t like if he was taller or something or if he talked better that this would happen. It isn’t going to happen until we have 60 Republican votes.
And there was this very painful period this spring where the president was out there and we only had 55 Republicans so it was over until we got 60. But because he ran in 2004 promising social security reform he felt he had to go out and campaign for it and he did. Did anyone see “Weekend at Bernie’s”? He’s going social security’s not dead. And he would poke it. See, its still there. Well because we didn’t have 60 votes, it wasn’t going anywhere. It’s not his fault; it just can’t happen until we have 60 Republicans. Now our solution is pretty simple. We will go get the 60. Now you guys in Texas are carrying your own weight. There are some slackers in North and South Dakota who are not up to snuff and not doing everything that they need to do. But that just won’t happen until we get there.
Tax reform, there’s a commission that the president put together that’s coming out quickly, or coming out shortly in early November. Here’s what is going to happen with tax reform and you always have to with tax reform have bifocal vision. All politics requires bifocal vision. Where we going? Long term, what’s our goal? And how do we stop from tripping over ourselves as we walk forward today, this week, this month? And if you focus too much on where you are going and forget today, you trip, and if you just focus on today, you get depressed because today and tomorrow darn near nothing gets accomplished. It takes a long time to change a world, to change a state, and to change an issue. But you got to keep an eye on where you are going and what you are doing today.
Our tax reform goal is three-fold. To get to a single rate tax that taxes income one time and then has some sort of protection against tax increases in the future. Taxing income one time! Right now, they tax it when you earn it, when you save it, when you invest it, when you put it inside a corporation, when it comes out as a dividend, and if your stupid enough to die, they steal half. What we want to do is say, look, you can watch us earn a dollar and steal some; you can watch us spend a dollar and steal some; but the rest of the time you got to go away and do something else. Stop following us around and taking another bite at the apple. Tax income one time! Second, tax it at one rate. Why do we tax income at one rate? Everybody pays the same rate. Some people go “oh very nice.” No! Taxation is about taking money from people who earned it and giving it to people who didn’t. Fairness is not part of this concept. The reason why we want to tax income at one single rate is so that everybody is treated equally. And when the politicians say I have a really good idea and we are all going to pay for it. People go okay, if we are all paying for it, tell us about it again, and it better be a really good idea. In other words, what Clinton did. He said I got some ideas but I am only going to mug 2% of the population so the rest of you go do something else, go to the other room, have a drink, I am just going to mug these guys here, this isn’t going to be pleasant, its not going to be pretty, but its not you. So, this doesn’t affect you. And he divided us into different groups and he came back for the people who drove cars, and he came back for the people who got social security. He mugged people one at a time. This is the Richard Speck theory of tax increases. You can’t take on everyone in the room at once, you take them out of the room one at a time.
Our job is to say treat us all the same. And if you got a really good idea, we will pay for it. If you are cutting taxes, then cut everyone’s taxes. And then I am from Massachusetts originally, we have five constitutions in Massachusetts a flat-rate income tax. Not as good as your income rate tax of 0. Ours is 5.5 percent. But five times, liberal Teddy Kennedy, Taxachussetts, has had put on the ballot the idea of going to a graduated or progressive income tax. Five times, it’s been on the ballot. Five times it’s been voted down with a very sophisticated discussion: “oh yeah, year one, you cut my taxes and raised Ted Kennedy’s but as soon as you divorce my interest from Ted Kennedy’s, I think you come back and raise my taxes and then his and then mine, and I make overtime, I end up worse. So tie me to Ted Kennedy and treat us the same.”
If Massachusetts will refuse to go away from a flat rate income tax, I think we can sell the same part of the country to get to a flat rate income tax at the national level. We got a couple of challenges. One of them is that you guys are in Reagan country. In Massachusetts, the Republican Party is the Reagan Republican party. There is, however, a broad band across the country that are Lincoln Republicans. And by this, I mean, from Long Island to New Jersey to Pennsylvania, I may get these in the wrong order, but Indiana, Ohio, and Illinois. Okay. They think they are Republicans because they are for the union and are against slavery. And they’ve been coasting: they raise taxes, they spend money. They missed the Reagan revolution. Okay. They failed to notice that being against slavery and for the union is now more or less a consensus issue even among Democrats.
And so you have in Illinois, you had in ’95, Republican majority in the House, Senate, and Republican Governor, they’ve now got a majority in the House, Senate, and no Republican Governor. And a whole bunch of them are going to prison because if you try to run a state not on principal but on handing out goodies, at some point, you start stealing. At some point, people get pissed at this. And they start putting you into prison. Hello, Governor Ryan. You may remember Republican Governor Ryan starting campaigning against the death penalty, and a whole bunch of people going what’s that all about. I said I will tell you what that’s all about. He knows he’s going to prison, and he wants some friends when he gets there. Hey guys, hey, hey, hey. Remember, I’m your friend. I’m the guy who said no executions. But the corruption is what happens when you try to campaign absent principal leadership.
Ohio. Governor Taft. I was speaking to a group smaller than this in 2004 at the Republican convention. It was all the foreign type people. It was the Republicans abroad, and somebody had a tape recorder. And I had a great conversation about how I thought we were going to win the election and why I thought things were going generally well. Somebody said well what are you worried about? I said I’m worried about Ohio. In Ohio, we have a corrupt, stupid, tax-increasing governor who is just irritating everybody. And he isn’t on the ballot in November, Bush is. People are going to be mad at Bush, and they are going to be mad at Taft, and they are going to vote against Bush. I am concerned about that. And somebody hopefully gave that tape recorder to every major television station in Ohio. But the argument stands. In Ohio, the Republican Party has raised taxes and spent too much money and has damaged itself.
Indiana, I think, has righted itself with Mitch Daniels leadership there, Pennsylvania, New Jersey used to have two-thirds of both houses and the governor, you now have minority position in both houses and not the governor. Long Island used to be a Republican island, it’s now a Democratic island. That happened there, and we need to turn it into Reagan Republicans or they’re going to become blue states. It’s a very, very problematic thing. But this is why the modern Reagan Republican party has the opportunity to lead but if we end up with the Lincoln Republican guys, this is not to criticize Lincoln, it’s just that there’s been some recent issues that came up since Lincoln left the political scene, and that’s not enough.
Let me end with one simple observation on the Democratic coalition and then take a few questions as time permits. The modern center right coalition, the people who voted for Reagan, the people who voted for Bush, our coalition is growing. The democratic coalition is unhappy because their fragmented. We have a meeting in DC with 120 folks; center-right guys get together every Wednesday. Hillary Clinton is quoted in the New Yorker saying “we need one of these meetings like Grover has.” The press called and said what do you think of this Hillary Clinton, and I said she can’t do it. I think she’s complimented us, but the Democrats can’t do the meeting that the right can do. Who would be in the Democratic meeting: trial lawyers, labor unions, big city political machines, the two wings of the dependency movement, those people who are locked into welfare dependency and those people who make $90,000 a year managing the dependency of other people making sure none of them get jobs and become Republicans?
And then you have, of course, the utopians and our environmental friends that want to make sure our cars are too small to have families in and the toilets are too small to flush. And they got more rules for the rest of us than are in Leviticus. You got to have the white glass and the green glass and the brown glass, and on Thursday, we all separate them out in this religious ceremony. They get government grants and tell the rest of us how to run our lives. You can’t wear leather and a whole series of eating meat. Anyway they have a whole bunch of rules for the rest of us that make Leviticus seem reasonable. But in this coalition on the left, they are not friends, they are not allies. They can hang together as long as there is more money coming in the door. It’s like that scene after the bank robbery: dollar for you, dollar for you. Why are you handing out money? But if we put our foot on the air hose, if we say no new taxes, no more money for you guys, then everybody around the table on the left begins to look at each other like the second of the last scene of those lifeboat movies. They are trying to decide who to throw overboard and who to eat because the left is not made up of friends or allies, it is made up of competing parasites. And if we do not feed them with tax dollars, if they can’t knawel on our ankles, they will knawel on each others.
And this is the challenge. The good news is we have a lot of work to do. The good news is the Republican Party is the area in which to advance all efforts to expand liberty in the United States. It is the party that will dominate because of the tax issue, the party that will dominate the country at the national level, and I believe at the state level over the next 25 years, and there is a great deal of work that needs to be done.