He served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under the first President Bush. He is a graduate of Harvard College and Harvard Law School. He is author of The Obamacare Disaster, from the Heartland Institute, and President Obama's Tax Piracy, and his latest book: America's Ticking Bankruptcy Bomb: How the Looming Debt Crisis Threatens the American Dream-and How We Can Turn the Tide Before It's Too Late.
Latest posts by Peter Ferrara (see all)
- A Principled Tax Reform Allows Expensing of all Business Costs - June 23, 2017
- Just As With Reagan, Getting Tax Reform Right Today Is Key To Booming Economy - April 17, 2017
- Closing The Deal With Conservatives On Obamacare - March 24, 2017
One hundred years ago, Woodrow Wilson was leading a counterrevolution against the Constitution. Unfortunately, he was doing it from the White House, as President of the United States. The more things change, the more they stay the same.
Wilson was one of the early leaders of the so-called Progressive Movement, which was an open conspiracy against the Constitution from the start. Former President of Princeton University, he had the haughty attitude of superiority that marks so-called “Progressives” to this day. He was so sure he was so much smarter than the Founding Fathers, who laid the careful foundations of the most successful country in the history of the world. He displayed the contempt for the average American Progressives exhibit to this day as well, successfully running for reelection in 1916 on the Slogan “He kept us out of war,” before he led America into World War I the next year.
Wilson’s handiwork as President bedevils the nation to this day. That includes the federal income tax, and the Federal Reserve Board. Posterity is finally beginning to recognize the rotten seeds Wilson planted that have grown to ensnarl America in vines that now threaten to bring the whole nation down.
But now comes the most effective response to Wilson, and the whole Progressive Movement, since Ronald Reagan, in the new book from former Reagan Justice Dept. official, Landmark Legal Foundation President, and nationally syndicated talk radio host Mark Levin, The Liberty Amendments: Restoring the American Republic.
Levin recognizes the damage the Progressives have done over the last 100 years, and seeks to restore the original Constitution that served the country so well over its first two centuries. In his book, he seeks to do that with 11 proposed Amendments to the Constitution, which he advances “not because I believe the Constitution, as originally structured is outdated and outmoded, thereby requiring modernization through amendments, but because of the opposite – that is, the necessity and urgency of restoring constitutional republicanism and preserving the civil society from the growing authoritarianism of a federal Leviathan.”
The Prosperity Agenda
The proposed Amendments actually incorporate an impressive, sweeping, fundamental economic policy agenda. That is because the Amendments include a Tax Limitation Amendment, a Spending Limitation Amendment, and a Balanced Budget Amendment. Those Amendments represent a new, free market, Libertarian, supply side economics of economic growth and prosperity for all.
The Tax Limitation Amendment states, “Congress shall not collect more than 15% of a person’s annual income, from whatever source derived.” Levin explains that as a limit on income taxes. But the language would seem to apply as well to payroll taxes, sales or excise taxes, and any other federal tax actually, imposing a limit on federal taxation of 15% of income.
From whatever source derived means that the limit covers investment income as well as labor income, counting all forms of the multiple taxation of investment income. That would mean it covers also capital gains taxes and taxes on dividends. The Amendment prohibits outright death, or estate, taxes, which are another form of multiple taxation of capital income. The Amendment protects labor as well from multiple taxation by also prohibiting a Value Added Tax (VAT) and a national sales tax.
Such tax limitation is highly desirable, because it prohibits the mob politics of the many ganging up on the few most productive earning the highest incomes. Those at the highest incomes would still pay proportionally more under this limit. Someone earning $10,000 could be subject to maximum federal taxes under this limit of $1,500 per year. But someone earning 100 times as much at a million dollars would still be subject to maximum federal taxes of 100 times more, at $150,000 a year. The tax burden could still be skewed proportionally more to the upper income earners, but only by reducing the burden on the lower income earners. In other words, lower rates than 15% could still be imposed on those at the lower income levels, while the highest could still be subject to a top rate of 15%.
Consequently, the Amendment does not require a flat tax, but limits the depredation on any one person to 15%. Note that supply side economics emphasizes marginal tax rates as the key factor on taxes providing incentives for economic growth, especially the top marginal tax rate. Levin’s Tax Limitation Amendment is consequently wise in limiting the top marginal tax rate to 15%, as I recommended in my 2011 book, America’s Ticking Bankruptcy Bomb.
The Amendment also wisely subjects the ruling class to maximum fury over taxation, providing, “The deadline for filing federal income tax returns shall be the day before the date set for elections to federal office.”
The proposed Spending Limitation Amendment provides, “Total outlays of the federal government for each fiscal year shall not exceed 17.5 percent of the Gross National Product for the previous calendar year.” Spending could still grow every year, but only to the extent the economy grows. Another section of the Amendment wisely provides that if Congress fails to adopt a budget, to which the spending limit could be applied, then the spending limit that applies to all expenditures is 5 percent less than was spent the previous year.
This is another pro-growth policy, as it limits what the federal government could draw out of the private sector, where the resources can be most effectively utilized to increase jobs and wages. Spending cuts were one of the planks of Reagan’s pro-growth economics, which produced a 25 year economic boom, the greatest economic boom in world history.
Levin’s Balanced Budget Amendment provides, “Total outlays of the federal government for any fiscal year shall not exceed its receipts for the fiscal year.” That means the borrowing power of the federal government would be eliminated, which inherently limits government. But Levin affords a necessary out which can apply in the case of war or other national emergency, providing that the balanced budget requirement can be suspended by a 60% vote by both houses of Congress. America’s victory in World War II was financed by the biggest run up in government debt in world history, at least as a percent of GDP. President Obama and his Democrats are taking us back to that same wartime debt record, which saved civilization from the fascists of Nazi Germany and Imperial Japan. But this time there is no war for survival, only an overwhelming desire to buy votes and power, sort of a fiscal coup d’etat.
National Tax Limitation Committee President Lew Uhler points out that President Reagan’s proposed balanced budget amendment passed the Senate in 1982 with 69 bipartisan votes. It only failed in Tip O’Neill’s Democrat majority House by just a few votes short of the required two-thirds majority. Balanced Budget Amendment supporters would be wise to look closely at the language of that proposed Amendment, which eminent economists such as Milton Friedman and William Niskanen contributed to and supported. There is no point to trying to reinvent the wheel on what was done right before.
But the best part of any Balanced Budget Amendment is that it renders Keynesian economics unconstitutional. Keynesian economics holds that the key to promoting economic recovery is to increase federal spending, deficits and debt. If that sounds nuts, that is because it is. Borrowing or taxing a trillion dollars out of the private economy to spend another trillion dollars back into the economy does nothing to promote the economy or economic growth overall on net. Counting dislocation effects of the policy, and the negative incentive effects of any higher taxes to finance the increased spending (higher deficits are recognized in the market as increased future taxes), the result is actually an overall net drag on the economy.
That is why President Obama’s blowout stimulus spending of nearly $1 trillion adopted as one of his first acts in office in 2009, never worked to produce the expected economic recovery and growth. Instead, it produced the worst economic recovery from any recession since the Great Depression, reflecting the net drag on the economy discussed above, along with Obama’s explicit tax rate increases, and the Fed’s counterproductive monetary manipulations.
And that is why Keynesian economics never worked to pull the economy out of the Great Depression, which is what it was invented to do, nor has it ever worked at any other time, in America or anywhere else. Those who believe in Keynesian economics do not do so because it is logical or has been proven to work. They believe in it because it justifies what they want, and what the politicians want, which is increased spending, deficits and debt, while avoiding the burden and political negativity of imposing higher taxes to pay for the increased spending.
Keynesian economics is actually just an abuse of democracy, as well as academic freedom, and the First Amendment when it is publicly advocated, morally deserving of punishment in my opinion. Forget about I don’t agree with what you say, but I would defend to the death your right to say it. I myself would favor public flogging of the more abusive Keynesian advocates, such as Paul Krugman. But just making their views unconstitutional would seem to be a reasonable, civil compromise.
Further Promoting Economic Growth
Levin’s Amendments would further promote economic growth by restoring strengthened protections for property rights. His proposed Amendment to Protect Private Property restores the Takings Clause by providing that private property may be taken by government only for public use, such as for a park or a highway, not to be redistributed to other private citizens, such as through so-called economic development programs. The proposed Amendment also wisely provides for regulatory takings, where property is effectively taken by regulations heavily restricting its use, such as when private property is devoted to a nature preserve by prohibiting any effective use. Levin’s proposed Amendment would require compensation to property owners for regulatory takings when the regulation imposes a loss in market value of the property of $10,000 or more. But that would not apply to regulations acting to prevent uses of property that injure the property rights of other property owners, such as harmful emissions of pollution that harm use or enjoyment of other property.
Levin’s Amendment to Promote Free Enterprise would return the Commerce Clause to its original intent, which was not to grant the federal government the power to regulate interstate commerce, but to prevent states from adopting protectionist regulations on trade between states. That would sharply restrict federal regulation harmful to economic growth, while preserving the free trade among the states that has been central to American prosperity.
Levin’s proposed Amendment to Limit the Federal Bureaucracy is another pro-growth measure. It would grant Congress the power to nullify any federal regulation costing the private sector $100 million a year or more. That would prevent President Obama’s abusive misuse of Executive Branch powers contrary to the will of Congress. No longer would a President be able to say, like a South American authoritarian, if Congress doesn’t act, I will. This would stop anti-growth overregulation, like the EPA’s War on Coal. War on American industries should be left to foreign enemies of the United States, not for our own President to wage against his own people. The Amendment would also provide that all federal departments or agencies shall expire within three years unless individually reauthorized in a stand alone bill. That would reduce unnecessary spending and overregulation, which are both pro-growth.
Restored Checks and Balances
Levin’s other proposed Amendments all serve to restore and reinvigorate checks and balances on runaway federal power. The U.S. Supreme Court hastily declared term limits for federal offices unconstitutional, warning against trying to repeatedly return to the Court with clever manipulations that might achieve the same result. Levin rewards them with the only remaining recourse, a proposed Constitutional Amendment imposing term limits on Congress and the Supreme Court.
Under Levin’s term limits Amendment, Members of Congress could serve for a total of 12 years in either the House or the Senate combined. That would prevent the effective capture of members who serve in Washington too long, coming eventually to represent the interests of centralized power in Washington to their constituents back home, rather than representing the interests of their constituents to Washington.
Moreover, a separate Amendment would also limit Supreme Court Justices to serving no more than 12 years, rather than for life, or until they decide to retire, as today. This would avoid the stealth liberal Justice, such as Chief Justice Earl Warren and Justice William Brennan appointed by President Dwight Eisenhower, and Justice John Paul Stevens appointed by President Ford, from becoming lifelong mistakes.
That same Amendment would further limit judicial abuse of power, or abusive judicial activism, not merely interpreting the law as written, but making up the law, which is effectively legislative action. The Amendment would empower Congress to override majority opinions of the Supreme Court by a three fifths vote in both houses. Moreover, it would also empower the states to do so through a three fifths vote of state legislatures. These are critical checks and balances on what have become destabilizing judicial abuses of power. An oversight in the original Constitution was to leave out any effective check and balance on the judicial branch. That was because the Founders never imagined the abuse of the modern judicial activism of today. Levin’s Amendment corrects that oversight, in light of modern experience.
Another proposed Levin Amendment would restore the originally intended federalism by granting states powers to check federal abuses. It would enable the states to override federal statutes by a three fifth vote of state legislatures. The states today could use that power to repeal Obamacare, an abuse passed on a completely partisan basis by a temporary partisan supermajority, with effective bribes to hold partisan unity. Remember the Cornhusker Kickback, and the Louisiana Purchase? By the same three-fifths vote, the Amendment would enable state legislatures to override federal regulations costing the private sector $100 million a year or more, another important check on anti-growth, federal, regulatory abuses. A similar Amendment would grant states the power to adopt further Constitutional Amendments directly, by a two-thirds vote of state legislatures.
The Populist Power and Appeal of Levin’s Liberty Amendments
Levin’s book provides an important breakthrough among conservatives, who have been long divided over using existing state powers to amend the Constitution by national convention, for fear that a runaway convention might rewrite the Constitution, and destroy critical American liberties in the process. Levin explains in the book that the state power for such amendment, which is how he sees his proposed Amendments possibly being adopted, not through federal action, was included in the Constitution precisely for a situation like today, when a runaway federal government breaks through the bounds of the Constitution, and threatens the nation with tyranny. Levin is so right about this, because our current Constitution has been broken by a century of rebellion and conspiracy against it by so-called “Progressives,” who actually deserve to be treated like any other rebels and outlaws. This is where the real loss of critical American liberties has become manifest today.
The potential tidal wave of public opinion and grassroots activism that Levin’s book could generate should not be easily dismissed. The book itself is a check and balance on Obama and his Marxist Democrats, just by raising the threat of such Constitutional amendments adopted through state action. Moreover, the proposed amendments have genuine grassroots populist appeal. Limiting taxes, limiting federal spending, banning federal deficits and debt, new powers to stop abusive federal regulations, term limits, new checks and balances on runaway federal judges, sharply limiting government takings, another chance to repeal Obamacare, and the potential for finally reigniting traditional American growth and prosperity, all of these hold great appeal to stir up a grassroots firestorm. Some entrepreneurial grassroots activists will see the new opportunity Levin’s book creates.
Moreover, just the fight to adopt such Amendments would restore balancing grassroots political power. During the 1970s, a populist movement among the states to adopt a federal balanced budget amendment almost succeeded, falling just one or two states short. But the grassroots organization from that campaign flowed right into the 1980 Reagan campaign, and Congressional elections, resulting in a transformational political earthquake in 1980. Just the effort to pass the Liberty Amendments can have that same political effect again.
[First Published by Forbes]