ARRA News Service
ARRA News Service facebook page  
News for social, fiscal & national security conservatives who believe in God, family & the USA. Upholding the rights granted by God & guaranteed by the U.S. Constitution, traditional family values, "republican" principles / ideals, transparent & limited "smaller" government, free markets, lower taxes, due process of law, liberty & individual freedom. All content approval rests with the ARRA News Service Editor. Opinions are those of the authors. While varied positions are reported, beliefs & principles remain fixed. No revenue is generated for or by this site - no paid ads accepted - no payments for articles. Fair Use doctrine is posted & used.
Editor/Founder: Bill Smith, Ph.D. [aka: OzarkGuru & 2010 AFP National Blogger of the Year]
Contact: (Pub. Since July, 2006)
    Home Page

One of the penalties for refusing to participate in politics is that you end up being governed by your inferiors. -- Plato (429-347 BC)

Tuesday, January 01, 2013

How to Resolve the Fiscal Cliff? Elementary, My Dear Watson!

by Ralph Benko, Contributing Author: As this column is being written America is preparing to head down the, theatrically styled, “Fiscal Cliff.” That “cliff” really is the chicken roost of 40 years of mostly disappointing — and more than a decade of catastrophic — economic growth. Lousy growth leads to a diminished tax base, capable of producing only anemic tax revenues.

Washington, DC is emulating Sherlock Holmes locked in mortal combat with its own Moriarity-style criminal mastermind: the Deficit. In its own re-enactment of The Final Problem Washington disappears — whether by rappelling in a mini-deal, or hurtling — over its own Reichenbach Falls: The Fiscal Cliff. Holmes later is found to have survived. So will Washington.

Spoiler Alert: Here’s how we actually will climb out. It will have nothing to do with what happens in the next few days. The solution revolves around this Sherlock Holmes axiom: “Once you eliminate the impossible, whatever remains, no matter how improbable, must be the truth,” as Holmes observed in A Scandal in Bohemia.

The 113th Congress is preparing to forsake the 112th’s fixation on the impossible. All but unnoticed by a Washington press corps obsessed by celebrities and melodrama the GOP has generated an impressive new set of leaders. These leaders will make the House turn its power toward creating an economic climate to sustain growth. The media’s focus on politicos associated with impossible budget policy will wane. The national focus will shift to officials committed to generating real equitable prosperity through healthy free markets, a climate that will melt the deficit.

This almost certainly will begin with monetary reform. A “Monetary Policy Reform Express” already is barreling down the tracks. This legislative locomotive — HR 4180 — takes the form of Rep. Kevin Brady’s Sound Dollar Act. It already has gained 49 House co-sponsors. Sen. Mike Lee has introduced companion legislation in the Senate, recently cosponsored by the Senate’s number two Republican, Sen. John Cornyn, and the GOP’s 2016 presidential favorite, Sen. Marco Rubio. Incoming Senator Ted Cruz also places sound money as one of his key four agenda items for economic growth. Rep. Brady, also, is incoming chairman of the Joint Economic — a very bully pulpit — and has sophistication about economic growth rarely seen since Kemp left the House.

In another major, underreported, development Rep. Jeb Hensarling is taking the chairmanship of the powerful House Financial Services Committee. Hensarling already is reportedly making monetary reform one of his very top agenda items. Chairman Hensarling is perfectly positioned to play a major role in pushing economic growth through monetary reform onto the GOP marquee. Furthermore, the savvy Rep. Jim Jordan (term limited out, and thus unencumbered by the duties, of the chairmanship of the Republican Study Committee) now is at liberty to continue his efforts to bring monetary reform to the fore of economic growth policy.

Why does all this point to an authentic solution — for job creation and deficit reduction — in process? The American Enterprise Institute’s James Pethokoukis recently published, in The 7 most illuminating economic charts of 2012, perhaps the most striking presentation of the real problem, a growth gap.

For over a decade, notwithstanding frequent empty bromides about growth, neither party has been tackling seriously the relevant, really interesting, and delightful, opportunity: setting policies to help grow the economy. Both parties have been reverting to reprising their last Hurrah: Republicans fighting to cut tax rates, Democrats fighting to increase social spending. Both are complicit in causing, and colluding in polices of, stagnation.

Both parties are guilty of using Mad Hatter logic to rationalize their base motives. These motives are not to create “a rising tide lifts all boats” growth. Their motivation is to deliver goodies to their own donor and voter base. Their proposed solutions have proven impossible. So the new GOP leadership will turn from the impossible to the merely improbable. The way out of our predicament, improbably but not impossibly, comes from polices fostering sustained economic growth.

Democrats demand higher taxes. Higher taxes further stifle economic growth, promoting a vicious downward cycle. Republicans demand non-defense spending and entitlement cuts. These are politically foredoomed by the GOP demand to exempt defense spending. By fixating on the impossible, Washington has built itself a Fiscal Cliff.

Washington has taken the economy to Hell before. The worst of contemporary times was called “the 70’s.” It manifested as “stagflation.” Inflation climbed to double digits, unemployment headed to the scandalous rate of … 7.7% (slightly lower than today). Sometimes, things have to get really bad before that somnolent pachyderm, the GOP, not for nothing nicknamed “Dumbo,” rouses itself. Back in the 70’s the House of Representatives, under the visionary political leadership of Rep. Jack Kemp, took up economic growth.

As commentator Peter Roff, one of the decorated veterans of the Supply Side Wars, writes in a recent column in US News and World Report:"Washington indeed has a problem, but it’s not really a spending problem: It’s a growth problem.

"Back in the late ’70s, when the economy was flat on its back because of high unemployment, high interest rates, and a lack of productivity, a group of young conservatives led by former Rep. Jack Kemp decided to focus on getting the economy growing again. Using a form of economic theory known as “supply side,” Kemp and others proposed a massive cut in marginal income tax rates that would free up income for savings and investment in the private sector. When put into place, these ideas became the foundation of a long boom that critics derided as “Reaganomics” but which ultimately proved more successful than even most of those behind it hoped."
And let us add to Mr. Roff’s formulation, of equally essential importance as tax rate cutting, the reversal of Carter’s inane dollar policy. As former Kemp presidential campaign aide Frank Cannon, president of the American Principles Project (with which this columnist is professionally associated) observes, “Today’s Republican leaders mostly are overlooking the fact that Kemp, in stages, felled the top tax bracket from 70% to 28%. That’s a dramatic change that had a dramatic impact on growth. Today’s dramatic opportunity comes from reversing current inane dollar policy, ideally through the gold standard which Jack Kemp also championed.”

The dramatic successes associated with tax rate cutting engendered a Republican Cargo Cult-like obsession with tax cuts, akin to the Democratic Cargo Cult-like obsession (derived from FDR) with public works spending. But restoring integrity to the dollar was an equal partner in the Kemp (and Reagan… and FDR!) growth recipe. Dollar policy reform is the key, overlooked, opportunity today.’s own (and my friend) Charles Kadlec recently, stunningly, pinpointed the potency of economic growth for cutting the deficit. Kadlec was one of the Kemp’s inner circle advisors. Kadlec here observed:"[I]n Appendix B of The [CBO’s] Budget and Economic Outlook : Fiscal Years 2012 to 2022: every one-tenth of one percent increase in the growth rate will reduce the federal budget deficit over the next 10 years by $314 billion. [Emphasis added.] … Just getting back to the average of 3.1% would reduce projected deficits by more than $900 billion.

"In other words, what the Democrats and the Republicans should be debating is how to achieve a minimum 4% real growth over the next 10 years in order to reduce projected deficits by $4 trillion.

"Such an inquiry would inevitably lead to the observation that restoring a rules based monetary system is the linchpin to budget balance. About half of the 10-year periods when the U.S. has been on a gold standard saw real growth average 4% or more. However, since 1973 – two years after severing the final link between the dollar and gold – there has not been one, not even one 10-year period of 4% or better growth."
“Once you eliminate the impossible, whatever remains, no matter how improbable, must be the truth.” The solution is economic growth. Growth through good money sounds improbable to conventional-wisdom-bound elites. Yet, unlike what they have been trying to date, good money is not impossible.

The incoming GOP leaders get this. Quite possibly, however improbable it may sound to the Defenders of the Status Quo, robust growth will be established through the expedient of a tried-and-true gold standard as championed by Kemp, duly modernized from Holmes’s day. Growth through monetary reform as the solution both to joblessness and the deficit? Elementary, my dear Watson.
Ralph Benko is senior advisor, economics, to American Principles in Action’s Gold Standard 2012 Initiative, and a contributor to the ARRA News Service. The article which first appeared with a different title in Forbes was submitted for reprint by the author.

Tags: Ralph Benko, the economy, fiscal cliff, To share or post to your site, click on "Post Link". Please mention / link to the ARRA News Service. Thanks!
Posted by Bill Smith at 5:05 PM - Post Link


Post a Comment

<< Home

National Debt
Don't miss anything!
Subscribe to the
ARRA News Service
It's FREE & No Ads!

You will receive a verification email
& must validate you subscribed!

You Then Receive One Email Each AM
With Prior Days Articles / Toons / More

Also, Join us at:

Recent Posts:
Personal Tweets by the editor:
Dr. Bill - OzarkGuru - @arra
#Christian Conservative; Retired USAF & Grad Professor. Constitution NRA ProLife schoolchoice fairtax - Editor ARRA NEWS SERVICE. THANKS FOR FOLLOWING!

Action Links!
Arkansas State Senators
AR State Representatives
Arkansas Governor Office
Arkansas Attorney General
Bankrupting America
US House of Representatives
US Senators
Family Research Council
Sunshine Review

Facebook Accts - Dr. Bill Smith
ARRA News Service
Arkansans Against Big Government
Alley-White Am. Legion #52
Catholics & Protestants United Against Discrimination
End Taxpayer Funding of NPR
Overturn Roe V. Wade
Prolife Soldiers
Project Wildfire 4 Life
Republican Liberty Caucus of Arkansas
The Gold Standard
US Atty Gen Loretta Lynch, aka Eric Holder, Must Go
Veterans for Sarah Palin
Why Vote for Hillary (Satire)
FB Groups:
Arkansas For Sarah Palin
Arkansas Conservative Caucus
Arkansas County Tea Party
Arkansans' Discussion Group on National Issues
Blogs for Borders
Conservative Solutions
Conservative Voices
Defend Marriage -- Arkansas
FairTax Nation
Arkansas for FairTax
Friends of the TEA Party in Arkansas
Freedom Roundtable
Let's Mine AR Lignite NOW!
Pro-Life Rocks - Arkansas
Republican Network
Republican Liberty Caucus of AR
Reject the U.N.


Request Via
Article Comment

Links to ARRA News
A Patriotic Nurse
Agora Associates
a12iggymom's Blog
America, You Asked For It!
Americans for a Free Republic
America's Best Choice
America's Whatchtower
An Ol’ Broad’s Ramblings
ARRA Twitter
As A Matter of Fact
As The Crackerhead Crumbles
Baaad Media!
Black & Right
Blogs For Borders
Blogs for Palin
Blow the Trumpet Ministry
Boot Berryism
Cap'n Bob & the Damsel
Chicago Ray Report
Chuck Baldwin - links
Citizen Pamphleteer
Common Cents
Conservative Hideout
Conservative Observer AZ
Conservative Voices
Conway Real Deal
Defeat Obama's Agenda
Diana's Corner
eGOP News
Florida Pundit
Franklin Online Outreach
Freedom For US Now
Free Zone Media Center
For God and Liberty
Garland County Republicans
Greater Fitchburg For Life
Guns and Religion
Lasting Liberty Blog
Liberal Isn't Amy
Liberty's Lifeline
Maggie's Notebook
Marathon Pundit
Monkey in the Middle
NASA Satellites
No Runny Eggs
Okie Campaigns
Our Voices Arkansas
Patriot's Corner
Publius Forum
Randy's Roundtable
Real Debate Wisconsin
Religion and Morality
Right on Issues that Matter
Right Reason
Rocking on the Right Side
Saber Point
Saline Watchdog
Secure Arkansas
Sentry Journal
Sultan Knish
Stop Obama Satire & Cartoons
The Arkansas Patriot
The Audacity of Logic
The Blue Eye View
The Bobo Files
The Born Again Americans
TEA Party Cartoons
The Conservative Citizen
The Foxhole | Unapologetic Patriot
The Liberty Republican
The Lid
The Looking Spoon
The Maritime Sentry
The O Word
The Path to Tyranny Blog
The Real Polichick
Truth About Obamacare
Twitter @ARRA
Warning Signs
Women's Prayer & Action

Editor's Managed Twitter Accounts
Twitter Dr. Bill Smith @arra
Twitter Arkansas @GOPNetwork
Twitter @BootBerryism
Twitter @SovereignAllies
Twitter @FairTaxNation

Editor's Recommended Orgs
Accuracy in Media (AIM)
American Committment
American Culture & Faith Institute
American Enterprise Institute
American Family Business Institute
Americans for Limited Government
Americans for Prosperity
Americans for Tax Reform
American Security Council Fdn
AR Faith & Ethics Council
Arkansas Policy Foundation
Ayn Rand Institute
Bill of Rights Institute
Campaign for Working Families
Center for Individual Freedom
Center for Immigration Studies
Center for Just Society
Center for Freedom & Prosperity
Citizens Against Gov't Waste
Citizens in Charge Foundstion
Coalition for the Future American Worker
Competitive Enterprise Institute
Concerned Veterans for America
Concerned Women for America
Declaration of Am. Renewal
Eagle Forum
Family Research Council
Family Security Matters
Franklin Center for Gov't & Public Integrity
Freedom Works
Gingrich Productions
Global Incident Map
Great Americans
Gold Standard 2012 Project
Gun Owners of America (GOA)
Heritage Action for America
David Horowitz Freedom Center
Institute For Justice
Institute for Truth in Accounting
Intercollegiate Studies Institute
Judicial Watch
Less Government
Media Reseach Center
National Center for Policy Analysis
National Right To Work Foundation
National Rifle Association (NRA)
National Rifle Association (NRA-ILA)
News Busters
O'Bluejacket's Patriotic Flicks
Open Secrets
Presidential Prayer Team
Religious Freedom Coalition
Renew America
Ron Paul Institute
State Policy Network
Tax Foundation
Tax Policy Center
The Club for Growth
The Federalist
The Gold Standard Now
The Heritage Foundation
The Leadership Institute
Union Facts

Blogs For Borders

Reject the United Nations

Adopt Our Troops in Prayer

Thousands of Deadly Islamic Terror Attacks Since 9/11

FairTax Nation on FaceBook
Friends of Israel - Stand with Israel
Blog Feeds
Syndicated - Get the ARRA News Service feed Syndicated!
ARRA Blog Feed

Add to Google Reader or Homepage

Add to The Free Dictionary

Powered by Blogger

  • How To Exchange Links!
  • Comments by contributing authors or other sources do not necessarily reflect the position the editor, other contributing authors, sources, readers, or commenters. No contributors, or editors are paid for articles, images, cartoons, etc. While having reported on and promoting the beliefs associated with the ARRA, this blog/site is not controlled by nor funded by the ARRA. This site/blog does not advertise for money or services nor does it solicit funding for its support.
  • Fair Use: This site/blog may contain copyrighted material the use of which has not been specifically authorized by the copyright owner. Such material is made available to advance understanding of political, human rights, economic, democracy, and social justice issues, etc. This constitutes a 'fair use' of such copyrighted material as provided for in section Title 17 U.S.C. Section 107 of the US Copyright Law. Per said section, the material on this site/blog is distributed without profit to readers to view for the expressed purpose of viewing the included information for research, educational, or satirical purposes. Any person/entity seeking to use copyrighted material shared on this site/blog for purposes that go beyond "fair use," must obtain permission from the copyright owner.
  • © 2006 - 2017 ARRA News Service
Creative Commons License
Creative Commons Attribution Noncommercial Share Alike 3.0 Unported License.