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“‘Repeal or Revise’ and Thunder Out of China” by Clark Judge

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The weekly column from Clark Judge:

“Repeal or Revise” and the Thunder out of China
By Clark S. Judge, managing director, White House Writers Group, Inc. <> , and chairman, Pacific Research Institute <>

A column last Friday in The Financial Times underscored the urgency of the new GOP House majority’s “repeal or revise” agenda. Not that addressing domestic U.S. concerns was the author’s intention.

The article by columnist Philip Stephens (see: ) surveyed the deterioration of US-China relations during the past year: tensions over Korea, Taiwan, and the Western Pacific, the unveiling of the J-20 stealth fighter hours before a meeting between defense secretary Robert Gates and Chinese president Hu Jintao. Add to that China’s insistence since Mr. Stephens’ article appeared that the dollar is yesterday’s global currency. It all adds up to an increasingly toxic bilateral brew.

Why China’s growing aggressive?

Mr. Stephens’ list of reasons includes China’s economic rise fueling expansion of its military, the military’s “harnessing of popular nationalism”, the military’s “misunderstanding and miscalculation” of the US, and the perception in China (particularly in the current economic crisis) that the US’s financial and military power are in decline.

It is hard to miss here the direct link between China’s perception of the financial weakening of the US government on one hand and China’s readiness to mount military and security challenges on the other.

Note I emphasize “financial” weakness. Despite administration and Democratic Party rhetoric, the current economic turmoil follows two-and-a-half decades of stunning economic growth. China has done well in those years, too – well, enough to suggest a symbiotic link between their economy and ours, each complimenting and strengthening the other. In other words, the current economic crisis would not be so provocatively inviting if our government’s financial house were in order. Clearly the Chinese government – or at least its national security establishment — is rapidly moving to the view that the US government has squandered its financial heritage and through it the nation’s global power.

What is to be done?

Call it the second order injunction of the Hippocratic Oath. The explicit injunction of the oath is “do no harm,” which would make the second order injunction, “if you are doing harm, stop.”

Here are four laws and policies that now do or will do immense harm to our government’s finances, harm that the new Congress should stop:

Harm #1 — Budget Reform Act of 1974: When I was in the Reagan White House, I was asked to review the history and consequences of this law. It grew out of President Richard Nixon’s frustration with the prisoner’s dilemma dynamics of Congress when it came to spending. Nixon saw that the legislature lacked an internal capacity to say no to new spending. He sought to devise new rules that would reverse that dynamic. Liberals quickly caught on and, as Watergate leached the president’s power, took control of the legislative process. The result: the bill was transformed (some were explicit about their intent) into one that made Congress even looser with the purse. As a graph given to me at the time by member of the Council of Economic Advisors staff showed with utter clarity, the rise in US government real indebtedness dated from the enactment of this legislation.

Harm #2 – The stimulus and spending packages of the last two years: Think of these as the ultimate fruits of the 1974 act. The act diminished the role of the White House as a restrainer of spending. Since the current administration took power (and to an alarming but far, far lesser extent under its predecessor), the White House has been a cheerleader and instigator of previously unimaginable federal lavishness. The new Congress should cancel all unspent funds from these packages.

Harm #3 – The health care overhaul: Like cultists with a parallel universe doctrine, the administration has convinced itself that it overhaul plans will reduce federal spending. That doesn’t mean that anyone else should drink their Kool-Aid – and from the polls it is apparent that no one will. Given the presidential veto, defunding enforcement is all that can be done for now. Repeal and replacement with consumer-and-market-driven reforms should come as quickly as a change in the White House allows. If this bill goes into force, it is impossible to imagine how the government’s balance sheet can be made healthy again.

Harm #4 – Social Security and Medicare/Medicaid: The rise of the Tea Party and the outcome of this past election suggest that touching these issues is no longer the third rail of American politics. Instead, failure to touch them and fix them may have become fatal. George W. Bush’s post-2004-election decline began with his inability to win Social Security reform. There is a new American majority that will respect those with the courage to address the unfunded liability problem. Restoration of our government’s financial health cannot be achieved without reform.

There is much more that needs to be done to insure our government’s continuing place as the unquestioned financial powerhouse of the globe. The thunder out of China warns us that not just money is at stake — but national security and possibly even war and peace.


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