Best government money can buy
ERNEST F. HOLLINGS, former U. S. senator
2013 -- The President made a powerful inaugural address intoning the Declaration
of Independence by intoning several times "We the people." The
people reacted warmly to "We the People" little realizing that
campaign contributions have caused the people to lose control of their
who contribute now control. The lobbyists used to contribute to the Speaker
or Leader for results in the House or Senate. Today the money goes direct
to the Congressman or Senator. The lobbyists work together, wheel and
deal, and votes are fixed long before the Roll is called. Lobbyists know
the particular lobbyist that can influence a particular Senator and even
tell the Leader or Speaker when to call the vote. The Speaker, the Leader,
the President no longer can lead.
Congress saw the threat of "the office" being bought and in
1973 limited spending in campaigns. President Nixon signed it in to law,
but the Supreme Court in Buckley vs. Valeo reversed the law with
the need for money in campaigns escalating beyond reason. Congress has
tried for thirty years to limit spending; McCain -Feingold; public financing,
etc. but the Supreme Court reversed, getting worse, even giving corporations
unlimited power to contribute. Only a Constitutional Amendment empowering
Congress to limit or control spending in federal elections will remedy
Lobbyists are very helpful. Senators learn the best arguments for or against
an issue from the lobbyists. But limiting spending in campaigns will limit
the lobbyists influence; the people will regain control of their government
and the Senator will have time for his work. For Congress to pass such
an amendment and for the States to ratify will take time - more time than
you think. Congress has learned to buy the office. It knows that being
in the middle of the lobbyists in Washington; fundraising morning, noon
and night, it has the advantage of raising money in campaigns. I got a
bipartisan majority vote to amend the Constitution but not the 2/3 required
for a Joint Resolution. In my last two years, (2003-04) I couldn't get
a Joint Resolution up to vote for the amendment.
Off-Broadway show of "the best government money can buy"
must stop. Climate change and energy sources can wait. President
Obama's legacy is a VAT Tax Cut to stop deficit spending and an
industrial policy to protect production necessary for a strong economy.
meantime, we can have instant tax reform -- close all loopholes -- by
eliminating the Corporate Tax and replacing it with a 7 percent Value
Added Tax. The 2011 Corporate Tax produced revenues of $181.1 billion.
A 7 percent VAT for 2011 would have produced $872 billion. With spending
cuts, Congress can balance the budget in two years rather than ten. 150
countries compete in globalization with a VAT - average 15 percent - which
is rebated on exports. The Corporate Tax is not rebated. An entrepreneur
in the U.S. can start production, develop the market and be making a profit
in two or three years but he has to pay the 35 percent Corporate Tax and
is levied a 17 percent VAT when his exports reach China. A competitor
producing the same product in China, exports to the U.S. tax free and
can put the entrepreneur out of business. This 52 percent difference destroys
manufacture in the U.S.
emphasize this is a tax cut. Rather than absorbing a 35 percent Corporate
Income Tax on each stage of production, this requires only a 7 percent
VAT to be absorbed. A Sales Tax must be paid; a VAT may be absorbed or
passed on. The multinationals have so many loopholes in the Corporate
Tax that they pay very little tax. The Main Street merchant or small business
pays the full 35 percent. The VAT tax cut gives small business a break.
Cancelling the Corporate Tax releases over $1 trillion in offshore profits
for Corporate America to repatriate tax free and create millions of jobs.
Last time this happened few jobs were created. Congress must restrict
the repatriation for research and jobs. Make it a 10 percent VAT, cancel
the payroll tax, and get the economy going.
The President and Congress act like they want to get the economy going
but the best actors are not in Hollywood, they are in Congress. They want
to get the campaign going. Wall Street, the big banks and Corporate America
want to keep the China profits flowing. So, Congress cusses China and
Wall Street, the big banks and Corporate America contribute to the President
and Congress to do nothing. And the President and Congress do nothing.
It takes private investment to develop a strong economy. The VAT tax cut
will encourage Corporate America to invest in America but it must have
certainty that its investment will be protected. Globalization is nothing
more than a trade war with production looking for a country cheaper to
produce. The United States was born in a trade war - the Boston Tea Party.
Our Founding Fathers showed the way to win this war by adopting an industrial
policy - The Tariff Act of 1787. This protectionism worked so well that
Edmund Morris writes in Theodore Rex that after a hundred years the Colony
was "$25 billion richer" than the Mother Country. We passed
the Defense Production Act in 1950 to be sure to have on hand the materiel
necessary to defend the country. Today we've offshored defense production
in support of NATO so that, like Boeing, we are "grounded".
We are begging Russia for helicopters for Afghanistan. The President must
enforce the Defense Production Act and the President and Congress must
develop an industrial policy to protect those items necessary for a strong
economy. President Reagan protected steel, motor vehicles, computers,
and machine tools in 1984. If President Bush and Obama had protected motor
vehicles, like President Reagan, the Detroit bailout would not have been
This Off-Broadway show of "the best government money can buy"
must stop. Climate change and energy sources can wait. President Obama's
legacy is a VAT Tax Cut to stop deficit spending and an industrial policy
to protect production necessary for a strong economy.
Hollings of South Carolina served 38 years in the United States Senate,
and for many years was Chairman of the Commerce, Space, Science &
Transportation Committee. He is the author of
Government Work (University of South Carolina Press, 2008).
Ernest F. Hollings. All rights reserved. Contact
us for republication permission.
Ernest F. Hollings served
the public for 56 years -- 38 years in the United States Senate and as South
Carolina's governor, lieutenant governor and a member of the S.C. House of
Today, Hollings continues
to be influential in public affairs and offers this Web site as a compendium
of current and past positions on public issues. Learn
more about Fritz Hollings.
Hollings receives French honor
France honored retired
U.S. Sen. Fritz Hollings on in 2013 by awarding him the Legion of Honor for
his World War II service. More.
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the new book
University of South Carolina Press in 2008 published Making
Government Work, a new book by Sen. Hollings. Learn