by John Hawkins | January 30, 2008 8:00 am
An Interview With David Frum About His New Book, Comeback: Conservatism That Can Win Again
Last week, I interviewed David Frum about his new book, Comeback: Conservatism That Can Win Again.
What follows is an edited transcript of our phone conversation.
What do you say to the idea that the problems the GOP is having right now are largely cyclical. You know, the GOP was in power for a while and conservatives became complacent, Republicans politicians have made a lot of dumb decisions, and voters were just ready for something new as opposed to the Republican platform needing a major overhaul?
I think there is much truth to that, to the claim that the problems are cyclical, but cycles don’t revolve by themselves. The reason we have cycles in politics is precisely because a party loses power and then it reinvents itself. But, if the party doesn’t reinvent itself, the cycle can take a very long time. Look at what happened to the Democrats between about 1970 and 1995. They took a quarter century to reinvent themselves. They were the weaker party for all of that time.
One thing you talk about in the book is a conservative commitment to make private-sector health insurance available to every American. Tell us about how that would work.
Americans tend to pride themselves on having a private sector health market as compared to those socialist markets elsewhere. But, the truth is the American market is heavily distorted by state interference and by state expenditures. The federal and state governments together spend more on health care for Americans than the Canadian Federal Provincial Government spends per Canadian. So, there’s a lot of federal and state money in the system, there’s a lot of rules.
But, instead of having one national market (for health care), we have 50 local markets. Each of them is like a little German barony where you can’t move the goods past the neighbors toll. So, you get a lot of anti-competitive behavior. It is not possible, for example, to be a Sam Walton of the health insurance market and offer a basic…product at a stable and low price to millions of consumers because you are trapped inside the regulatory structure of each state.
We as conservatives should think about being trust-busters in the health field — trying to identify anti-competitive practices, knock them down, create a national market instead of a state market, and open the way to make competition more effective.
I’ve never heard a good reason why health costs should so uniquely rise and rise and I am struck by the fact that the two costs that rise the most uncontrollably in American life, health care and tuition, are both products of these distorted public/private markets in health and education.One interesting idea from your book was indexing the child tax credit to inflation and expanding it to benefit all working parents. Tell us a little bit about that.
George Bush raised the child tax credit, created by the Republicans in Congress, from $500 to $1000. But, it’s only creditable against income tax and many middle-income families simply don’t have enough income tax obligation to use it all. So, my suggestion is that it should be creditable against the payroll tax. 80% of all Americans pay more payroll tax than they pay income tax. At the same time, people who are slightly above the middle discover that even if they are eligible for the credit, they forfeit it if they come under the alternative minimum tax. So, I propose that we apply the child tax credit against the alternative minimum tax.
Now, both of those ideas are very fiscally costly. So, I want to propose the single most unorthodox thought in the book: because of the pending retirement of the baby boomers and huge costs associated with that, it is simply no longer going to be responsibly possible for Republicans to offer tax relief in one direction without finding new revenue somewhere else. So, I talk in the book — and I know this is one of the big taboos in Republican politics — where that somewhere else might be to find that additional revenue….
A carbon tax is one suggestion. My other is a form of consumption tax that would fall more heavily on upper income consumption. A progressive consumption tax.
From my point of view, I think they would have similar effects. They are both taxes on consumption. One is on energy, one is on everything. But, the idea is to protect productive activity from taxation while raising revenue that is going to be needed.
One other thing: tell us about USA accounts.
This was an idea that Bill Clinton had to create a separate system of accounts that would allow lower income people to save $300 — and if they saved $300, the government would match it with another $300. The Democrats have abandoned it, but I think it’s a pretty good idea. If you, however, were to combine it with President Bush’s approach on personal accounts and Social Security, the effect of that subsidy would be sufficient that you could guarantee that every American, even someone who earned the minimum wage his whole life, would retire at age 67 with a million dollars in a personal Social Security account. That’s…a way for Republicans to say we’re interested in (letting everyone) accumulate wealth.
Explain a little bit more about that. So, they chip in $300, the government matches it…
Let’s say you earn minimum wage your whole life. In effect, you pay 12.6% of your income, 6% directly, 6% from your employer, into a Social Security account. If you put that into a private account and we assume it grows at 8%, it will accumulate, if I remember the numbers right, to 700,000 dollars for a minimum wage worker. Not quite a million. But then if you were to top it off by saying to that minimum wage worker, “If you put in up to $300 a year into your account, free of tax, the government will match that $300 with another $300,” the effect of that combined $600 a year contribution over a working lifetime will raise that $700,000 nest egg to a million dollars.
Now, I don’t want to get too far into the weeds on this thing, but one more question to ask about that. The Social Security money that would be put into that, we’re spending it right now. So, wouldn’t that blow the deficit way up?
Yes, we’re going to have a big problem financing a transition to more private forms of Social Security. That’s one of the reasons that we need more revenue.
One of the things that I think is a problem is that we have this rule in our party that says we can discuss no new taxes. But, the problem with no new taxes is that you get stuck with the same old taxes. So, we find ourselves being a defender of this very oppressive and destructive payroll tax system because any change to the payroll tax system will require new taxes, new revenues from somewhere else to replace the payroll tax system. So, I think if we’re going to do tax reform, some taxes will rise and some new taxes will have to be created to replace the old taxes. If you won’t do that, you can’t have a reform.
Now, the GOP really hit the rocks on the illegal immigration issue last year and we could be poised to do it again, depending on who the nominee is this time. How do you think the GOP should be dealing with illegal immigration?
I think we should be talking much more about enforcement inside the country. I am not opposed to the fence, but I am skeptical about how much good it will do. It can’t hurt, but it’s expensive, it’s going to take a long time to build, and it may not be cost effective. I would venture that for much less than the cost of a fence, you could build a really effective and tamper resistant identity card system that would identify which workers are entitled to take jobs inside the country. With the fence…we try to catch you, but if you’re past, you’re past. With a system of checking who’s eligible to work, every employment transaction, of which there are tens of millions per year, will be scrutinized. Even if someone got into the country, there would be a chance to catch them. Even if they escaped or they changed jobs, they would be caught and caught again. You would make illegal work a much less profitable activity for both employer and employee. That would discourage the illegality because you would remove the incentive for illegality.
Right. You’d have enforcement by attrition.
Enforcement by attrition. But, I think we make a mistake if we focus only on the problem of illegal immigration because legal, low skilled immigration is also a big problem. The mere fact that somebody is legal as an immigrant doesn’t necessarily mean that they’re a net contributor to society.
So, how should we change our legal immigration policy?
You take a (page) from Canada and Australia. They use a slightly different point system, where instead of reserving an enormous quota for relatives of people who have recently arrived, what you do is say we’ll have some family reunification, but not too much…
What we should do is say if you speak English already, you get a certain number of points. If you have a certain level of education, you get a certain number of points. If you can demonstrate that you already possess a certain amount of capital, you get a certain number of points. If there are certain areas that have been identified by Congress as being areas of special labor shortages, you get points for that. I think the way it works in Canada and Australia is that above a certain level, you’re an automatic admission, if you score in the next tier, you go into a queue, and if you score below a certain level, you go into a slower queue, and if you score below that, you’re not considered.
I think this issue would look very different to Americans if they had more confidence that immigrants were net contributors to society, not net beneficiaries.
I agree with you 110%. One area where the GOP’s policies and rhetoric seem to be splitting is on trade. The Republican Party is still the party of free trade, but a lot more conservatives seem to be concerned about free trade deals, about trade with China, and about manufacturing jobs going overseas. How do you think conservatives should be dealing with it?
I think one of the reasons why it is so important to deal with the middle-class income issue in an effective way is because if we don’t, we are going to find more and more people attracted to snake oil and the ultimate snake oil is protectionism.
I think China is a somewhat special case. I think all the other forms of attraction to protection are deeply destructive, both to American prosperity and to the prosperity of the whole planet. We have to deal with the middle class distress that will otherwise tempt Americans to follow a protectionist path with all the terrible consequences that follow.
On environmental issues, the GOP seems to be caught in sort of a Catch-22. Republicans are for clean air, clean water, etc, but most of them don’t buy into global warming, nor can they ever hope to satisfy the environmentalist groups, many of which are run by the worst sort of extremists. So practically, how does the GOP improve its image on the environment beyond the sort of near useless calls for solar, wind, and Switchgrass that are never going to solve our problems?
You don’t have to please the environmental groups. In fact, it’s a mistake to try. One of the big surprises to me when I was researching the book was that I assumed, like a lot of us have assumed, that the environmental issue is strongest among the best educated, most affluent voters. I was rather startled to find that, in fact, it was most intensely felt among some of the least affluent voters. It was especially important, often to younger voters.
To these voters, the environment means something different than it does to the Sierra Club. It’s very much a quality of life (issue). When low income voters talk about the environment, they don’t mean “THE environment,” they mean “MY environment.” The environment of the cities, six lane highways through new suburban developments, garbage dumps and toxins, things that have a very direct impact. It is precisely because the Republican Party does not buy into a lot of the apocalyptic fantasies of the environmental movement that it has the ability to reach these people in a common sense, non-fanatical way.
The way you position the party is to say, Al Gore has been looking for ways to take away your car since 1972. Global warming is just the latest justification for doing something he wanted to do anyway. We are the party of a more common sense approach. We want to do what’s necessary, but only what’s necessary. For us, this is not a substitution for religion.
I think it is often true that in politics, the party that ends up owning an issue is often the party that is less determined about the issue. For example, it was a Democratic president who ended up signing welfare reform because he could say to the voters that he was doing it as a pragmatic matter, not as an ideological issue. In the same way, we can be the pragmatists on the environment and leave the job of being the ideologues to the Democrats.
If somebody said to you, “David, what is the one block of voters that the GOP could make the most progress with, what group would it be and what would we need to do to bring them into the tent,” what would you say?
The most promising block of voters to get are the ones you have most recently lost. The people who voted Republican before are the most likely to vote Republican again in the future. White, native born voters who are earning just above the median family income. That’s the block of voters we have lost since 2006 and the thing that is pushing them away is their concerns about economic security and we have to have a story for them about what we’re going to do to get their incomes going again. That story involves health care reform and it involves immigration curbs.
Now about a third of black Americans could be classified as conservatives; however, Republicans don’t seem to be able to convince them to vote for us no matter what we do. Does the GOP need to change strategies, just accept that we’re probably not going to get the black vote anytime soon — what should we do?
You have to learn to live with less than 100% of the vote. I think one of things that has been a lesson of the Bush years…is that although you can see a lot of socially conservative views amongst blacks and Hispanics, that they are going to vote their economic interests ahead of their values. The votes with whom Republicans should have the best chance, middle-class African American voters, are much more heavily dependent on government employment than non-African American Democrats. I think that Republicans just have to accept that they are never going to do well with government employees. So that may mean leaving some of those votes on the table.
So realistically, there’s not that much we can do?
The place to go looking for African-American votes is among the private sector middle class and unfortunately, that’s a relatively small group of people.
Ok. Give me 3 issues that a lot of conservatives seem to think are potent, but really don’t help us that much with the general public?
…Income tax cuts would be number one. …It has been demonstrated in 1996 and 2000 that it’s not (a powerful issue) because 80% of Americans pay more in payroll tax than they pay in income tax.
The second issue is the…same sex marriage issue. A lot of people credit that with the Republican success in 2004. But, when you look at the numbers, you see the states where the Republicans had the biggest gains did not have same sex marriage on the ballot. Those states where same sex marriage was on the ballot were places where the GOP had some of the smallest gains, including notably, Ohio. I think the trend in public opinion is towards a more permissive view on this issue. Although I regret that, it’s hard for me to escape it.
I think a third issue we tend to over-value is on issues of personal character. I think we tend to feel that the public was much more appalled by, for example, Bill Clinton’s personal behavior than it really was or that their attitude towards Bill Clinton’s behavior would translate into votes. But, the American public was perfectly capable of mocking Clinton and then reelecting him.
…Would you agree that too much of our foreign policy is still left over from the Cold War?
I think too much of our policy institutions are left over from the Cold War. Just as we created the National Security Council after World War II to do a better job of integrating defense, intelligence, and economics, we need institutions for the post-Cold War era. We need peace keeping institutions, we audit too much by department, not by mission — we have a bad tendency to overlay new institutions overtop of old ones. But, it’s not very helpful to create new institutions unless you get rid of the old ones because the old ones will just trip them up.
Last question, are there any blogs that you read regularly or semi-regularly?
There are dozens I read regularly….I am nervous about listing them because I will forget somebody. I read Kausfiles more than anything else….I read The Corner, of course. I read The Campaign Spot.
There are two things about my internet reading that are unusual. I have a number of correspondents who will send articles to me. Probably half my time online is spent reading articles sent to me by people I’m in correspondence with. The other thing I do is I try to do a rotation of world press. My favorites are listed by days of the week. I have a Monday list, a Tuesday list, and…I do sort of a round the world tour about once a week.
David, I appreciate it. Thank you very much…
Thank you so much. I appreciate it…
The David Frum Interview
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