E. Fiscal Responsibility and Patriotic Decency

The General Welfare: A Legislative Agenda for a Better American Future

"We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America."

"All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside."

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Fiscal Responsibility and Patriotic Decency

The purpose of our government, as stated in our Constitution, is to promote the common welfare. Patriots participate in the common enterprise; they do not attempt to shift the burden onto others. We need a government that is funded fairly, in which much is demanded of those to whom much is given: those who benefit the most from our system should also pay the most to support it.

Separately, our Federal government faces a massive deficit resulting from two basic problems: The extraordinary inefficiency and expense of our medical sector, which costs almost twice as much per person as that of other advanced countries with better public health success than ours, and our bloated military sector, which is almost as large as the rest of the world's combined. Any long term solution to our fiscal problems or to reduce taxation must reduce military and/or medical expenses.

    • The Dean Baker Drug Research Improvement and Monopoly Profits Reduction Act.

    • Patent monopolies are an expensive and inefficient way to reward past drug research or fund new research. They provide funds to researchers based on the salability of prior research rather than the promise of future research, reward expensive treatments for the affluent rather than necessary or useful treatments for all, and create powerful incentives for manufacturers to promote overuse of existing patented drugs in order to capture monopoly profits. A system of peer reviewed research and prizes would generate better results for far less cost, while still creating sufficient rewards for the occasional maverick to gather private funding.

    1. Patent monopoly protection for pharmaceuticals is hereby reduced to five years, commencing from the first application for a pharmaceutical or any closely related substance.

    2. The CBO shall calculate the expected savings for Medicare due to the reduced prices as drugs come off patent sooner. This amount shall be shifted from Medicare's budget to NIH.

    3. The CBO shall calculate the expected savings for Americans not using Medicare due to the reduced prices as drugs come off patent sooner. This amount shall be appropriated to NIH and funded with general tax revenues, unless the Congress shall vote to fund it with a tax on existing pharmaceuticals in the amount of the saved monopoly profits.

    4. NIH shall fund primary research and research and development to create marketable pharmaceuticals by means of competitive, peer reviewed grants. University and for-profit researchers shall be eligible to apply for grants.

    5. NIH shall fund a prize system, granting a prize in the amount of $10,000 for every life saved and proportionally lesser amounts for nonfatal diseases or injuries cured or ameliorated by new pharmaceuticals, taking into account side-effects and the degree of improvements over previously existing treatments.

      • Prizes shall be based on reported results during the patent period and paid one year after the expiration of the patent period.

      • Should additional benefits or detriments be discovered after the prize payment, payments may be retroactively adjusted by the agency or on application of the prize recipient or any affected consumer.

      • Prize determinations shall be based as much as possible on objective statistical determinations of medical utility, with necessary judgments of relative utility or success made by a peer reviewed panel of experts and public representatives with appropriate safeguards against conflict of interest.

    • The GI Bill Restoration Act.

    • Whereas, the most fundamental basis of national security is a well-educated citizenry,

    • now therefore:

      1. Any soldier who has served a term of 3 years or seen service in time of war shall be entitled to a grant of full tuition at any eligible college or university to which he or she is admitted.

      2. Eligible institutions shall include

        • all state colleges and universities,

        • all private, accredited, not-for-profit colleges and universities, provided that if such college or university has more than 20% of its students on this program, the grant shall be limited to the institution's average collected tuition (reduced by financial aid from all sources) or the tuition at the closest equivalent state institution, whichever is lower, and

        • accredited for-profit and trade schools, providing that such institution demonstrates proof of equivalent educational quality, a graduation rate over 75% and a placement rate in the relevant trade exceeding 75% of graduates, and further provided that the grant shall be be limited to the institution's average collected tuition (reduced by financial aid from all sources) or the tuition at the closest equivalent state institution, whichever is lower, reduced by the percentage of the institution's budget that does not go to direct instructional costs or research leading to published work.

    • The Patriot's Army Act.

    • Whereas, our soldiers bear a disproportionate burden of defending our country; and

    • Whereas, some politicians have been too free with the lives and health of soldiers in the name of chicken-hawk aggression;

    • now therefore:

    1. No law or resolution of the Congress to commence, extend, or fund hostile action abroad shall be valid unless, in addition to all other requirements of law, it shall be approved by a majority vote of those senators and Congressmen/women with children currently serving in the armed forces in positions that might lead them to be sent abroad.

    2. In the event that any hostile action abroad shall continue for more than 3 months, or shall involve more than 100,000 troops, or shall require a special appropriation not included in the regular Pentagon budget, the draft shall be reinstituted All men and women 18 to 21 years old shall serve 2 years in the armed forces, unless the President shall determine and the Congress shall approve, a smaller number, in which case selection shall be by lottery.

    3. The funeral of every serviceman or servicewoman killed in service to the United States shall include a honor guard and a public ceremony in Washington DC, unless the family of the deceased shall request otherwise.

    4. The Pentagon shall determine, to the best of its ability, and publicize the name of every soldier and civilian killed or injured by, or in defense of, the United States or in connection with military or quasi-military action by the United States.

      • A permanent list of all persons killed or injured in the service of the United States shall be inscribed on suitable monuments at the entrance to the Pentagon and the Congress.

      • A permanent list of all persons killed or permanently maimed by US forces shall be maintained in a public place on or near the Mall.

      • A publicly available record shall include the location, date and incident in which the death or injury occurred, and the reason for such incident.

      • Each of the names on both lists shall be read in a public ceremony in the National Cathedral on each Memorial Day.

      • No law or resolution of the Congress to commence, extend, or fund hostile action abroad shall be valid unless, prior to vote on such law or resolution, both lists shall be read out loud on the floor of the Congress to a quorum of the House which is to vote.

    • The President Eisenhower Memorial Military-Industrial Complex Restraint Act.

    • All departments of the Armed Forces are hereby directed to:

      1. Create and publicly distribute a list of all contracts with non-governmental entities for the supply of products or services to the military, whether direct or indirect, including an explanation of

        • why such product or service is supplied by a non-governmental entity,

        • the costs or savings associated with such outsourcing,

        • the security risks or gains associated with such outsourcing,

          • and the proportion of such costs or savings associated with

            • (1) paying ordinary employees less than the prevailing government wage or

            • (2) paying executives and other upper level employees, or investors, more than the prevailing costs for similar government employees or government borrowing.

    1. Cease all use of "outsourced" labor, services or products within one year, except on demonstrated and public showing that the Armed Forces and government are not capable of providing similar labor, service or product on similar terms.

    2. Propose cuts amounting to 25% of current budget, which cuts shall not include reducing the salary, wages or benefits of any soldier or service person (but may include reducing headcount).

    • The Fiscal Responsibility Anti-Cyclical Act.

      • If in any quarter, the annualized inflation rate exceeds 7% and the Federal Reserve declares a risk of increased inflation, for the following quarter a surcharge tax shall be imposed in the amount of 1% of all earned income above $100,000, 10% of all earned income above $500,000 and 10% of all interest, dividend and capital gains income over $20,000. Begining in 2011, these threshold levels shall be reset each year so that the 1% threshold is at the 95th percentile of wage earners and the 10% threshold is at the 99th percentile for earned income and unearned income respectively, using the most recent available information but in no case more than two years old.

      • If in any quarter unemployment exceeds 8%, for the following quarter, the employee portion of payroll taxes shall be suspended for all individuals earning less than 150% of the median individual wage and salary income as determined by the IRS, and all social security and social security disability payments shall be increased by 5%.

        • In each such quarter, the social security trust fund shall be reimbursed from general treasury funds for any FICA payments lost due to this provision, if any, as calculated by the CBO using dynamic scoring including the impact of reduced tax rates in increasing employment.

    • The President Eisenhower Memorial Restoration of Responsibility and Deficit Reduction Income Tax Act.

    • High income can be powerful incentives to productivity and competition in a capitalist system. However, when prospective incomes get too high, the incentives change: they attract people who are willing to and skilled at cheating and deception, creating short term appearance of success, taking unsound risks with other people's livelihoods and money in order to win an unlikely but large prize even at the cost of highly likely failure and otherwise manipulating the system in order to win extraordinary rewards. For this reason, it is not surprising that higher CEO salaries in recent years have been associated with deceptive and sometimes criminal accounting, mergers and acquisitions lacking sound business rationales but likely to appear attractive to stock markets or bosses, polices likely to generate short term appearance of success even while reducing the likelihood of long term success, and violations of implicit and explict-but-legally-unenforceable agreements in order to seize rights or assets that others reasonably relied upon. Bureaucratic organizations, whether armies, government agencies, or business corporations, quickly lose their competitive edge when their leaders have incentives to work for themselves instead of institutional success. Thus, our capitalist system requires that our business leaders, like other professionals, make a good living only if the institutions they work for do as well -- which requires reducing pay to the point where success is defined by successfully building a long-term viable institution and running it, not by winning the lottery ticket of sudden wealth.

    • The current tax preference for unearned income such as income and dividends is both unfair and inefficient. Those who need not work for their income but can rely on the work of others benefit more from government; they should be be treated as aristocrats entitled to tax exemptions. Moreover, tax incentives for investors to move their capital around are economically unsound. Reducing the mobility of capital, by taxing it fairly, would reduce speculation. Even more important, it would improve the relative bargaining power of labor: labor, which is human beings, is inherently less mobile than capital, because people need to uproot their families to move or, often, even to change jobs. The greater mobility of capital gives it increased bargaining power in negotiations, where the party that can walk is always in a better position to seize the bulk of the gains from a transaction. Taxing mobile capital will, therefore, have the desireable result of directing more economic growth towards the productive employees who make it possible. .

    • Furthermore, no republic can long survive if some are rich enough to buy the unquestioning loyalty and obedience of others. Democracy will inevitably collapse into plutocracy if some citizens are rich enough to buy politicians, votes, or public opinion and to use this influence in order to increase their own power and wealth.

    • Finally, in a competitive market system, extremely high incomes normally result from monopoly or quasi-monopoly power or similar market failures. Worse, large accumulations of wealth can easily be used to overwhelm competitors or corrupt regulators in order to increase such monopoly power and generate further wealth by taking from, rather than giving to, the rest of society.

    • For each of these reasons, no one has a moral claim to the extraordinary gifts our capitalist system sometimes bestows, and the survival of our capitalist market and democratic republic require that their effects be limited. Accordingly, it is essential to use the taxing power in order to prevent the accumulation of wealth extremes. Unfortunately, our current tax system has been corrupted to tax unearned income at lower rates than earned income and to exempt large accumulations of wealth from most taxation altogether -- much like the feudal French system of taxing the peasantry while exempting the aristocracy.

    • Whereas, extreme accumulations of wealth and income threaten the integrity of our political process, and

    • Whereas extreme accumulations of income and wealth are useful only for buying aristocratic privilege, and

    • Whereas those who benefit the most from our political and economic system should also contribute the most towards its costs, and

    • Whereas, extremely high pay is associated with corruption and incompetence,

    • now therefore, be it enacted:

    1. The income tax rate on taxable income over $1 million per year shall be 90% of the amount above $1 million.

    2. The income tax rate for unearned income, including capital gains and dividends, shall be no less than the applicable tax rate for earned wage and salary income.

    3. Step up of basis at death is hereby repealed. The IRS shall, by rule or regulation, provide methods to allow heirs who are unable to prove basis to estimate it.

    4. The regressive cap on social security (FICA) tax is hereby repealed. All earned income is subject to social security tax.

    5. The estate tax exemption amount is set at $3 million ($6 million for a couple). The tax rate is set at zero for amounts below that exemption amount, at 50% for amounts between $3 million (or $6 million for a couple) and $10 million, and 90% for all amounts above $10 million. This means that spouses may inherit without tax. When money is passed on to the next generation, an estate of $3.1 million will pay $50,000 and an estate of $11 million will pay $4.4 million, leaving more than enough money for any heirs to live well without working. The estate tax shall apply to all devised or inherited assets regardless of form and all "generation-skipping" devices shall be subject to a penalty tax of double the ordinary estate tax.

    6. Trusts with a corpus exceeding $100,000 shall be taxed at the maximum income tax marginal rate. If multiple trusts directly or indirectly benefit the same individual beneficiary, the entire corpus of such trusts shall be consolidated for purposes of this provision.

    • The Medicare/VA For All Act.

      1. Every American citizen or permanent resident below the age of 18 shall be enrolled in Medicare. His or her parent or legal guardian shall be billed the same fees as a senior citizen Medicare recipient who has enrolled in the cheapest available Medicare coverage.

      2. Every American citizen or permanent resident between the age of 18 and 64 (or the then current age of regular Medicare eligibility) shall be offered the opportunity to enroll in Medicare or the Veteran's Administration medical care system. Each individual may choose either system but not both. Fees shall be the same as for regular (senior citizen) Medicare recipients or veterans, respectively. No person shall be required to enroll in either program and no enrollee shall be required to use the program for particular health care.

      3. In any year in which the unemployment rate is above 5%, funding for this Medicare-For-All/VA program shall be from general revenues or deficit spending.

      4. In any year in which the unemployment rate is below 5%, one half of the proceeds of the Estate Tax shall be directed to this Medicare-For-All/VA program. Any additional funding needed shall come 50% from an income tax surcharge on the top 1% of all income tax payers and 25% from an increase in the Medicare tax and 25% from the general budget of the Pentagon.

    • The Health Care Improvement Information Act.

    • Comparative studies have shown that more expensive medical care is rarely synonymous with more effective medical care. Unfortunately, the private market as current structured provides strong incentives for more care, but only weak incentives for better care. Consumers have only limited ability to influence the care they receive, since the primary drivers are medical education, professional self-government, and fee-for-service pay, private insurers, patent monopolies creating monopoly rents and for-profit hospitals driven by markets to expand utilization. However, consumers and well-intentioned professionals could have more influence with more information and sometimes for-profit actors will find lower costs profitable. Accordingly, we need an better system for collecting, analyzing and disseminating information. In the event the we decide to re-professionalize medical care, fund research by means other than patents or restructure the medical insurance industry with better incentives, the improved information will be even more valuable.

      1. The NIH shall create an agency to research and publicize the most cost effective ways of improving health care outcomes. It shall create reporting protocols to collect all necessary and useful data from all medical care providers and insurers, including but not limited to Medicare and the Veterans Administration and any hospital, insurer or medical provider receiving Federal funds. These shall include, but not be limited to, protocols for investigation of and reporting of all iatrogenic incidents and all insurer denials of care.

      2. The NIH shall issue an annual report stating the percentage of each provider and insurer's net income that is devoted to processing or contesting payments, to administrative overhead, to executive (non-medical) pay, and to profits. The report shall also identify the most and least effective health care providers.

      3. The NIH shall create and disseminate information about medical and financial best practices on an ongoing basis.

      4. Every medical insurance provider shall be required to provide full and accurate information to the NIH and to consumers at the time of sale, comparing the services it provides and the fees it charges to Medicare and explaining the differences. Any consumer, or group of consumers, injured by false or misleading information may bring an action for damages.

    • American Property Rights Protection And Free Market Pricing Act.

      1. No person shall be granted a license or permit to use, mine, farm, graze, exploit,or occupy land that is the property of the United States, or any mineral or resource that is the property of the United States, unless such person pays a fee at least equal to the fee that would be charged in an arms length private sector transaction.

      2. In all cost-benefit analyses performed with regard to US owned resources, the value of retaining native fauna, flora or landscapes shall be priced at no less than the amount Americans would expect to paid to relinquish the rights to possession, maintenance, continuing enjoyment and knowledge of the continuing health and safety of such fauna, flora and landscape.

      3. The fee for grazing permits on US land shall be no less than the cost of grazing on equivalent private land, and shall include the cost of repair or restoration of such land and the monetary value of damage done to the beauty and natural biological diversity of such land, including the value to Americans who wish to know that US land remains intact.

      4. The fee for extraction permits on US land shall be no less than the market cost of extracting similar commodities from private land, and shall in every case include a fee for the costs of full restoration of the land after extraction and elimination of the effects of any pollution or global warming gases emitted or produced during extraction, transport or use of the commodity.

      5. No grazing or extraction permit shall be issued if, in the judgment of any of the Secretary, applicable state or local authorities, or determination of the EPA, grazing permits shall cause damage to buffalo, other native fauna or flora, or the value of the land as a refuge or reserve for Americans nationally, if the monetary or non-monetary value of such damage is greater than the incremental benefit to the American people as a whole of the permit.

      6. It is the policy of the United States to manage its fuel resources with regard for the rights of future generations. In general, this means that resources ought to stored undeveloped to the degree possible, so that they will be available for future use when no alternatives are available.

      7. No fuel extraction permit shall be granted unless the grant recipient pays a fee equal to the lesser of

          • (1) the costs of restoration of the land following extraction, plus the costs of eliminating the effects of any pollution or global warming gases emitted during production, transport, marketing or use of the fuel, or

          • (2) an amount necessary to create incentives to produce less polluting and more sustainable alternative sources.

      8. No power plant or other permit shall be granted unless the licensee/permitee demonstrates sufficient assets (or insurance or similar guarantee from a guarantor with sufficient assets) to cover tort damages in the worst possible scenario. All caps on tort liability resulting from negligent operation of any power plant or extractive industry are hereby repealed.

    • The Human Life Preservation and Economic Recovery Act.

    • Whereas, the use of carbon based fuels imposes massive costs on other people and the ecosystem that are not correctly included in fuel prices, and

    • Whereas, subsidized insurance, limits on liability and other subsidies are distorting and inefficient,

    • Whereas, subsidizing business to act in an anti-social manner does not promote the General Welfare,

    • now therefore:

    1. A carbon price correction fee, to be collected in the manner of a VAT tax, is imposed on all carbon based fuels in an amount to be determined by the EPA from time to time,

      • The EPA shall set such carbon price correction fee, at an amount which shall be, in the EPA's estimation, the actual cost of externalities associated with the use of such fuels, including the economic and non-economic costs of pollution and global climate change.

      • In the absence of EPA determination, or should a court determine that the amount of this fee may not be determined by the EPA, the carbon price correction fee shall be $5 per gallon of gasoline or its energy equivalent and shall increase with inflation.

      • The proceeds of this carbon price correction fee shall be used to fund research and development of, infrastructure for, and production and installation of safe renewable non-carbon based fuels, mass transit systems, dedicated urban bicycle paths and intercity railroads, and energy conserving technologies, including highly efficient motors and insulation.

    2. All Federal subsidies, whether by direct appropriation, tax reductions or other method, for carbon based or nuclear powered fuels, including subsidies for exploration and development thereof, are hereby repealed.

    3. All limits on tort liability for power plants, energy exploration and carbon-based transportation systems are hereby repealed. This provision may be enforced by any taxpayer.

    4. No state shall enact any special limitation on ordinary tort liability for power plants, energy exploration or development or carbon-based transportation systems, or provide any subsidy, whether by tax, appropriation or other method, for such industries or companies engaging in them. This provision may be enforced by any taxpayer.

    5. Each state shall establish tariffs for sale of electricity and other regulated fuels that shall provide utilities with a greater incentive to promote conservation than to promote expansion of energy use.

    6. All carbon-based and nuclear fuel power plants, exploration and development projects shall include a provision for the safe disposal of all associated wastes, including hothouse gases, and no such plant, exploration or development project shall be approved unless it includes provision for such disposal and funding thereof. This provision maybe enforced by any taxpayer.