Texas Senator Ted Cruz has been steadily growing in the polls in recent weeks and the debate was his attempt to capitalise on this slight momentum to capture more votes from the libertarian and uber-Christian wings of the Republican Party. The format of the debate helped Cruz before he said anything as the other two candidates that are trying to court the vote of fundamentalist Christians, Mike Huckabee and Rick Santorum, were not on the stage. As a result Cruz, although his performance was decidedly average, will probably go up in the polls in the aftermath of the debate.
On taxes and spending Cruz suggested that the US should institute a 10% flat income tax, a 16% flat business tax, and undergo massive “regulatory reform” which would probably result in huge deregulation of large amounts of industry. Furthermore, Cruz stated that people would only pay this 10% income tax rate on earnings above $36,000. Obviously this would result in Draconian cuts in federal expenditure and most of this revenue would go towards military spending, however the other component of Cruz’s plan was one that caught my attention.
Cruz stated that the US needed to have “sound money ideally backed by gold”; Ted Cruz’s plan to make the US face up to modern economic challenges is to bring back the Gold Standard (which hasn’t backed US currency since 1971. I’m not going to talk about the economic pros and cons of types of currency because I would be lying to say that I knew what I was talking about but I would like to talk about the mindset of Cruz at this point. Cruz believes that currencies are more reliable when backed by gold because he doesn’t understand that, despite the widespread perception that it does, gold, unlike something like water, has no intrinsic value. This point is easily testable as if left on a desert island having all of the gold in the world would be irrelevant, whereas water would always be useful. Unfortunately Cruz will never think philosophically about the abstract idea of value because, according to Cruz, people should be discouraged from studying philosophy.
Later on in the night Cruz had what the commentariat have called his ‘Rick Perry moment’ because he said that he would cut five federal agencies: “the IRS, the Department of Commerce, the Department of Energy, the Department of Commerce, and HUD”. Although I would not want to see any of these government departments cut I do commend Senator Cruz for pointing out how wasteful the federal government is for having two Departments of Commerce and I think I would meet him half way but agreeing to abolish one of them.
On a more serious point look what he wants to abolish. I understand that three of these agencies are focussed on enforcing regulations and assisting people, both of which are opposed by the Republican Party, but how can the federal government collect taxes if you abolish the agency who’s job is to do specifically that? He says that he is going to have some federal taxes yet he wants to get rid of the mechanism through which they are collected. Cruz later on claimed that he wanted to expand military spending and that this would be funded by the total abolition of tax loopholes. So to clarify spending on the military, which is already higher than the next ten countries combined, should increase, taxes should be cut to ridiculously low levels, and support for the poorest in society should be cut. What a joke.
Regarding welfare Cruz argued that the retirement age should be raised for younger workers and that welfare benefits should grow at a slower rate. This policy position is rooted in the idea that Social Security is about to go under and some serious policy solutions are required to guarantee its solvency. However the foundational premise is false; according to the Treasury Department, even if the trust funds are depleted, Medicare and Social Security will be able to pay 85% of costs in 2030 and 75% in 2050. Indeed the Congressional Budget Office have projected that Medicare’s main trust fund will be depleted by 2030, which means that although something may have to be done about Social Security and Medicare at some point, it is no where near as pressing as Cruz is implying.
Cruz also made comments regarding immigration and said what can only be described as something stupid: “if Republicans join with the Democrats as the party of amnesty we will lose”. Firstly the Democrats are not the party of amnesty, this is evidenced by the fact that all of the Democratic candidates are proposing a pathway to citizenship and none of them are suggesting an amnesty of illegal immigrants.
Also, the Republicans that Cruz is attacking are not proposing amnesty either, they’re proposing the same policy as the Democrats only over a much longer time period. But the point that escapes Cruz is that the last president to sign an amnesty of illegal immigrants was Ronald Reagan, which would therefore mean that, according to his own definitions, the GOP is the only party of amnesty in the United States.
Cruz’s final contribution of the evening was in relation to bank bailouts. The Texas Senator said “I’d go after bankers and the cronyism and corruption of Washington”. This view is informed by his libertarian leanings and as a consequence he said that he wouldn’t bailout the banks again however I believe that this creates a hypothetical situation that Cruz wouldn’t be able to respond to.
For example if there was another banking crisis I wouldn’t bailout the banks affected, I would nationalise them and use them as a mechanism to pump capital investment into the economy because a simple bailout, as has been shown in recent years, will prevent a catastrophe but not improve the country’s financial situation. In the case of Cruz he would not bailout the banks, prosecute the bankers, and then allow the people who lost their life savings to remain poor because apparently state-intervention in the economy is the spawn of Satan.
He concluded by bemoaning the “philosopher-kings” that apparently run the Federal Reserve. He rather uniquely argued that the Federal Reserve caused the 2007 Financial Crisis, which is interesting because it’s wrong, before saying that the Fed should be “the lender of last resort for private banks but not of the government”. This last quotation was a reference to Cruz’s opposition to quantitative easing which he has previously characterised as ‘printing money’. Specifically QE is a mechanism that prints money in order to purchase government debt, thus enabling the economy to somewhat recover as the government can run a large deficit without fear of a debt crisis as the central bank of that country has underwritten that debt. QE is not printing money for the hell of it and an inevitable route to Weimar-style hyperinflation.
Ted Cruz did well in the debate, not in terms of making sense or coming up with any substantive proposals, but he didn’t make any mistakes that GOP primary voters care about. Considering that he is a Senator, he has remained the most outsider-like of the presidential candidates along with Rand Paul but unlike Paul, Cruz has a significant following among evangelical Christians as well as self-styled libertarians. His poll numbers will probably go up because of his average performance because he will be able to court the religious vote now that Huckabee and Santorum are out of the main debates, but this increase in support shouldn’t be mistaken for momentum as I still do not believe he shall be the nominee.