I interviewed Congressman Connie Mack (R-FL), via telephone, about his new “Mack Penny Plan,” which is gaining considerable support from both House and Senate Republicans, and even some Democrats.

Congressman Connie Mack did not vote to raise the debt ceiling before the August recess. He was looking for a long-term solution to the nation’s deficits, which are leading to unsustainable debt.

After working with some grass-roots groups, Mr. Mack designed the “One Percent Spending Reduction Act,” or, the “Mack Penny Plan,” which, he says, will cut and cap federal spending, and balance the federal budget in eight years.

In short, the “Mack Penny Plan” would:

• Cut federal spending by 1% each year for 6 years
• Cap spending at 18% of GDP in the 7th year
• Balance the federal budget in the 8th year
• Save taxpayers $7.5 trillion over 10 years

“What’s different about this plan,” the Florida congressman says, “is that it’s pretty simple. We freeze spending at the 2011 level- about $3.6 trillion- and cut 1% of spending for six years- that’s one penny out of every dollar. Everyone has had to cut at least one penny out of every dollar, whether in family or business budgets, so that’s not too hard for the federal government to do.”

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Ronald Reagan’s poignant question to then President Jimmy Carter during a debate in 1980 clinched the presidential election. Carter presided over one of the worst economies. The economy had tanked and inflation had skyrocketed. Additionally, Iranian radicals had held 52 Americans hostage for almost a year. But that’s nothing compared to our nation’s economic malaise brought to you courtesy of Obama’s presidency.

Compared to the current economy, Carter was presiding over a picnic.

The first political ad for Obama’s 2012 re-election campaign was just released. It’s a pre-emptive measure. It’s also a powerful ad that will now set a new standard for the GOP.

Skyrocketing Debt.The national debt doubled from $5 trillion to $10 trillion on Bush’s watch. This was outrageous. This increase in national debt additionally increases interest payments to the bond holders. Americans must then pay the extra taxes just to satisfy the increased interest payments to satisfy those bond holders. In fairness, much of the increased debt was associated with 9/11 and the wars in both Iraq and Afghanistan, both of which, at the outset, had bi-partisan congressional approval. Even so, there were critics of Bush from those fiscally responsible players on the left, “We pay in interest four times more than we spend on education and four times what it will cost to cover 10 million children with health insurance for five years,” Pelosi sternly warned in 2007. “That’s fiscal irresponsibility.”

Obama, by comparison, went into an absolute spending frenzy and increased the debt to an unsustainable and new historical record. Pelosi, the left and their media echo are all silent. Obama maintained Bush’s wars and even started his own new and unpopular war in Libya. He did this without congressional approval or even consultation. More silence.

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I’m sitting in my campaign office working on a policy statement (I’m running for U.S. Senate in Virginia as a Republican Tea Party candidate) when the following headline from the Washington Times comes across my computer, “Government posts biggest monthly deficit ever.” Now, that is something to be proud of– if you are President Obama or a member of Congress and believe the more you borrow the better.

The Congressional Budget Office just released preliminary numbers Monday that show a $223 billion federal deficit for February alone – an especially amazing accomplishment in just 28 short days, even for the United States Congress. In fact, it is the largest single monthly deficit in the history of our country! Compare this February deficit of $223 billion to the entire 2007 fiscal year deficit of $163 billion. Does this look like insanity now?

Now, what is even more frustrating is that during the month of February we had House Republican Leaders who had promised us $100 billion in cuts, but could muster only $61 billion in cuts. And even worse, we had the Democrats who made the bold proposal (sarcasm implied) of a staggering $6 billion in cuts, and then had the audacity to call that meeting the Republicans half-way.

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At a time when the American taxpayer is on the hook for trillions in current and future federal spending—when the Congressional Budget Office warns that the current rate of federal spending is “unsustainable”—liberal Democrats in Congress have earmarked over $68 million of taxpayer dollars for a Boston shrine to the late Senator Edward Kennedy.

In a detailed report, the Boston Herald describes the planned Edward M. Kennedy Institute as a “temple for Ted Kennedy built with pork.”

According to their account, congressional Democrats—especially Massachusetts senators John Kerry and Edward Markey—have been cramming earmarks for the project into various government funding bills. The Herald found that Kerry and Markey even intend to siphon $28.9 million of the institute’s funding from the Defense Department budget, with almost $19 million of that amount already signed into law.

Why do they think taxpayers should be paying for this shrine? A statement from a Kerry spokesman declared that the institute will bring “knowledge and good citizenship to thousands of young people.”

This has raised the ire of taxpayer watchdog groups. “If the Kennedy family wants to honor the senator, they should find a way to fund it themselves,” David E. Williams of Citizens Against Government Waste told the newspaper. Steve Ellis of Taxpayers for Common Sense agreed that “this could be independently funded and doesn’t need to be getting taxpayer dollars.”

Indeed.

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Of course there were no news accounts of this, so we missed it. On March 31st, Rep. Paul Ryan delivered a keynote address to the Oklahoma Council of Public Affairs, one of the better state-based free market think tanks. It is a magisterial distillation of where we are…and where we need to go. Full text of the address below:

Last week, on March 21st, Congress enacted a new Intolerable Act. Congress passed the Health Care bill – or I should say, one political party passed it – over a swelling revolt by the American people. The reform is an atrocity. It mandates that every American must buy health insurance, under IRS scrutiny. It sets up an army of federal bureaucrats who ultimately decide for you how you should receive Health Care, what kind, and how much…or whether you don’t qualify at all. Never has our government claimed the power to decide when each of us has lived well enough or long enough to be refused life-saving medical assistance.

This presumptuous reform has put this nation … once dedicated to the life and freedom of every person … on a long decline toward the same mediocrity that the social welfare states of Europe have become.

Americans are preparing to fight another American Revolution, this time, a peaceful one with election ballots…but the “causes” of both are the same:

• Should unchecked centralized government be allowed to grow and grow in power … or should its powers be limited and returned to the people?
• Should irresponsible leaders in a distant capital be encouraged to run up scandalous debts without limit that crush jobs and stall prosperity … or should the reckless be turned out of office and a new government elected to live within its means?
• Should America bid farewell to exceptional freedom and follow the retreat to European social welfare paternalism … or should we make a new start, in the faith that boundless opportunities belong to the workers, the builders, the industrious, and the free?

We are at the beginning of an election campaign like you’ve never seen before!

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So this is what change looks like. If he were here, Mr. Speaker, in this time of momentous national distress, I would remind the President of the United States that he is not the leader of a party or an ideology; he is the leader of our country—one founded, not to emulate others, but to inspire the world.

As families lose their jobs, their homes, and their dreams for their children; as our troops fight and sacrifice in foreign fields for our liberty and security, President Obama’s obsessive-compulsive pursuit of an abominable government takeover of health care has defied the public’s objections, despoiled this, “The People’s House,” and further alienated Americans from their representative government.

As President Obama’s campaign mantra of “hope and change” has degenerated into “tax and hate,” reputable surveys prior to this vote report: the public overwhelmingly thinks that the U.S. Government is broken. Only 21 percent of the public thinks it is being governed with its consent. Only 26 percent of the public trusts the Federal Government most of the time or always; 56 percent of Americans think the Federal Government has become so large and powerful that it poses an immediate threat to the rights and freedom of ordinary citizens; 70 percent believe the government and big business typically work together in ways that hurt consumers and investors; and 71 percent of Americans think the Federal Government is a special interest.

In the wake of this health care debate’s despicable, dysfunctional process and product, it is clear: The most dangerous special interest is Big Government and President Obama is its lobbyist.

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The prospect of CNBC analyst Larry Kudlow seeking the Republican and Conservative Party nominations to oppose Sen. Chuck Schumer has become a cause among Tea Party folks, Conservatives, Republicans and many on Wall Street. Not since James L. Buckley won a US Senate seat in 1970 have New York Conservatives been so excited about a statewide political race.

Pick Up the Mantle

I don’t know Kudlow well. We met several times during the Reagan years but it was at Buffalo Congressman Jack Kemp’s 2009 memorial service that I got reacquainted with the pro-growth enthusiast. Kudlow has been on on my STONEzone TEN BESTED DRESSED LISTtm since 2008. I admire him as an unabashed apostle of hope and optimism and opportunity on television and radio. His are the politics of Ronald Reagan and Jack Kemp, who Kudlow calls his mentor.

It goes without saying that Chuck Schumer needs a vigorous challenger; he is perhaps the most odious, pushy, abrasive and self-absorbed jerk in Congress today. His pork-fests are legendary, and he narrowly escaped indictment for corruption as an Assemblyman before becoming the master of the “pay to play” game in Washington.

But Kudlow’s potential candidacy is about something even more important than sending Schumer packing.

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Midterm elections can present a considerable risk for a new President.  Often viewed as a referendum on a President’s policies, the last 45 years featured such huge party losses as 54 House seats under Clinton, 48 seats under Ford, and 47 seats under Johnson.  While Ford’s fate was not entirely his own, the fates of Johnson and Clinton present foreboding scenarios for Democrats in 2010.

Johnson and Clinton: Unpopular Policies Lead to Midterm Losses.

In 1964, the Democrats were sitting atop the political world.  They held 68 Senate seats and gained 36 House seats for an overwhelming margin of 295 to 140 – not to mention winning the White House.  Just two years later, however, they lost 48 seats.  Why? A series of policies that were unpopular including a “credibility gap” on the Vietnam War and what one Democrat Governor said was “Frustration over Vietnam; too much federal spending and… taxation; no great public support for your Great Society programs; and … public disenchantment with the civil rights programs.”  Despite the economy growing 6% because of the Kennedy/Johnson tax cuts, the divide between Johnson’s policies and public opinion produced a 49% approval rating for Johnson and resulted in historic losses for the President and his party in 1966.

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Just came across some rather grim analysis of the economic impact of massive, ongoing federal budget deficits from a group of prominent economists. It’s a little dated (2004) but still highly relevant considering that the deficit situation has dramatically worsened since then. Some highlights:

Substantial ongoing deficits may severely and adversely affect expectations and confidence, which in turn can generate a self-reinforcing negative cycle among the underlying fiscal deficit, financial markets, and the real economy:

• As traders, investors, and creditors become increasingly concerned that the government would resort to high inflation to reduce the real value of government debt or that a fiscal deadlock with unpredictable consequences would arise, investor confidence may be severely undermined;
• The fiscal and current account imbalances may also cause a loss of confidence among participants in foreign exchange markets and in international credit markets, as participants in those markets become alarmed not only by the ongoing budget deficits but also by related large current account deficits;
• The loss of investor and creditor confidence, both at home and abroad, may cause investors and creditors to reallocate funds away from dollar-based investments, causing a depreciation of the exchange rate, and to demand sharply higher interest rates on U.S. government debt;

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Well, it’s hard to choose these days. The resurgence of Keynesian economics shows how fragile and insecure economists are in general. They are, of course, important exceptions. But while I have a special dark place in my economist heart for the New York Times‘ columnist Paul Krugman, I think today the prize should to economist Mark Zandi, of Moody’s Economy.com.

Zandi is constantly quoted in the media as the go-to-person on what do for the economy to recover. For instance, how many stories have we read in the Washington Post saying “nearly all economists support the stimulus,” with for only evidence a Zandi quote. Many. Who cares that Zandi’s model shows that the stimulus is working because the answer is built into the equations of Keynesian models. Here is a job for an economist: Take apart and demolish these reality-defying macro models once and for all.

The media loves him and as a result there are countless quotes of him out there about how we need more government intervention into the economy to jump start the economy, how passing the $800 billion stimulus bill would create jobs, how more spending programs are yet still needed.

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