Second, Congressman Ryan’s brilliant ability to explain aspects of the budget and economic data to Americans who may not be economists and budget analysts is on display in his new video, in which he describes the three necessary features of a new tax code: fairness, competitiveness, and simplicity.

Mr. Ryan told Tina Korbe of Hot Air, “If you tax something more, you get less of it. If you tax something less, you get more of it. If you tax work, savings, investment more, you’re going to get less of those things. If you lower tax rates across the board, we always see stronger economic growth result across the board.”

How simple is that? No jobs saved and created here. No double-counting Medicare in Obamacare. No tax increases to pay for investment, i.e., spending, in infrastructure.

In the same interview, the chairman made an important distinction between being “pro-market,” versus “pro-business.” He explained that Republicans need to be advocates for the former, a term which invokes the concepts of entrepreneurism, American creativity, and competitiveness in world markets.

While Paul Ryan has endured criticism from both Republicans and Democrats alike, he is a man who is not afraid to light a fire under Americans and our politicians, and to lead us to take a hard look at the kind of changes we need for growth. Let the next conversation begin.

Folks, the economy cannot be explained in two and a quarter minutes.

However, the good people at the George-Soros funded MoveOn.Org, which commissioned the video, sure would like you to believe it can.  They specialize in spoon-feeding pabulum to Liberals who don’t know what they don’t know, all the better to keep them ignorant.  If you think George Soros and MoveOn don’t have an agenda, then you’ve been living under a rock.

This is not to say that Mr. Reich is 100% wrong.  He may have a few things right.  The problem is he oversimplifies things and deliberately misleads his audience.  (How do I know it’s deliberate?  It’s for MoveOn.org).  The key is to examine each statement made — but not only the text.  You must look at the subtext, context, and omissions to get a complete understanding.

That’s really the purpose of this article — an exercise in critical thinking.  It’s just like those movies they showed of advertisements in seventh grade, and you learned how not to be taken in by phrases like, “virtually odor-free”.

Dot 1: Economy has doubled, but wages have been flat.

(Sound of furious scribbling).  Nope.  Dept. of Labor shows just the opposite.

Mr. Reich has lied to you.  That’s right, I call it a lie.  Because when someone says one thing and the government chart that collects the data — which I found in 30 seconds — tell another, I don’t know what else it could be.

Subtext: Regular people’s wages aren’t growing.   This is not fair.  Remember, “fair” = Socialism.  We don’t live in a Socialist country.

Those familiar with debate know that, having proven the initial premise to be a lie, all statements that follow from it are also false.  However, as my old math teacher used to say, “That was for the A students.  I’ll repeat it for the B students”.

Dot 2: All gains from the economy go to the super rich.

Context and Omissions:  What does he mean specifically by “gains from the economy”?  Think about it.  Can you answer that question?  If you can’t answer it yourself, then you are forced to make an assumption.  If your sympathies lie with the Left, you interpret this to mean that the rich are raping the middle and lower class.  If you keep your Spock-like mind focused on reason, you recognize the statement is vague.

But we’ll take him at his word.  He is, again, lying.

(Sound of furious scribbling).  Nope.  If the economy grows, that means businesses are growing. If businesses are growing, it means they are manufacturing more goods and services.  Who provides those goods and services?  Workers.  That means more workers get hired.  More workers getting hired means they receive salaries and benefits.

If you did not have a job and then you have one, you have gained from economic growth.

If you had a job, and kept it as real wages grew faster than inflation, you have gained from economic growth.

Furthermore, since your wages have increased, and thanks to productivity and technology gains, goods and services also cost less.  I call that a gain from economic growth.

By the way, he also says the “super rich” now take home 20% of income, instead of 10%, and own 40% of the nations wealth.

Subtext and Omissions:  Who are the “super rich”?  Is that defined as net worth or annual net income?  Gross income or after-tax income?  Income from wages or capital gains?  The subtext, again, is “the super rich are exploiting the poor defenseless workers”.  As for the alleged wealth disparity, you should be aware of two things.  The first is this is a classic tactic of the far-Left: promote class warfare.  Even though we’re starting to see that fomenting this warfare is based on a series of lies.  The second item is that it takes money to make money, and that’s just a fact of life (more on that in a second).

Dot 3: With money comes political power.

(Sound of furious head scratching).  The text is correct.  At last!  If you have money, you can indeed influence politicians and government, to do things like lower taxes.   Except….

Subtext and Omissions:  Super-rich = Republicans.  Alas, some of the Super-rich are also Democrats.  At least, I think they are.  Since super-rich hasn’t been defined, we don’t know, do we?  But here’s what we do know.  Opensecrets.org is a great website where you can see who contributed money to politicians.  You’ll find that corporations donated just as heavily to Democrats as Republicans, and that unions were only outspent 53% – 47%.

So, yes, I’m sure plenty of people lobbied for lower taxes.  But plenty of people were also lobbying for increased salary and benefits for unions, especially public employee unions, real wages that also benefited from lower taxes (The Bush Tax Cuts benefited all Americans in every tax bracket).

As for lower capital gain tax rates, Mr. Reich omits two important concepts while subtextually implying that the rich “aren’t paying their fair share”.   Here’s the deal.   It takes money to make money.   If you have money, even a few dollars, you can invest it.  The more you have, the more opportunities become available to you.  The way investment works is that the more risk one takes, the more return one needs to justify the risk of losing one’s investment.  Every investment carries risk.  The concept of lower capital gains is to encourage investment — to allow one to keep more of their return in exchange for taking the risk.  And the key is that these investment risks are good for the economy.  Whether you invest in a bond or a stock or especially private-equity funds (which invest in start-ups and middle market companies experiencing rapid growth), you are encouraging companies to grow, or in other words, to hire more people.

Dot 4: Lower taxes leads to huge budget deficits

(Sound of furious belching).  False.  This video is a bit clumsy, but it explains why Reich is wrong.

Subtext and Omissions:  The subtext is, “see, the economy is bad because the rich aren’t paying enough!”.   The omission, and it’s a glaring one, is that Mr. Reich doesn’t mention spending.  See, the MoveOn folks want you to believe that the only part of a budget is the revenue side — taxes.  But you aren’t that stupid.  You know the other part is spending.  Mr. Reich makes no mention whatsoever about the out-of-control spending that was bad under Bush, and has gotten worse under Obama (increased more in 2 years under Obama than 8 years under Bush).

Mr. Reich furthers his lies by talking about how public services are being sacrificed and cut at “all levels of government”.  It’s scare-mongering, of course.  Roads, bridges, levees, health care, safety nets!  The sky is falling.  It isn’t.  Spending is increasing.  Maybe he didn’t hear about the Stimulus bill that failed to stimulate because it was never intended to.

Dot 5: Middle class divided

(Sound of furious passing of gas).  This is the most egregious and revolting statement.  Mr. Reich continues to foment class warfare.   He claims “union vs non-union” are competing for the “scraps left behind”.   The truth is that non-union people aren’t screaming at union workers at all, other than forcing them to join a union against their will if they don’t work in a right-to-work state.  Meanwhile, the truth is that it is union workers who are behaving like thugs, even going so far as to disrupting the Special Olympics.  “Native born vs. immigrants”.   Do I need mention the subtext?  Americans do not have a problem with immigrants.  They have a problem with illegal immigrants, who have taken away millions of American jobs by committing a crime — entering this country illegally.

Dot 6: Anemic Recovery

(Sound of furious snoring).  At this point, Mr. Reich isn’t even making sense.  Having “proven” that the middle class isn’t earning any money, they have to borrow money to create purchasing power to help the economic recovery.  But we’ve already proven that the middle class has seen real wage increases.  Further, it was the overleveraging of America that contributed to the financial crisis — people borrowing money to buy houses they could not afford.  This doesn’t even speak to the credit-restricting policies of state and federal governments.  The CARD Act restricted credit.  The attack on RALs restricted credit.  The constant attack on payday loans restricted credit.   More lies and omissions from Mr. Reich, but at this point, we shouldn’t be surprised.

Conclusion: “So you see?  The only way we can have a strong economy is with a strong middle class.”

Only way?  No.  A strong economy depends on numerous factors including, but not limited to: massive spending cuts, lower taxes, repayment of the national debt, a balanced budget, smaller government, and a little bit of truth-telling here and there.  Another idea:  out-of-the-box thinking that might encourage government spending in a way that actually would create jobs, instead of wasting taxpayer money.

Let’s start with the Treasury bond market. Yields have fallen to 2.6 percent today from 4.1 percent last April. Decomposing this Treasury rally shows that real yields have dropped 79 basis points, which is a signal of lower economic expectations.

Meanwhile, inflation break-even TIPS (Treasury inflation-protected securities) have fallen 64 basis points, showing that price expectations also have dropped. The consumer price index is only rising 1 percent over the past year. And long-term inflation fears have fallen all the way to 1.7 percent. It’s not deflation. It’s disinflation.

The corporate-bond market shows a similar decline of economic-growth and profits expectations. Credit-risk spreads are widening. The spread between investment-grade corporate bonds and risk-free Treasuries have widened 62 basis points, while higher-yielding junk-bond spreads have increased 138 basis points.

Now, all these bond-market indicators don’t tell us a whole lot about the future. But they are corroborating the summer slump in the present. Lower inflation is a good thing, but lower growth is not.

And here’s another hitch in the story. Using the break-even TIPS, the Federal Reserve’s zero target rate is really minus-1.7 percent, which is the same sort of negative real interest rate we had in the early and mid-2000s. This is undoubtedly why Kansas City Fed president Thomas Hoenig is worried about a new boom-bust cycle.

Hoenig calls the Fed’s latest decision to maintain the zero-interest-rate target a “dangerous gamble.” Those are strong words of criticism leveled at Ben Bernanke and the other Fed bigwigs. Hoenig says the financial emergency is over and predicts a modest economic recovery that requires small increases in the Fed’s target rate — still accommodative, but slightly less so.

Hoeing also echoes the fears of Stanford economist and former Treasury official John Taylor, who argues that the Fed is keeping its target rate too low for too long, just as it did between 2002 and 2005.

Are we doomed to repeat the boom-bust cycle? Very few people agree with Hoenig and Taylor. But one market that does is gold. While bond rates have been declining this summer, gold has jumped $100, and it is hovering near its all-time nominal high. That’s food for thought.

And let me repeat my own mantra: The Fed can produce new money, but it cannot produce new jobs. Fiscal policy — and its threat of overtaxing, over-regulating, and overspending — is what’s ailing the economy. And that threat is reverberating through stock and bond markets. (The stock market, by the way, is still about 11 percent below its late-April peak.)

So the long-run message of the gold rally may be this: The Fed may print too much money, but taxes and regulations may hold back the production of goods and services. And if too much money chasing too few goods is inflationary, then lower taxes and regulations to encourage more goods would promote stronger prosperity and domestic price stability.

Free-market supply-side father Robert Mundell argued for lower tax rates and stable money. Is anyone listening?

In The Capitalist Welfare State, Lund University economist Andreas Bergh explains how Sweden has managed to increase economic productivity despite its large public sector.

Bergh says that despite popular mythology, Sweden is not a socialist success story but instead owes its economic growth to the lowered tax rates and deregulation of the early 1990s, which allowed innovation and investment to flourish. Bergh also discusses how Sweden’s national voucher program revitalized the country’s educational system and warns that Americans who are hoping to emulate Swedish success by growing the public sector are learning the wrong lessons from Sweden.

Produced by Ted Balaker and Daniel B. Klein; filmed by Jonathan Liberman and Henrik Devell; edited by Zach Weissmueller; with special thanks to Niclas Berggren, Martin Borgs, Nils Karlson, and the Ratio Institute .

Approximately 10 minutes long.

Go to Reason.tv for downloadable iPod, HD, and audio versions.

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The agenda driven by President Obama, Speaker Pelosi, and Leader Reid is aggressively targeted toward our becoming an all powerful central government. Since the 2008 election we have seen unprecedented expansion of government. History has shown us that as government expands individual liberty contracts.

In January of 2010, during the waning days of my primary campaign for Illinois Governor, former Polish President Lech Walesa came to Chicago to endorsed my effort. Known as the great anti-communist, founder of Solidarity, best-friend of Ronald Reagan, Margaret Thatcher, and Pope John Paul II, Walesa continues to inspire and encourage strong leadership. During the luncheon, Walesa issued an ominous warning for America, “America is sliding toward socialism; America is no longer the shining city on the hill.” In the videotaped interview, Walesa saw a hint of socialism creeping into America’s domestic policies. He spoke of “the issue with the banks” and how “the government wastes all the money … building a bureaucracy — just for itself.”

Walesa said that the strongest candidates are committed to principles. The framers of our Constitution based out government on strong principles, sometimes referred to as the first principles. The “first principles” that will Ensure Liberty and the American Promise for future generations are:

1. Smaller Government,
2. Fiscal Responsibility,
3. Lower Taxes,
4. National Security,
5. Federalism.

With these principles to guide us, we have created Ensuring Liberty, an organization of activists and citizens dedicated to strengthening the public’s appreciation of these ideas. Ensuring Liberty is working closely with a group of leaders currently serving in Congress to hear our voice and keep our First Principles. This group is chaired by Congressman Steve King.

In two weeks, congressional elections in Pennsylvania and Hawaii are drawing clearly delineated choices on “first principles”. Immediately, we have the opportunity to add two more “first principle” conservatives to the Congress. Electing these two candidates will eliminate two “sure votes” for the Obama/Pelosi machine. On a targeted and systemic basis, the unraveling of the National Democrat machine and it’s liberal agenda must continue- it’s our obligation.

President Obama and his Chicago operatives understand only one thing: raw power. Raw power is conferred at the ballot box. In Pennsylvania, Tim Burns is poised to take back Jack Murtha’s seat, and in Hawaii Charles Djou can win back the congressional seat of Barack Obama’s boyhood home.

Tim Burns can win the 12th congressional district in Pennsylvania. His life experiences growing up within the district as well as being a father, entrepreneur, successful businessman and community leader, make him uniquely qualified to serve as our next Congressman. Tim’s business grew to over 400 employees before he sold it in 2003. His commitment to conservative values, smaller government, lower taxes, ending wasteful spending and restoring an ethical standard in public service are political philosophies that stand in stark contrast to the Obama/Pelosi/Reid agenda.

Charles Djou was an elected state representative where he was the Minority Floor Leader. He is a graduate of the University of Pennsylvania, Wharton School of Finance and Commerce, graduating magna cum laude with distinction. He is also an officer in the U.S. Army Reserve; practices as an attorney specializing in business law; and, teaches at the University of Hawaii’s William S. Richardson School of Law. To quote Mr. Djou, “I will never forget that every dollar the government spends comes from a family like yours.”

The American Promise and our nation’s liberty is dependent on electing “first principles” candidates. Electing these two candidates will eliminate two “sure votes” for the Obama/Pelosi machine. On a targeted and systemic basis, the unraveling of the National Democrat machine and it’s liberal agenda must continue- it’s our obligation.

We know that this is a decentralized grassroots movement, with many different voices hailing from many different towns across the country. But the tea-party message comes together in the “Contract from America,” the product of an online vote orchestrated by Ryan Hecker, aHouston tea-party activist and national coordinator for the Tea Party Patriots.

With nearly 500,000 votes recorded in less than two months, this Contract forms a blueprint of tea-party policy goals and beliefs.

Of the top-ten planks in the Contract, the number-one issue is protect the Constitution. That’s followed by reject cap-and-trade, demand a balanced budget, and enact fundamental tax reform. And then comes number five: Restore fiscal responsibility and constitutionally limited government in Washington.

Note that two of the top-five priorities of the tea partiers mention the Constitution.

Filling out the Contract, the bottom-five planks are end runaway government spending; defund, repeal, and replace government-run health care; pass an all-of-the-above energy policy; stop the pork; and stop the tax hikes.

What’s so significant to me about this tea-party Contract from America is the strong emphasis on constitutional limits and restraints on legislation, spending, taxing, and government control of the economy. Undoubtedly, the emphasis is there because no one trusts Washington.

As I read this Contract, tea partiers are reminding all of us of the need for the Constitution to protect our freedoms. They’re calling for a renewal of constitutional values, including — first and foremost — a return to constitutional limits on government. The tea partiers who responded to this poll are demanding a rebirth of the consent of the governed. The government works for us, we don’t work for it.

All this makes me think of President Reagan, who never quite succeeded in gaining a constitutional amendment for a balanced budget, or for limits on spending, or for a two-thirds congressional majority for any new tax hikes. But throughout his presidency, and for many years before, the Gipper argued for constitutional limits on government, especially government spending.

And now this message is being echoed perfectly in the tea-party Contract from America. In effect, it picks up where Reagan left off.

The tea partiers, whom I call free-market populists, desire a return to Reaganism. In particular, their demands for a balanced budget (third plank), for restoring fiscal responsibility (5th plank), for ending massive government spending (6th plank), and for stopping the pork (9th plank) all underscore the populist revolt against runaway government spending, and therefore runaway government power.

There are mentions in the Contract of tax reform and stopping tax hikes. But it is pretty clear to everyone nowadays that the massive run-up in spending of recent years will inevitably result in an equally massive tax-hike movement — that is, unless the spending is strictly curbed and reduced.

Yet the tea partiers don’t trust Congress to do this, so they want to bring in constitutional restraint.

A recent survey by the Brookings Institution spells out this spend-and-tax problem with great clarity. Under current spending trends, tax-the-rich efforts to bring the deficit to just 3 percent of GDP — not balance, mind you, but 3 percent deficit — would require a nearly 80 percent marginal tax rate on the most successful earners. And if taxes are raised across-the-board, the marginal rate would rise to nearly 50 percent for the top earners, with state and local tax burdens bringing it up to 60 percent. Otherwise, a European-style value-added tax (VAT) would become necessary.

The tea partiers know this and they don’t like it one bit. And so, at bottom, they have formed a constitutionalist movement to revolt against big government and big taxes — and oh, by the way, to stand against big-government control of large chunks of the economy, such as energy and health care.

Harking back to the Founders’ principles of constitutional limits to government is a very powerful message. It’s a message of freedom, especially economic freedom. The tea partiers have delivered an extremely accurate diagnostic of what ails America right now: Government is growing too fast, too much, too expensively, and in too many places — and in the process it is crowding out our cherished economic freedom.

It’s as though the tea partiers are saying this great country will never fulfill its long-run potential to prosper, create jobs, and lead the world unless constitutional limits to government are restored.

Now, as the tea partiers rally across the country, the big question is only this: Will the political class get it?

Since the onset of ‘change we can all believe in’, politicians at all levels seem to constantly point to small businesses as our hope for economic recovery. In an era of “too big to fail,” it would seem obvious that people, regardless of party affiliation, could agree that bigger is not better. I haven’t heard anyone speak of the positive impact that CEO-led mega-banks, automakers, or the Fannies and Freddies will have on economic recovery.

The idea that the grassroots tea party movement should become a third political party is counter productive and borders on the ludicrous. Tea Parties are about government accountability, not joining partisan politics in the corruption and incompetence that threatens American liberty. Our City Councils, State Legislatures, and Congress work for us, and it is high time that we reminded them of this and brought them into the fold.

Tea Parties are made up of conservative, hardworking Americans that individually harness the power of the vote and collectively work together toward common goals. These core components of American culture and Tea Party weaponry are what will drive constitutionally grounded, conservative candidates to victory in the 2010 elections. It is these diehard patriots that will flock to the ballot boxes nationwide. They will support  candidates who will have been made painfully aware that their job requires ethical behavior and responsibility. By the time the 2010 elections are upon us, all incumbents and candidates will be equally aware that substandard performance comes with consequences.

Samuel Adams said “If ever a time should come, when vain and aspiring men shall possess the highest seats in Government, our country will stand in need of its experienced patriots to prevent its ruin.”

This is the Tea Party, a group of like-minded, freedom loving Americans that have at different times and under different names throughout American History risen to the call to protect liberty.

The Tea Party is governance by the people in its purest form and many opportunities will be presented between now and election day allowing Tea Parties to unite for a common goal without a CEO, Czar, or a General to call the shots. The Tea Party movement is a true reflection of American culture driven by values that have been taught for generations.

Mr. Huston and I agree on the power of the Tea Party. Our difference of opinion is in his underestimation of the collective Tea Parties’ ability to exercise strategic accuracy and to coordinate a precision strike when it counts. Don’t be fooled by the spin-doctors of the mainstream media, as the tea party strikes its opponents at will and with specificity.

I spend most of my evenings talking to Tea Parties from California to Pennsylvania and everywhere in between. You can rest assured political target acquisition for the 2010 elections is ongoing. Make no mistake, there will be an impact and the Tea Party message will be heard loud and clear.

Our energy should be devoted to delivering this message; not building another national organization or institution.