Thin Gruel for “Social” Republicans

By: Carl Graham

Bozeman: Barry Goldwater, in a line that may have cost him the presidency, famously quipped that extremism in defense of liberty is no vice and moderation in pursuit of justice is no virtue. Turns out he might have been on to something there, and Montana’s latest legislative session is a great example.

Goldwater’s quote came in 1964 when Republicans were in a fissile state just hot enough to self-immolate but not hot enough to start a real fire. The “establishment” wing of the Party was mostly comfortable with a growing government and felt that if they didn’t rock the boat they’d have a seat at the table and get their slice of the pie even if it consigned them to being forever small fish in a big pond.

This governance-by-metaphor confused amity with effectiveness, as well as the electorate, and resulted in a two party, one philosophy system that left a large chunk of American conservatives without a political home until the Reagan revolution scooped them up nearly twenty years later.

Into this vacuum stepped two disparate groups: a new dissident small government movement and a loud anti-communist faction that allowed themselves to painted as nuttier than an Angus bull pen. Goldwater’s quote appealed to the former group but scared enough people into thinking he was a part of the latter one to at least partially account for his losing to an incumbent with few tangible accomplishments under his belt. President Johnson was easily able to win by defining Goldwater as an extremist rather than running on his own merits. Sound familiar?

So what’s all that got to do with Montana’s legislative session? In 1964 the candidate who represented smaller government, fiscal responsibility and libertarian principles was thwarted by a combination of status quo Republicans and Democrats who successfully labeled him as a nut. In 2013 the smaller government, pro-liberty agenda of a GOP majority in both legislative chambers was successfully undermined by the combination of a lockstep Democratic caucus and a handful of – let’s use their term – “Responsible Republicans” intent upon growing state government and presenting a harmonious front. So how’d that work out?

First of all, I don’t blame the Democrats for growing government any more than the turtle blames the snake for biting him halfway across of the river. It’s what they do, and the economic or philosophical merits of that approach are arguments for another day. I even, however grudgingly, respect the consistency and clarity of their approach. But they could not have succeeded in the minority without the handful of “Responsible Republicans” who crossed the aisle on some key bills. So let’s see how the guiding principles of amity and moderation turned out for those folks.

If increasing the state’s budget by 14% when most Montanans are seeing their paychecks stagnate at best is responsible then they’re right on track. If delivering an unbalanced budget to the governor is responsible then they’ve got a lock on what’s good for Montana, if not a handle on what’s required by Montana’s Constitution. If, after inheriting a huge surplus, it’s responsible to have spending increases outpace tax relief by a factor of ten, then those “Responsible Republicans” have their fingers on the conservative pulse. If tying school funding to volatile commodity prices is responsible, then our kids won’t be able to wait until they’re eighteen to vote these guys back in office, if they can read the ballot.

In truth, none of those things are considered responsible in the conservative districts that put most these Republicans in office. To be fair a couple of them are in moderate to liberal districts that fall under the Buckley Rule of electing the most conservative person possible. But most of them advanced an agenda that is anathema to the fiscally conservative, ruggedly individualistic beliefs held by most of the people who sent them to Helena. They either misrepresented themselves to their electorate or they are so devoid of core principles that they covet power for power’s sake and will do whatever it takes to not be called names.

They are Social Republicans, not to be confused with social conservatives who actually stand for something. The “social” in Social Republicans means they want to be seen as socially acceptable by all. They want to get invited to the “right” parties, fawned over in coffee shops, and above all not have any uncomfortable moments with people who disagree with them or be made fun of in the papers. They, like the establishment Republicans of Goldwater’s time, confuse amity with effectiveness and power with principle. And what did they get for it?

The governor slaughtered their sacred cows with the same zeal he took to the priorities of those upstart conservative Republicans who booted them out of leadership positions. They lost the respect of their opponents and the trust of their peers. And for what? To be liked? To not be called names by people who still want to beat them? To get along rather than fight for the values of the very people they were elected to represent?

No, in the end it seems the Responsible Republicans got their cake and ate it too, except that the governor got to eat it first. Bon Appetit.

This commentary appeared on Montana Public Radio : 5/9/2013

Let the Death Tax Die

By MPI CEO Carl Graham and Dick Patten


Six family-owned companies from across the state were just awarded the 2009 Montana Family Business Awards. Honored for their commitment to “service, family values and diversification to satisfy the needs of their markets, often in challenging situations,” the owners of these family businesses have much to celebrate.

Why? They, along with the tens of thousands of other Montana family business owners and farmers, have sacrificed much to build a successful enterprise that can reinvest in new jobs and expanded opportunities in the community.

Unfortunately, in the end, all their hard work might be for naught if their businesses have to be sold to pay estate taxes.

The federal government requires the payment of estate taxes within nine months after the business owner’s death, demanding a large percentage of the combined value of all family and business assets, including the house, car, savings accounts, retirement accounts, business equipment, inventory, buildings, land and more.

Family business owners often have most of what they own tied up in buildings, equipment, inventory and other “hard assets,” so their families are forced to sell off large portions of the business, if not the entire company, to satisfy the IRS.

It’s not as if these people haven’t paid their taxes every year. They have, and probably more than their fair share. But they have to make one final payment at death to be free from Uncle Sam, at least until the next generation of the family – if they’re able to keep the business alive – passes on.

Contrary to popular myth, the estate tax rarely impacts the super rich. Rather, a disproportionate amount of estate tax filers come from the ranks of family business owners and family farmers.

According to the Joint Economic Committee of Congress, between 1995-2005, estate taxes were paid by more than 37,000 “closely-held businesses,” 24,000 family farms, 50,000 limited-partnerships and nearly 28,000 “other” non-corporate businesses, such as sole proprietorships.

Currently, such business owners face an estate tax rate of 45 percent, with the first $3.5 million exempt. This is likely to change later this year, when Congress revisits the tax again in an effort to prevent the rate from going to zero next year and jumping to 55 percent in 2011, which would happen under current law.

Some in Congress want to increase the tax and lower the exemption, while others want to keep the status quo. Both sides justify their positions out of concern over losing federal revenues at a time when Washington needs every tax dollar available.

A report for the American Family Business Foundation by economist Stephen Entin, a former Treasury official, should give them pause. According to Entin, if revenues are their primary concern, the best thing Congress could do is eliminate the tax, not raise it.

That’s because a lower tax rate – indeed a tax rate of zero – would stimulate investment in family owned businesses and the creation of new jobs, both of which would generate increased federal, state and local tax revenues. As much as $23.3 billion annually, Entin estimates.

But there’s another – and perhaps more important – reason to repeal the estate tax: jobs.

Former Congressional Budget Office Director Douglas Holtz-Eakin has estimated that as many as 1.5 million new jobs could be added to the economy nationwide simply by repealing the federal estate tax.

The Montana Policy Institute has calculated that Montana would gain 5,952 of those 1.5 million jobs. That’s good news in a job market where Montana’s unemployment rate stands at 6.6 percent.

Repeal of the federal estate tax is certainly a more dependable and less costly way to stimulate the economy than other policies being considered by Washington.

A majority of Americans agree. According to a recent Opinion Research Corporation poll, Americans support repeal of the federal estate tax by a nearly two-to-one margin.

It should be a no-brainer. More family businesses and farms growing in size. More jobs. More tax revenues. Congress should repeal the unfair “death tax.” Doing so would not only be good for family business owners and farmers in Montana, but also good for the country.



Carl Graham is president of the Montana Policy Institute. Dick Patten is president of the American Family Business Foundation.



Contact MPI President Carl Graham at 406.219.0508, or email

The Montana Policy is an, independent, nonprofit, nonpartisan policy research center based in Bozeman. It provides analysis and information to encourage individual freedom, personal responsibility, and market oriented policy solutions in Montana.

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What Are They Afraid To Tell You?

The Governor, in his State of the State address, assured us that “[federal] dollars will be spent in an accountable and transparent way…” One would have hoped he meant state dollars as well. But he and a few Representatives on the House Taxation Committee are instead standing in the way of letting us see how our tax dollars are being spent and what’s being done in our names. We should all be wondering why.

First, let’s be clear. This isn’t a partisan issue. At the federal level, President Obama cosponsored legislation with John McCain that brought more transparency to contract spending. Groups as diverse as the Progressive States Network and Americans for Tax Reform have asked their memberships to support more transparency in government using virtually identical arguments and endorsing virtually identical solutions. Nearly two dozen states have taken bipartisan action to bring more transparency to their state spending. This is an issue of fairness and accountability. If you don’t know what and who government is spending your money on you can’t participate and hold your government accountable. We can’t effectively do that in Montana and we need to fix it now.

The Montana Policy Institute recently conducted a poll that found barely 16% of Montanans had ever submitted a public records request to find out where their tax dollars were going or what was being done in their names. That means one of two things: Either the vast majority of us are perfectly happy with how our government is running, who’s getting our tax dollars, how regulations are passed, and all that. Or we feel helpless in our ability to gather any useful information or to do anything with it. In other words Montanans are checking out as active participants in the democratic process. But which of these is it?

Another enlightening number answers that question. In the same poll, MPI asked whether respondents would use a government-run transparency web site to track revenues and spending if it was free and easy to use. Over 65% said yes. Those two results indicate an enormous hunger to find out where tax dollars are going coupled with an enormous frustration over the ability to find out. But what’s standing in their way?

Only one entity is on record as opposing current transparency efforts in the legislature: The Governor’s Office. His Budget Director called a bill (SB 460) to have a monitoring committee oversee state stimulus spending unnecessary. His office has testified multiple times against a bill (SB 241) that would have created a searchable transparency web site where Montanans could track dollars from the time they enter government coffers until they’re spent. What were their arguments? Mainly that you’re happy with the current system of mailing in requests for information, that such a site wouldn’t provide anything new, and that it costs too much. They also insultingly argued that most Montanans are too computer illiterate to use a searchable web site.

Those arguments are all easily refutable by the facts, and have been at Polls show that over 63% of Montanans would like to see such a site and 65% would use it if it was available. Other states and the federal government have created web sites for costs ranging from nothing, i.e. using existing resources, to under a million dollars. I’d bet state government spends more on toner cartridges in a year than they’d spend on a transparency web site, but under the current system it’d take days, weeks, or months of firing off letters to the bureaucracy to verify that claim. We’re talking pennies on the state budget dollar. What can be more important than giving citizens the tools they need to oversee their government? Public service ads telling us to buckle up? Lawn care? Traveling to conferences back East? How much of your tax money could be better spent telling you who gets your tax dollars and why than on pet projects and special interest handouts?

Why does the Governor oppose giving you easy access to your data? There’s no way to know. We only know that he is, and have to presume that he’s leaning on House Democrats to follow suit – even though diverse groups like the Montana Newspaper Association, Montana Taxpayer Association, Society of CPAs, National Federation of Independent Businesses, and others are on record as supporting it.

The Governor’s office has stood alone trying to kill any chances for transparency and accountability for the 2009 session, despite his promising the opposite. And some of his Party in the House are following his lead instead of looking out for your interests. If that doesn’t bother you then so be it. But if it does – and it should – then you ought to tell them so. And you have to do it fast.


Carl Graham


Montana Policy Institute


The Montana Policy Institute ( is a nonpartisan policy research center based in Bozeman.


For Immediate Release

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Legislators’ Forum to Discuss Transparency and Accountability

Press Release

The Montana Policy Institute, partnering with the CATO Institute, Americans for Tax Reform, the Center for Fiscal Accountability, the American Legislative Exchange Council, and the Property & Environment Research Center, will host a Legislator’s Government Accountability Forum at the Red Lion Colonial Inn, Helena, 8:30-4:30 on Tuesday, November 11th.

The Forum will provide a hands-on workshop of programs and expert panels on government transparency, fiscal discipline, and property and environmental rights and responsibilities. In addition, Grover Norquist, President of Americans for Tax Reform, will provide the keynote lunch address.

All morning presentations and the lunch program are open to the public (and media). Policy experts will discuss budget and tax proposals that stress fiscal discipline and accountability; success stories in government transparency measures from other states; and property rights issues for maintaining Montana’s clean and healthful environment.

Afternoon events are closed-door sessions for state legislators and legislative staff. Hand’s-on panels will present nuts and bolts tools and resources to assist our lawmakers in crafting proposals that ensure our government remains transparent and accountable to taxpayers. These will include real world examples from other states’ actions that have resulted in concrete benefits to their citizens. Some of these include: Objectives-based budgeting models, tax reform measures, and government transparency web sites.

These “Google for government” web sites have allowed citizens in other states to track their tax dollars from the time they are collected to when they’re spent using key word searches and other user-friendly tools. Today’s technology allows this level of access to the peoples’ data, if only governments have the will to make it available. The Forum will provide concrete examples of just how easy and inexpensive it is.

Registration starts at 7:30 a.m. and events begin at 8:30. Registration is $25, and includes the morning presentations, lunch, and a keynote address by Grover Norquist. Register online at


The Montana Policy Institute is dedicated to providing Montana leaders and citizens the information and resources they need to advocate for policies that are based on a respect for individual freedom, an expectation of individual responsibility, and a belief that government intervention should be the avenue of last rather than first resort. For more information visit us on the web at