AFR Mission Statement
Why We Need to Form a Third Political
Party
to Challenge the Democrats and Republicans
In view of the economic instability and relentless government growth
that we are now experiencing in America, it should be alarmingly
clear that we as a people have lost our compass of freedom and sanity.
For the past 40 years, political conservatives have put their trust
in the Republican Party to bring about a reduction of government
spending in Washington and a restoration of limited government that
the Founding Fathers established.
Every election year, Republicans speak the language of freedom on
the campaign trail, but after taking office, they do just what the
liberals do -- they bring us bigger and bigger government.
Now we have all been taught in school that one of the great strengths
of the American political system lies in the fact that we have a "two-party
political process." We at AFR believe this is akin to teaching that
babies come from storks. It's a fairy tale we spin out to avoid messy
details of reality that we prefer not to face.
The reality is that America is now a one-party state. The Democratic
and Republican parties have become nothing but two divisions of the
same party -- the Demopublican Party. No matter who wins, we always
get more taxes, more inflation, more bureaucracies, more wars, and less
freedom.
The Demopublicans now tax over 50% of our earnings every year. They
steal hundreds of billions from our savings through currency debasement.
They have brought us a national debt of over $9 trillion dollars.
They have saddled us with $45 trillion dollars in unfunded liabilities
to be loaded upon the backs of our children. They are consuming the
substance of our lives like a swarm of locusts consumes a golden
wheat field.
We at AFR believe there is only one hope for meaningful reform.
Americans must challenge this egregious irresponsibility with a third
political party. But it must be a REAL THIRD PARTY that will actually
pose a threat to the Demopublicans' monopolistic rule.
This is the most crucial issue of our time, and we must face up
to it. We have a runaway Federal Government in Washington, and we
must figure out how to stop its tyrannical growth. The way to do
this is to grasp the cause and effect process involved. One of the
cardinal laws of all intellectual and scientific progress is that
we must always go to the root causes of our problems if we
want to solve those problems.
If we are to find the root causes of why we suffer a tyrannical
government in Washington, we must go all the way back to 1913. For
it was in that fateful year that the Federal Reserve System and the
progressive income tax were enacted into law.
These two institutions ushered in the two major evils of modern
day politics, which are: fiat money, and the progressive
income tax. It is these two evils that have destroyed the idea
of "limited government" that the Founding Fathers gave to us.
Franklin Roosevelt in 1933 and Richard Nixon in 1971 were the architects
of the first evil. When they removed gold backing from the dollar,
they gave the Federal Reserve the power to establish a fiat paper
money system. This gave the Federal Reserve the ability to then inflate
the currency at will, which gave Washington the capacity to secretly
rob Americans of their wealth through currency depreciation.
This then was the first evil that came out of 1913 -- perpetual
debasement of the currency. The second evil of 1913, the progressive
income tax, was equally as dangerous. It gave to our government the
ability to arbitrarily seize the earnings of productive Americans
to buy voter support from vast hordes of special interest groups.
Herein lies the death knell of the American republic. With the ability
to arbitrarily print paper money and confiscate our incomes, the
Federal Government has been able to grow exponentially over the past
century.
If we are to stop this travesty of tyrannization over our lives,
we must go to the root causes of such tyranny. We must challenge
these two policies of "fiat money" and "progressive taxation," for
they are what give the Federal Government its power to grow unabated.
Educating the populace, however, about the Fed and the income tax
through conventional means is well nigh impossible today because
the ideology of big government dominates our schools and our media.
So we need to circumvent this statist bias and go directly to the
people -- to the one-hundred million voters that determine what kind
of government we are to have.
We at AFR submit that the way to quickly reach 100 million voters
is through the formation of a third political party. [Let's
call it the FREE AMERICAN PARTY.] But it cannot be just another conventional
third party that we see plodding along today getting 1% of the vote
every election year. It must be a REAL third party that can actually
stop the growth of the Federal Government.
So keep in mind that our two goals are to explain to 100 million
American voters why we must check the dangerous power of the Federal
Reserve and why we must end the injustice of the progressive income
tax.
In other words, we must overcome the statist bias of our schools
and our media in a way that will sensationalize our message and galvanize
tens of millions of Americans. We must use a third political party
as a promotional vehicle for our cause.
In order to do this, we must break the monopoly that Demopublicans
have over the modern political scene. This will require the adoption
of two crucial, fundamental political reforms. It is what we at AFR
call the "Two Pillars Strategy."
Most of us agree that ending the dictatorial power of the Federal
Reserve and abolishing the progressive income tax are goals that
cannot be achieved overnight. But there are two essential first steps
that can be promoted through a political campaign, that would allow
us as a people to get control over the alarming growth of the Federal
Government in Washington.
These two steps are the enactment of an "honest money" system and
an "equal rate tax" system. These are the two pillars upon which
we can build a powerful third political party to stop the growth
of government in Washington cold. Let's examine these two pillars
and see how.
Pillar # 1 -- An Honest Monetary System.
What exactly do we mean by an "honest" money system? We mean a system
that does not steal our savings every year through currency debasement.
It is accepted by all reputable economists today that central bank
expansion of the money supply at a faster rate than the economy's
production of goods and services is growing results in price inflation.
In other words, if goods and services are growing at 3% a year and
the government is expanding the money supply at 8% per year, then
we will have a 5% inflation rate for that year. This is currency
debasement, or simply stealing from the people.
For example, if the government inflates the money supply by 5% during
the year, it means that our money will be worth 5% less at year's
end. A diligent saver with $100,000 in the bank now has only $95,000
worth of buying power. The Federal Government, however, has $5,000
extra in buying power because it printed the new money out of thin
air.
Multiply this times millions of savers in America and we're talking
about hundreds of billions of dollars that are being stolen from
the people every year by the Federal Government.
This is obviously not honest. An "honest monetary system" is one
that expands the money supply no faster than the growth of goods
and services. This way there is no currency debasement and no loss
of buying power for our savings.
In light of this, we need to ask ourselves what type of money can
a society possibly have when its government bankers can simply print
that money at will? What level of stability will there be for the
prices of that society and for the savings of its people?
History clearly teaches us that no country can remain stable and
prosperous if it allows its money supply to be controlled by government
bureaucrats and bankers. The temptation is simply too great for such
bureaucrats to promote excessive expansion of the money supply in
order to create an illusion of prosperity so that the electorate
will continue to reward them with more power.
Ever since 1936, the Federal Reserve's monetary policy under both
Republican and Democratic administrations has always been to pump
more credit (in other words, more debt) into the system --
because according to John Maynard Keynes and his academic progeny,
this is the only way to maintain a prosperous economy.
In other words, the Federal Reserve must be allowed to expand credit
to whatever level it thinks desirable, or we won't be able to maintain
sufficient economic growth. But this is totally false. America's
economic growth during the 19th century was spectacular, and there
was no Federal Reserve pumping paper money and credit into the system
at all.
For example as we see in the above chart, the Consumer Price Index
(CPI) actually decreased by 40% between the years 1800 and
1913. But from 1913 to the present day, the CPI has increased
by 1,850%.
This is because ever since 1913 the money supply has been created
by Federal Reserve bureaucrats at a faster rate than the production
of goods and services. This is why we have price inflation, and this
is how our money is being stolen from us by the government. False
Keynesian economics dominates our politicians in both the Democratic
and Republican parties.
The Keynesian monetary philosophy of constantly increasing paper
money and credit is what led to the runaway inflation of the 1970s
and to the wild bubble economy of the past 15 years. What our economy
is now experiencing is the result of all that past credit inflation.
We now have to go through a lengthy recession and purge this excess
debt brought about by our government in Washington. This is the only
way we can restore economic health.
But there is a giant problem. Unless this purging of debt is accompanied
by genuine monetary reform, we as a country are doomed to merely
repeating the Keynesian fallacies of credit inflation. We are doomed
to an ever-increasing dictatorial government that steals our savings
and corrupts our society. The only way to eliminate such corruption
is to establish a monetary standard other than the whims of federal
bankers and bureaucrats. Throughout history that standard has always
been gold.
Restoration of a gold standard, however, will require revolutionary
thinking in the field of monetary theory and will require many decades
to educate the public as to its necessity.
So the question we have to ask is this: Could a 51% majority of
voters be motivated to accept gold as money and pass its implementation
into law? No they couldn't; not at this time in history. But our
reform pillar of "honest money" doesn't need to establish gold money
right away in order to be effective. It can be structured to temporarily
bypass gold so as to make the reform acceptable to the people.
For example, as a preliminary step to actually establishing a gold-backed
dollar, the Nobel Prize winner Milton Friedman's 4% auto-expansion
plan should be enacted. His plan is to computerize the increase
of the money supply at 4% annually -- in other words to make monetary
expansion automatic and totally remove it from the arbitrary hands
of Federal Reserve bureaucrats. This would allow us to check the
irresponsible power of the Fed until the American people can be educated
as to the necessity of restoring a sound gold-backed money (which
may take many decades).
Thus the first pillar of the Free American Party is to enact an "honest
money system" for America that prohibits Federal Reserve bureaucrats
from expanding the money supply at will. Milton Friedman's 4% auto-expansion
plan is an excellent first step to ultimately getting gold back into
the dollar.
This will end the Federal Government's ability to steal 3%-8% of
our savings every year. Therefore, it will increase everyone's standard
of living by an average of 5% annually.
Pillar #2 -- An Equal Rate Tax
The fundamental principle of the Declaration of Independence, which
undergirds our political-legal systems in this country, is that all
citizens are to possess equality under the law. Our whole
concept of rights is based upon them being equal for all citizens
of the Republic.
In 1913, however, there took place a most shameful default on this
concept of "equal rights under the law" when our Supreme Court judges
allowed a progressive income tax to be enacted by Congress, despite
the fact that a progressive rate tax is clearly unconstitutional.
The reason why a progressive rate tax is unconstitutional in America
is because different classes of society are assessed different
rates under such a system. This denies American citizens an equal
right to the disposal of their property (in other words, their income).
And thus it denies them equal protection under the laws of the land.
It is contrary to everything for which America stands.
As the renowned Scottish economist J.R. McCulloch stated over 150
years ago, "The moment you abandon the cardinal principle of extracting
from all individuals the same proportion of their income or
of their property, you are at sea without a rudder or compass, and
there is no amount of injustice or folly you may not commit."
Under our present system, the blindfolded Goddess of Justice has
been allowed to peek. "Tell me first who you are and what you earn," she
says, "then I will tell you how the tax laws apply to you." This
is privilege and arbitrary law, the harbingers of every tyranny throughout
history.
This then is the moral and philosophical case for abolishing the
progressive income tax. It is simply unjust, unconstitutional, illegal,
and dictatorial. But in addition to the philosophical case, there
is also a very powerful practical reason why ending this tax is so
important.
This is because if we end progressive tax rates, there would no
longer be any incentive for voters to try and gain their life's status
by relentlessly increasing government spending, in other words, by
redistributing wealth from the pockets of their neighbors.
Most Americans do not understand this, but the major cause of explosive
government spending is our use of progressive tax rates to redistribute
wealth. This is because the progressive income tax permits large
constituencies of voters to pay zero taxes and equally large
constituencies to pay next to zero taxes. Thus, a progressive
income tax spawns a "something for nothing" voter mindset that dominates
all elections.
For example, the upper 50% of income earners in America pay 96½%
of the taxes, while the lower 50% of income earners pay only 3½%
of the taxes. These are IRS statistics. The bottom quadrant pays
zero taxes with the next quadrant paying 3½% of the taxes,
and the top two quadrants paying 96½% of all taxes.
So we have a system where the bottom 50% of American voters get
their government services for free or next to free. Well,
what happens to desire for services when we get them for free? To
use economic terminology, we have created "infinite demand" for those
services, have we not? If people get something for free and they
like that something, then they want all they can get of it. That
is just human nature.
So this is the root of the problem. Our tax system has created "infinite
demand" for government growth -- because it exempts 50% of the
American people from meaningful payment of taxes.
Overcoming this "infinite demand" for government spending will be
impossible until we genuinely reform the tax system and eliminate
its something for nothing aspect. This means ending all deductions,
all exemptions, all privileges. Period. This will require the adoption
of a simple equal rate income tax (in other words, a genuine flat
tax) that does not convey favors or exemptions to anybody.
Since voters would then have to pay for all government subsidies
and pork barrel programs proportionately out of their own pockets,
they would lose their overwhelming desire to have such subsidies
and programs. They would begin to favor politicians who advocate reduction of
government instead of its constant expansion -- because this
is the only way they could get their own taxes reduced and more freedom
into their lives.
But as long as voters pay zero taxes or next to zero taxes,
they will continue to favor politicians who offer more programs and
more pork every November at election time. An "equal rate tax" is
the only way to end the automatic expansion of government.
In other words, no one is to get special privileges. All citizens
must contribute to the system rather than leeching from the system.
For example, under a 15% flat tax, if a man earns $100,000 in a year,
he would pay $15,000 to fund the government. If he earns $10,000
annually, he would pay $1,500. This way everyone has a stake in being
responsible citizens and voters.
Now we're sure this sounds fairly harsh to many readers because
it would impose a burden on the lower income earners who presently
pay zero taxes. So let's make a very strategic change here. Let's
switch from a "net income" tax to a "gross profits" tax in order
to get our government revenues.
When we use the term "gross profits," we mean the profits of everyone,
corporations, small businesses, and individuals alike. We all make
profits in some way by selling products, or services, or labor.
Since gross profits would give us a much larger taxable base than
net income we can employ a lower rate -- approximately 10%. And because
everyone would have to pay it, a 10% gross profits tax would possess
the power to stop infinite demand for government services. But what's
most important is this -- it would not impose a net burden on
the lower income earners! The reasons why are as follows:
The simplicity of a "gross profits tax" would be a tremendous boon
to all businesses and corporations. It would save American industry
hundreds of billions of dollars annually in income tax compliance
costs that go toward record keeping, accountants, tax lawyers, economists,
lobbyists, audits, appeals, lost opportunities, tax avoidance, etc.,
etc.
Prominent tax reform groups, such as Americans for Fair Taxation,
maintain that consumers must pay an extra 5-10% every year for their
goods and services because of the compliance cost burden of the income
tax for businesses and corporations. So by eliminating these compliance
costs we would create an annual savings of at least 5% in the cost
of goods and services for all consumers.
Thus all low income earners who presently pay zero taxes would have
to start paying a 10% tax, but they would be getting a 5% reduction
in their annual cost of goods and services, which would wipe out half
of the tax burden right off the bat.
In addition, with enactment of the "gross profits tax" and its elimination
of the compliance cost burden, there would take place a tremendous
increase in capital accumulation and also in new entrepreneurial
venture expansion, which are the two causes of real wage growth for
the workingman. Thus we would be able to return to real wage growth
of 3% every year, which we had in the years prior to 1972.
For the past 35 years, our onerous tax system has reduced capital
accumulation and entrepreneurial expansion in the marketplace to
a lower rate of increase than the supply of labor is increasing every
year. This is what has reduced "real wage growth" for the workingman
to zero. These are U.S. Dept of Commerce figures. This return to
real wage growth would wipe out an additional 3% of the new tax burden
for low income earners.
In addition because of our enactment of Milton Friedman's auto-expansion
plan for the Fed, we would be able to eliminate the inflationary
burden that robs us all of our earnings at the rate of about 5% annually.
This savings would wipe out still more of the new tax burden. So
low income earners will be hit with a new tax of 10%, but they will
receive a 13% increase in their standard of living as a result.
This will bring about a 3% net annual increase in the standard
of living of all low income earners!
[A 3% increase in real wages, plus a 5% decrease in price inflation,
plus a 5% decrease in the cost of goods and services from elimination
of income tax compliance costs = 13% increase. Subtract the 10% gross
profits tax, and you have a 3% net annual increase in the standard
of living.]
And, of course, other income earners will experience even higher
increases. Because of this new tax policy, there will take place
a vibrant explosion in economic growth for our country. This would
make everyone much, much better off. And as an added benefit, the "gross
profits tax" would bring many of our corporations back to America
from the offshore havens they have migrated to over the past 30 years.
It would light up the sky of economic productivity and wealth creation
for our country.
Moreover everyone's lives would be so much simpler. We would
be able to fill out our tax returns in 10 minutes every April because
record keeping for gross profits is miniscule compared to net income.
But most importantly because all voters would have to pay such a "gross
profits tax," it would quickly bring about a serious reduction of
government. Every state in the Union would begin sending Ron Pauls
to Congress instead of Chuck Schumers. As a result the 10% tax rate
could be gradually lowered. We could have a 7% tax rate within a
decade or so because no one would continue to vote for all the pork
and privileges if they had to pay for them out of their own pockets.
This is the all-important element in the Two Pillars Strategy. It
is the linchpin to set in motion the phasing out of Big Government: All
voters must pay proportionally out of their own pockets for their
government services if we are to have a responsible government and
a free society. This is why we are losing the battle to statism.
Ever since 1913, we as a people have refused to face this fundamental
reality of political life.
Now the question we have to ask is this: Could a 10% gross profits
tax win the support of a majority of American voters? No, it could
not, not at this time. But as we will soon see, our goal is not to
win 51% of the voters. Our immediate goal is only to win 15% of the
voters and make it into the national TV election debates to act as
a powerful counter vision to the insanity of the Demopublicans.
Therefore, our second pillar of reform must be to end the policy
of progressive taxation and its something-for-nothing mindset that
is stultifying our nation. These then are our two paramount goals
-- honest money and equal tax rates! These are the
TWO PILLARS that must be used to challenge the Demopublican establishment.
Thus we build our party upon a 4% auto-expansion plan for the Fed,
and a 10% gross profits tax for all citizens. This will increase
everyone's standard of living immensely and immediately. It
will change the political paradigm of America in a powerfully dramatic
way.
Can these Two Pillars be explained to the American voters in large
enough numbers to make a difference? Yes, they can! Imagine, if you
will, a dynamic third party candidate in the debates giving a 30
minute lecture on nationwide TV the night before each of the debates
like Ross Perot did in 1992. Only this time the lectures are about
how "progressive tax rates" are destroying our country, how "infinite
demand" for government services stems from the progressive tax system,
and how the Fed's irresponsible expansion of the money supply robs
us of 5% of our wealth every year. These are the reasons why government
constantly grows. Such lectures would be positively electrifying.
Here lies the only solution to our runaway government growth in
America. We must propose a proper tax system to the voters and start
educating them about why we need to end all tax exemptions and require
everyone to pay something toward the cost of government. We must
explain how the Fed is robbing us of our currency's value every year.
Only in this way can we restore a responsible electorate and send
responsible politicians to Washington.
If a third party wishes to become viable, it must offer radical
enough change to separate itself from the Demopublicans, but not
so radical that it becomes marginalized like the Libertarians.
If the FREE AMERICAN PARTY would run a candidate with name recognition,
it could easily gain 15% (and probably 20%) in the polls, which would
qualify it for the national TV election debates every year. It would
then have a national podium to disseminate its ideas out to 100 million
voters, which would scare the living daylights out of the Demopublicans
in Washington.
As a result, it wouldn't be too long before Demopublicans would
be offering their own honest money plan and their own equal rate
tax. And if they didn't, the nation's voters would increase their
support every year for the FREE AMERICAN PARTY until either the Demopublicans
relented and enacted the two pillars into law themselves, or the
Free American Party achieved parity with the Demopublicans and actually
won on election day.
Either way, the Free American Party would win because its two pillars
would be implemented. With implementation of the two pillars, big
government would die, and freedom would be reborn.
Thus a third party does not have to win the White House immediately
to win its cause! But it does have to gain entrance into the national
TV election debates. These three debates are televised to 80-100
million voters by the major networks. It is these debates that legitimize
a candidate and his party in the people's eyes. They are absolutely
essential to participate in if a third party is to have a chance
to change the role of government in America.
The main reason why statism is growing relentlessly in our country
today is because there is no counter vision being effectively presented
to the voters at election time. What is needed is to present the
people with a choice between big government and small government
in a way that does not sound utopian. This has never been done in
the 48 year history of the debates.
Therefore the all-important goal is to get 15% in the polls and
gain admission into the National Election debates, which will give
the FREE AMERICAN PARTY access to 100 million voters with its powerful
pillars of monetary and tax reform.
The freedom movement is now a major philosophical force in America,
and it needs to create an effective political party to speak for
it.
But this is most important! The Free American Party cannot threaten
voters with the dissolution of the welfare state. It cannot sound
like Harry Browne. Its message must simply be that we have to check
the explosive growth of government in order to bring back sanity
to our country, and that this will require policies of "honest money" and "equal
tax rates" to be enacted.
In other words, we cannot sound libertarian. We have to sound like
the Democrats and Republicans except for the Two Pillars.
This is the only way to obtain the 15% necessary to get into the
national TV election debates.
Such a third party (if led by the right candidate) would have a
powerful, galvanizing appeal to all Americans, which would capture
15% of the vote, then 25%, then 35% and eventually victory in a three-man
race. Millions of voters would rally around such a cause. The fear
that would rise up in the establishment crowd would be heart pounding.
Their corrupt game of buying votes through debasement of the currency
and progressive taxation would be over.
The time has come to form a third political party that actually
has the ability to make a difference. We could inject the two greatest
issues of our day -- honest money and equal tax rates --
into the living rooms of 100 million Americans every election year.
This would be big time, TV oriented, major league politics. It would
rock the nation, it would make history, and most importantly, it
would stop the growth of the Federal Leviathan cold.
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Thank you for your attention; we hope to hear from you. These are
grave times that will only get worse as government grows bigger.
Help us to reverse this insidious destruction of our country and
restore the Constitutional system that the Founding Fathers gave
to America.
