The Daily Bell – Nelson Hultberg Interview

Nelson Hultberg

January 3, 2010

with Scott Smith

“Launching the Conservative American Party”

Libertarian-conservative writer and free-market activist, Nelson Hultberg, recently was interviewed by The Daily Bell. Here are some excerpts:

Daily Bell: Thanks for sitting down with us. You have a new book, and some exciting news – and we’ll discuss that in a minute. But let’s jump right in. Your latest book is titled, The Conservative Revolution: Why We Must Form a Third Political Party to Win It. Can you give us a brief overview of what the book is about?

Nelson Hultberg: In simplest terms, the book is about how to save our country from the political madness taking place in Washington. Anybody with a lick of sense realizes that there’s no real difference between Democrats and Republicans anymore. Both are lackeys to the special interests. No matter who wins, we always get more spending, more taxes, more bureaucracies, more wars, and less freedom. So America desperately needs to open up the process and establish a third choice. But it can’t be a Libertarian style party that preaches utopianism to the choir. It must be a real third-party that poses a genuine threat to the status quo.

This is the main purpose of the book — to show Americans how to form a third-party that can get 15%-20% in the polls in 2012 and qualify for the national TV Presidential debates, where it can dramatically challenge the corruption and obtuseness of the Demopublican establishment. Then build on this to get 35% by 2016 and win in a three-man race.

Daily Bell: What is the name of this new third-party, and how far along is it in its formation?

Nelson Hultberg: The name is the Conservative American Party, and we plan on officially launching in the next few months. This is what Americans for a Free Republic in Dallas is all about. Our website is: www.AFR.org. We’re an educational organization set up to inform the people about why the Conservative American Party is so desperately needed, and also to explain the unique political strategy that we have designed. We want to bring millions of disenchanted Republicans, Democrats, and Independents together to support the cause.

Daily Bell: You write that it is a fallacy that third parties cannot work in America. This you say is because all third parties throughout the past century have made two disastrous mistakes in strategy that always doom them to failure. What are these two mistakes and why are they so important?

Nelson Hultberg: The two major mistakes that all third parties make are what I call “marginalization” and “cloning.”

1) “Marginalization” is the flaw of the Libertarian Party and the Constitution Party. This takes place because these two parties attempt to instantly implement an ideal vision of how society should be constructed through the political process. They ignore the fact that politics is a game of incrementalism, that it is not an arena in which an “ideal society” can suddenly be voted into place. Because they try to do this, they are perceived by the public as not living in the real world.

For example, whenever they are asked what tax policy they advocate for the country, Libertarian and Constitution Party members reply that the income tax should be totally abolished and government should be stripped down to a minimal state funded by tariffs. Now this is a wonderful “ideal” that could perhaps be achieved in 100 years. But it’s not a credible political platform to be gained through a political campaign. Libertarian and Constitution Party members are blind to the damage this does to their image in the minds of the voters. As a result, both parties are marginalized as utopian. They end up getting at best 1% of the vote every year and remain obscure fringe voices.

A couple of Libertarian Party candidates recently complained to me that I was being unfair with the above assessment. For example, in the last election they had modified the tax proposals of the LP and ran their local individual campaigns on just a simple flat tax, and still they got nowhere. So according to them the LP’s problem was not its radical idealism; it was basic voter apathy and the unfair rules set by the major parties. But what these LP candidates overlook is that the national Libertarian Party ideology has been around for 35 years, and it has firmly cemented into the public’s mind that the LP stands for abolition of the income tax with no replacement. Seeing that the Federal Government took in $1.42 trillion in revenue from the income tax in 2008, the LP stand on taxes means that there will be $1.42 trillion less in government services. This paints a picture of extremism and unreality to the people; it is a threat to the stability of their lives that they will reject overwhelmingly. This is why Libertarian candidates get only 1% of the vote. The national Libertarian Party has the “mark of Cain” on it, and no amount of individual modification or side-stepping in local campaigns will remove the mark. The national party has marginalized itself over 35 years, and anyone associating with it will be stuck with its image of extremism and unreality. Unfortunately the Constitution Party succumbs to this same error.

2) “Cloning” is the flaw of groups like the Reform Party that Ross Perot founded (and also John Anderson’s independent candidacy in 1980). Because they wanted to win the Presidency right away, the Reform Party couldn’t risk espousing any radical policies. They had to copy the basic approach of the Demopublicans and thus became nothing but a clone, offering only more of the same statist pabulum of the two major parties. In other words, while the Libertarian and Constitution Parties project too much radicalness, the Reform Party projected no radicalness and became just another “big government party.” This meant they had to run on the notion that they would somehow govern the monster welfare state better because they would bring “better personnel” to Washington. Their bureaucrats would supposedly do a more professional job of confiscating our money and throwing it down the rat holes of political boondoggles. In the end, the voters didn’t see the need for still another big government party. So the bottom line was that because the Reform Party campaigned on a platform designed for instant victory, it became nothing but a clone and failed.

Any third-party challenge of the Demopublicans must avoid these two mistakes. A third-party must offer radical enough change to separate itself from the Demopublicans, but not so radical that it becomes marginalized like the Libertarians and the Constitutionalists.

Daily Bell: Your book’s main emphasis is formed around what you call the “Two Pillars Strategy.” Can you tell us what this strategy entails?

Nelson Hultberg: The “Two Pillars Strategy” is the foundation of the Conservative American Party. It is designed to put in front of the American people two crucial political reforms that will stop the relentless growth of government and begin the restoration of the Republic.

These two crucial reforms are: 1) Ending the Federal Reserve’s power to inflate the money supply at will, and 2) Ending the government’s power to progressively tax its citizens. These two powers give government the ability to steal wealth from the people by debasing the currency and by confiscating the earnings of our most productive citizens through progressive tax rates. The politicians then use this stolen wealth to buy votes from the special interests, which leads to all kinds of corruption and tyranny as we can well see around us today.

So if we really want to stop the tyrannical growth of government in America, we have to stop the Fed from expanding the money supply in excess of the growth of goods and services. And we have to enact an “equal-rate” income tax so that government can’t redistribute the people’s wealth in order to buy votes with subsidies and handouts.

Thus Pillar #1 is to enact Milton Friedman’s 4% auto-expansion plan for the Fed. This will mandate by law that the Fed only increase the money supply by 4% every year. Monetary expansion will be taken away from the FOMC’s arbitrary discretion and be computerized, which will keep money supply growth equivalent to the growth of goods and services, which will reduce price inflation to zero. This will end the Fed’s irresponsibility and allow time for the people to be educated as to the necessity for a gold standard, which might require 30-40 years. Such an auto-expansion plan is not perfect and not a permanent solution, but it will stop the destruction of our currency. It is a vital interim policy until gold money can be re-established.

Pillar #2 is to enact an equal-rate income tax of 10% for everyone (i.e., a genuine flat tax). If we are to uphold “equal rights” in America, then we must have “equal rates” in our tax system. And all citizens must be assessed the tax. No exemptions. Period. Only in this way can we have a responsible electorate. When all people have to pay proportionally for their government services, they will begin to vote for less government every year at the polls. A 10% equal-rate tax for everyone will be revenue neutral, and thus not threaten the stability of the voters’ lives. And because all the people will have to pay the tax, the overwhelming majority will demand that the 10% rates be lowered every year. We could have a 5%-7% tax in a decade or two.

Once these “Two Pillars” are enacted, the dangerous growth of government will be stopped because government will no longer have the ability to arbitrarily create money, and it will no longer have the ability to redistribute earnings so as to promise massive pork and privileges in return for votes.

Daily Bell: Wouldn’t a 10% “equal-rate” tax for everyone place a heavy burden on the low-income earners who presently pay zero taxes? How would you overcome the massive resistance to this problem?

Nelson Hultberg: First of all, it is not true that a 10% equal-rate tax will hurt the low-income earners. I show in the book that it will not impose a net burden on them at all. In fact, it will actually increase their standard of living because of the explosion of economic productivity that will accompany enactment of the Two Pillars. This I show by figures from the U.S. Department of Commerce, along with the work of economist John Williams at Shadowstats.com, and a wonderful study by the political scholar James L. Payne titled, Costly Returns: The Burdens of the U.S. Tax System.

With enactment of the Two Pillars, low-income earners presently paying zero taxes will gain a 16% increase in their standard of living. That nets out to an increase of 6% after assessment of the 10% tax. Once the American people are made aware of this, a large portion of them will begin letting common sense guide their vote instead of the massive guilt that has been heaped upon them by liberal professors and pundits over the past 50 years.

Daily Bell: You say the main strength of the Two Pillars Strategy is that it will eliminate “infinite demand” for government services. Will you explain this concept of “infinite demand” and what we must do to eradicate it?

Nelson Hultberg: “Infinite demand” for government services comes about because the progressive income tax permits large groups of voters to pay zero taxes and equally large groups to pay next-to-zero taxes. These two constituencies comprise 50% of our voting population today. IRS figures show that the upper 50% of income earners in the U.S. pay 96.03% of all taxes, while the lower 50% of income earners pay only 3.97% of the tax load. The bottom 25% of income earners pay zero taxes. (From IRS Statistics of Income Division, September 2002.)

graphThus a progressive income tax spawns a something-for-nothing voter mindset that dominates all elections. It creates an irresponsible electorate that demands a steady expansion of government services. This is basic human nature and one of the cardinal laws of economics. If government benefits are free (or nearly free), demand for them will be infinite. This is why the voters constantly vote for more and more government; 50% of them get their services FREE, or for pennies on the dollar.

Overcoming this “infinite demand” will be impossible until we radically reform the tax system and eliminate its something-for-nothing aspect. This means adopting a simple “equal-rate” income tax that doesn’t convey favors or exemptions to anybody. Once we have an equal-rate tax in place, all voters would then have to pay for their government services proportionally out of their own pockets. This would kill their desire for all the pork and subsidies. The voters 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. They would begin sending Ron Pauls to Congress instead of Chuck Schumers.

Daily Bell: Getting the necessary 15% in the polls to qualify for the national TV Presidential debates plays a very important role in the “Two Pillars Strategy”? Please explain why.

Nelson Hultberg: The Demopublican elites control the political process in America to a great extent through control of our national TV Presidential debates. Only Democrats and Republicans are allowed. And they propose only statist / collectivist policies to the people. But once the Conservative American Party is in the debates, its candidate would then be able to explain the cause for freedom and limited government to 70 million voters.

As things stand now, the freedom message is totally shut out to the voters at election time. They never hear about any alternate vision of governing. They never hear what is really causing their problems. They never hear about fiat money, debasement of the currency, and why progressive tax rates cause “infinite demand” for government services. They never hear about why we should return to a mind-our-own-business foreign policy that the Founders advocated. They never hear about how illegal immigration is destroying our culture. But with the Conservative American Party in the debates, we could have a third voice that would tell the people how corrupt and tyrannical the Demopublicans have become.

To give you an example of how powerful the national debates can be, imagine an articulate Conservative American Party candidate giving one-half hour lectures prior to each debate like Ross Perot did in 1992. Only this time the lectures will be about how the Fed is stealing hundreds of billions of dollars from our savings every year through currency debasement, and how progressive tax rates create “infinite demand” for government services.

The Conservative American Party approach would dramatically transform the field of politics. I believe that 15%-20% of the American people will support the “Two Pillars” of honest money and equal tax rates, which will get the party into the Presidential debates in front of 70 million voters in 2012. And then that 15%-20% figure can be built to 35% by 2016. This would force the Demopublicans to enact the two pillars into law. Because if they didn’t, the Conservative American Party would be able to capture 35% of the vote and achieve victory in a three-party race. So either way, the Conservative American Party wins.

Daily Bell: What important platform planks other than the “Two Pillars” of tax and monetary reform does the Conservative American Party advocate?

Nelson Hultberg: We advocate two subsidiary planks which are: 1) the restoration of a mind-our-own-business foreign policy and 2) a thorough crackdown on illegal immigration that will stop its flow into our country and return the majority of the illegals to their country of origin. The immigration plank will also return us to the pre-1965 legal immigration levels. These are the four cornerstones of the party — tax and monetary reform, along with foreign policy and immigration reform. The rest of the platform is to be conventional Republican fare. This is very important because we must avoid becoming marginalized like the Libertarians.

Daily Bell: Why should we not work within the Republican Party and try to convert them to a limited government philosophy? Wouldn’t it be easier to convert them instead of trying to build a new party from scratch?

Nelson Hultberg: In order for the Republicans to convert to a limited government philosophy, there has to be a mandate from the people to do so. No such mandate will ever arise, however, until all citizens are taxed proportionally for their government services with an “equal-rate” tax. As long as 50% of the voters get their services FREE, or for pennies on the dollar, they will continue to demand more government spending. Republicans will never propose the necessary tax reform to change this because they know that proposing an equal-rate tax with no exemptions would doom their re-election chances. They want to return to Washington every year, and they have to compete with Democrats who continually offer more and more spending programs to the people. So Republicans join the crowd and do likewise.

Consequently no REAL reform toward limiting government will ever come from Republicans. Only a third-party that doesn’t crave immediate victory will propose an equal-rate income tax with no exemptions, which is what is necessary to stop government growth. Republicans crave immediate victory, and thus can never do this. But since the Conservative American Party candidate’s goal is not immediate victory, he will be able to do it. His goal is to win, but only by offering the Two Pillars of “honest money and equal tax rates” to the people and be elected after these reforms have won them over. This can be orchestrated spectacularly through the national TV Presidential debates.

Thus the fundamental problem is that without a third-party in the election debates, there is no counteracting force to mandate that Republicans try and distinguish themselves from the Democrats. Without the people being aware of another vision (e.g., that of honest money and equal tax rates), they will not demand that the Republicans change their stripes. If there is no demand from the voters, then these “better, more conservative Republicans” that we are electing slowly get consumed by the Washington beast of big government. They get bought off by the system as fast as we can send them and join with the Democrats to tax and spend so as to assure their re-election. This will not change until we reform the tax system that buys them off.

For over 40 years, conservative Republicans have been attempting to reshape the Republican Party into a party of liberty by working to elect “better, more conservative” candidates to turn Congress into a true limited governing body again. And it has gotten us nowhere. Government grows just as fast under Republican administrations as under Democratic ones — because “infinite demand” still exists among the people for expanding government services. It’s time to change our strategy, and only a third-party can change it.

Daily Bell: Can you explain for our readers about third-parties in the 19th century, and why it became more difficult to form and sustain them after 1890?

Nelson Hultberg: There were basically no restrictions for minor party candidates forming and running in elections prior to the 1880s in America. Consequently there were numerous third parties. Examples were the Liberty Party in the 1840s, the American Party in the 1850s, the Liberal Republican Party in the 1870s, the Greenback Party in the 1880s. And of course, the Republican Party was a third-party, formed in 1856 as a union of several smaller factions. It put the Whigs out of business and elected Abraham Lincoln in 1860. All these efforts were easily formed and became influential, some very influential. It made for an open forum on policy, and kept political factions from gaining an unfair monopoly of ideas.

By the end of the 1880s, however, political reformers among the two largest parties — the Democrats and Republicans — began to see the benefit of monopolizing the process with strict ballot access laws so as to deny those with contrary ideas the ability to be heard. This, they began to implement in greater degree over the next few decades.

With the onset of the New Deal in the 1930s this monopolizing process gained further strength because fiat money and progressive tax rates became ready tools to gain votes. This drove both major parties to make use of these tools in order to win office, which further merged the Democrats and Republicans into a similarity of ideas. Naturally they moved to protect this similarity with even more restrictive ballot access laws. When the televised debates came into being in 1960, a powerful means to further protect their monopoly was created. And at the end of the 1990s the two major parties set an attainment of 15% in the polls as the requirement for entrance into the debates. This was an extremely high number that effectively destroyed all competition to the major parties because without participation in the debates, it was impossible for a third-party candidacy to achieve the necessary credibility in the eyes of the voters.

Daily Bell: How did we get into this fix where we have two parties that are virtually the same?

Nelson Hultberg: We got into this fix once the FDR / Keynesian revolution came about in the 1930s. FDR’s New Deal showed politicians how to buy votes with fiat money and progressive tax rates. Prior to the New Deal, Congress didn’t have blatant use of these two powers even though they were enacted in 1913. But after 1936 because of fiat money and progressive tax rates, the Republicans had to keep pace with the Democrats in spending if they wanted to be elected and re-elected. Richard Nixon consummated the merging of the parties in 1971 when he stated that, “We’re all Keynesians now.” The Republicans’ flirtation with fighting for limited government lasted one campaign under Barry Goldwater in 1964. From then on out they became big government conservatives and resigned themselves to spending just like the Democrats. The New Deal tragically restructured the American political system so that only a “big spending party” could prevail. The contest now became, not who could best govern within the constraints of the Constitution, but who could best print money and redistribute wealth.

Daily Bell: What do you think of the conservative movement at present and what does it need to do to become stronger?

Nelson Hultberg: I think the conservative movement, as originally conceived by National Review in the 1950s, has basically self-destructed. As I point out in my book, the movement contained the seeds for its own destruction because it embraced Keynesian fiat money and progressive taxation and tried to accommodate the Welfare State. What is desperately needed in America today is the restoration of the Jeffersonian / Burkean blend of libertarian-conservatism that built our nation during the first 125 years up through World War I. The first step must be to stop the relentless growth of the Leviathan, which can only be done by implementation of the “Two Pillars” of tax and monetary reform put forth by the Conservative American Party. Conventional conservatives like George Will, Newt Gingrich, and Wall Street Journal apparatchiks are incapable of doing this. They long ago made a Faustian pact with the mega-state and neo-cons such as Irving Kristol and Norman Podhoretz in order to gain celebrity and power. They sold out the principles of freedom. Thus true American conservatives must dump them and the Republican Party that they have built.

Daily Bell: Can you expand on the differences between this party you propose and the Constitution Party?

Nelson Hultberg: We agree in principle with most of the Constitution Party’s stands on issues such as abortion, national defense, education, the environment, foreign policy, health care, immigration, trade policy, terrorism, and welfare. We just disagree with their strategy of how to go about convincing America to adopt such stands. At present we must concentrate on stopping the Gargantua of government. Tomorrow we can concentrate on cutting him down to size. Therefore the Conservative American Party believes it is best to just concentrate on the “Two Pillars Strategy” of tax and monetary reform, and leave other radical reforms for the future — like abolishing the income tax, the Education Department, welfare, social security, etc. In this way, we do not threaten the people with the dissolution of the welfare state. This will allow the Conservative American Party to get the necessary 15% in the polls to qualify for the crucial national TV Presidential debates.

The Constitution Party marginalizes itself like the Libertarian Party because it threatens the people with the dissolution of the welfare state. It assumes radical, ideal stands on the issues rather than practical, achievable stands. This is political death. The Constitution Party will never get into the national TV election debates with such an idealistic platform, and thus it will remain an obscure fringe party. The debates are everything. Without participation in them, no political party can ever be truly effective.

Daily Bell: What do you say when critics claim that nothing can be done to reform the system because a corporate-bureaucratic-banking triad controls the economy, and they have far too much power to be defeated at the polls?

Nelson Hultberg: I tell them to check their history. All progress in forming better, freer societies comes about because there are certain people in this world (the Thomas Jeffersons and Aleksandr Solzhenitsyns) who just don’t allow immense power structures to bother them or dissuade them from their goals. The reason why is because of a very dynamic force that all tyrannical systems lack, and all rational revolutionaries possess — and that is MORAL TRUTH. This is what brings the most powerful of tyrannies down. No matter how ruthless they are, they are always vulnerable in face of men and women who are willing to take a moral stand against overwhelming odds. Moral truth is the key. That’s what we who advocate freedom and limited government have on our side. We just have to design the right strategy to implement it.

Recent polls show that 40% of Americans consider themselves to be “conservative.” An additional 40% of Americans consider themselves to be “independent.” These are the two constituencies that will build the Conservative American Party into a power that can challenge the liberal / statist elites in Washington. We have the opportunity here to do something very profound. We can inject the two greatest issues of our day — honest money and equal tax rates — into the living rooms of 70 million Americans every election year. This would be big time, TV oriented, major league politics. It would stop the growth of the Leviathan cold, and it would begin the restoration of the Republic. That’s what we have the power to do with the Conservative American Party and its Two Pillars Strategy.

Daily Bell: Where can our readers get your book?

Nelson Hultberg: They can buy the book with a credit card at the AFR website, www.afr.org. Callers from within the United States can also call our toll-free number 1-888-404-2155 if they wish to order over the phone. Or they can send a check for $14.95 + $3.00 S&H (Total $17.95) to: Americans for a Free Republic, P.O. Box 801213, Dallas, TX 75380.


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