Tag Archives: Ted Cruz

Is Marco Rubio right about his attacks on Ted Cruz’s business tax plan?

Texas Senator Ted Cruz
Texas Senator Ted Cruz

Here’s an article from Dan Mitchell of the Cato Institute, published with Forbes magazine. Cato economists are libertarians, so they are good at fiscal policy, but terrible at moral and social issues.

It says:

But here’s the part of Cruz’s plan that raises a red flag. He says he wants a “business flat tax,” but what he’s really proposing is a value-added tax.

His proposal is a VAT because wages are nondeductible. And that basically means a 16 percent withholding tax on the wages and salaries of all American workers (for tax geeks, this part of Cruz’s plan is technically a subtraction-method VAT).

Normally, I start foaming at the mouth when politicians talking about value-added taxes. But Senator Cruz obviously isn’t proposing a VAT for the purpose of financing a bigger welfare state.

Instead, he’s doing a swap, imposing a VAT while also getting rid of the corporate income tax and the payroll tax.

And that’s theoretically a good deal because the corporate income tax is so senselessly destructive(swapping the payroll tax for the VAT, as I explained a few days ago in another context, is basically a wash).

But it’s still a red flag because I worry about what might happen in the future. If the Cruz plan is adopted, we’ll still have the structure of an income tax (albeit a far-less-destructive income tax). And we’ll also have a VAT.

So what happens 10 years from now or 25 years from now if statists control both ends of Pennsylvania Avenue and they decide to reinstate the bad features of the income tax while retaining the VAT? They now have a relatively simple way of getting more revenue to finance European-style big government.

And also don’t forget that it would be relatively simple to reinstate the bad features of the corporate income tax by tweaking Cruz’s business flat tax/VAT.

[…]Notwithstanding my concern about the VAT, Senator Cruz has put forth a plan that would be enormously beneficial to the American economy.

Instead of being a vehicle for punitive class warfare and corrupt cronyism, the tax code would simply be the method by which revenue was collected to fund government.

Rubio ignored all of those details during the debate, and instead accused Cruz of bringing in a VAT tax that is the same as those in Europe, with no other taxes being lowered or eliminated to compensate. It’s dishonest, but he was probably hoping that Cruz would not have time to respond.

Here’s Cruz’s response from the debate last night:

In Rubio’s question, he deliberately misrepresented Cruz’s proposal by neglecting to mention all the taxes that Cruz would eliminate. Dan Mitchell mentioned them. I don’t understand why Rubio is smearing a fellow conservative with such attacks. Unless maybe Rubio is not a fellow conservative at all? I’ll be looking at that more next week.

This is not the first time that Rubio has tried to distort facts in order to smear Ted Cruz. Honestly, I used to have Rubio listed as my 5th choice, but he keeps smearing Cruz with dishonest attacks that are easily cleared up with a little knowledge from experts. I have therefore removed Rubio from my list of candidates.

Debate evaluations

Google Trends shows that the debate was essentially a showdown between Trump and Cruz, based on search engine traffic during the debate:

Google Trends analysis of search terms during Fox Business GOP primary debate
Google Trends analysis of search terms during Fox Business GOP primary debate

There are some reports out now on who did well in last night’s debate.

And The Weekly Standard has a new podcast up.

Ted Cruz’s scary, unreported, undisclosed Goldman Sachs loan

Texas Senator Ted Cruz
Texas Senator Ted Cruz

The New York Times reported that Ted Cruz borrowed money from his Goldman Sachs investment account to finance his Senate campaign, then didn’t disclose it. Is their story correct? Let’s see.

Caffeinated Thoughts explains:

The New York Times “broke” a story yesterday about a Goldman Sachs loan that Ted and Heidi Cruz obtained during his run for U.S. Senate that wasn’t reported properly on an FEC filing.  I’vedefended Marco Rubio when New York Times fired garbage at him, and I’ll do the same with Cruz.

This story was one *discovered* from public disclosure forms, and it is a story that alreadyran in 2013.  So the New York Times didn’t run any new news here. All they did was run some opposition research that a rival campaign gave them. *Great* journalism.

This is a non-story. Beyond the fact it is rehashed news taken from public records here are a couple reasons why there’s nothing there.

First, The loan was disclosed. It may not have been on the right FEC form at the right time, but it was made public and it was made public before Cruz’s runoff election against then Texas Lt. Governor Dewey Dewhurst.

The Caffeinated Thoughts article has a public, federal reporting document filed on July 9th, 2012, that has the following entry: “Goldman Sachs Margin Loan”. So this loan was not hidden and undisclosed and secret and scandalous. Cruz simply made an error and didn’t disclose it on another public form.

Newsflash: borrowing on margin is normal

For those of you who invest, like me, you’ll know that anyone can borrow money on margin from their investment brokerage account, although it is not recommended. Goldman Sachs is an investment broker, and you can borrow money on margin if you have a brokerage account with them. You can do the same thing with E-Trade, Ameritrade, ScottTrade, etc. This is not some great mystery. This is a margin loan given to you by your investment brokerage firm, with collateral provided by your investment securities.

Anyway, let’s see Cruz explain it in his own words.

First, on CNN:

Second, here is Cruz’s 2-minute answer from last night

Now, that’s a simple answer that anyone can understand, but the left wants to make it seem sinister and sneaky. There is no question that the left, including the mainstream media, has it in for Cruz. The radically leftist New Republic entitled this story “Ted Cruz Defends His Undisclosed Loan from Goldman Sachs”. The radically leftist New York Times called it “Ted Cruz Didn’t Report Goldman Sachs Loan in a Senate Race”. Associated Press “Cruz Failed To Disclose Goldman Loan On Reports”. Secular Talk “Ted Cruz Took $500k From Goldman Sachs & Didn’t Disclose it”. They don’t have time to report on any of the scandals of the Obama administration – especially Hillary Clinton. But they do have time to make a mountain out of a mole hill about a simple thing like borrowing on margin.

I feel bad for Cruz in the way that he has to answer these deceptive attacks from the leftist media, and then again from Marco Rubio and Donald Trump, who parrot the stories they read in the leftist media. These things are easily explained, but you have to actually understand how real life works. It just depresses me when I think about how hard it is for an honest man to run for office in a world like this. You can’t fight back against these smears… the minute you respond to one, there’s another dozen lies to answer. It’s just depressing.

The best part of the debate

However, I will end this post on a high note. The highlight of the debate last night was that Cruz finally defended himself from Trump’s attacks.

Here is their entire exchange on Trump’s birther argument against Cruz:

Cruz graduated from Princeton and Harvard Law. He clerked for J. Michael Luttig in the 4th District Court of Appeals, then Chief Justice Earl Rehnquist at the U.S. Supreme Court. Two conservative justices. As Solicitor General of Texas, he defended religious liberty, gun rights and other conservative issues in front of the Supreme Court. The man understands Constitutional law.

Here is Frank Luntz’s focus group responding to the exchange:

You can read an assessment of the exchange in the radically leftist New York Times, of all places – which actually gets it right for a change. Headline is “Ted Cruz, Once Dismissed, Emerges as a Slashing Debater”. I’m not kidding.

In any case, I responded to the charge in detail here, citing legal experts on both sides of the political spectrum.

Harvard Law Review: Ted Cruz is a natural born citizen and is eligible to become President

Donald Trump with his buddies, the Clintons - I think that's Trump's third wife on the right
Donald Trump and his third wife pose with his radical leftist Democrat friends

Donald Trump has been questioning whether Ted Cruz is eligible to run for President because he was born in Canada. I thought it might be worth it to look at the circumstances of Cruz’s birth, then get an opinion from some legal experts.

So as far as I can tell, there are 3 people on the planet who think that Cruz is not eligible to run for President. Donald Trump, Rand Paul and Ann Coulter, a famous celebrity comedian who supported Mitt Romney, and now supports Donald Trump. She is very fond of getting attention by saying outrageous things, which she later claims are “jokes”. This week, she wanted to have the Republican governor of South Carolina, Nikki Haley, deported. She later said she was joking.

Ted Cruz’s mother was born in the USA

So, let’s start with the facts:

Eleanor Darragh, mother of Sen. Ted Cruz (R-TX), was born in Delaware on Nov. 23, 1934, establishing her citizenship by birth–and, according to U.S. law, that of her son, even though he was born in Calgary, Alberta, Canada, on Dec. 22, 1970.

You can look at her birth certificate on Breitbart News. This is the thing that all the birthers on Daily Kos and Democratic Underground denied the existence of, until it appeared. There is no doubt that Ted Cruz’s mother is an American citizen, and she met the residency requirements to pass on birthright citizenship to baby Ted.

Ted Cruz’s mother passes the residency requirement to pass on birthright citizenship

Former assistant U.S. attorney, and law professor Andrew McCarthy explains in National Review:

Under the law in effect when Cruz was born in 1970 (i.e., statutes applying to people born between 1952 and 1986), the requirement was that, at the time of birth, the American citizen parent had to have resided in the U.S. for ten years, including five years after the age of fourteen. Cruz’s mother, Eleanor, easily met that requirement: she was in her mid-thirties when Ted was born and had spent most of her life in the U.S., including graduating from Rice University with a math degree that led to employment in Houston as a computer programmer at Shell Oil.

Ted’s mother registered baby Ted with the U.S. Consulate in Calgary. Cruz moved back to the USA when he was 4 years old. Cruz was able to get a U.S. passport to travel abroad in 1986. The U.S. government does not hand out U.S. passports to non-citizens.

A legal opinion from the Harvard Law Review

Now, I didn’t think this topic was worth writing about. It was actually my friend Robb who urged me to do it.

Robb sent me this article from the Harvard Law Review, which is what made me decide to go ahead and write about it.

The article is written by two experts in the law:

Neal Kumar Katyal is an American lawyer and chaired professor of law. He served as Acting Solicitor General of the United States from May 2010[2] until June 2011… Katyal was the Paul and Patricia Saunders Professor of National Security Law at Georgetown University Law Center and the lead counsel for the Guantanamo Bay detainees in the Supreme Court case Hamdan v. Rumsfeld. While serving at the Justice Department, he argued numerous cases before the Supreme Court.

Paul Drew Clement is a former United States Solicitor General and current Georgetown University law professor. He is also an adjunct professor at New York University School of Law. He was nominated by President George W. Bush on March 14, 2005 for the post of Solicitor-General, confirmed by the United States Senate on June 8, 2005, and took the oath of office on June 13. Clement replaced Theodore Olson. Clement resigned on May 14, 2008, effective June 2, 2008, and joined the Georgetown University Law Center as a visiting professor and senior fellow at the Supreme Court Institute.

The article says:

The Constitution directly addresses the minimum qualifications necessary to serve as President. In addition to requiring thirty-five years of age and fourteen years of residency, the Constitution limits the presidency to “a natural born Citizen.” All the sources routinely used to interpret the Constitution confirm that the phrase “natural born Citizen” has a specific meaning: namely, someone who was a U.S. citizen at birth with no need to go through a naturalization proceeding at some later time. And Congress has made equally clear from the time of the framing of the Constitution to the current day that, subject to certain residency requirements on the parents, someone born to a U.S. citizen parent generally becomes a U.S. citizen without regard to whether the birth takes place in Canada, the Canal Zone, or the continental United States.

While some constitutional issues are truly difficult, with framing-era sources either nonexistent or contradictory, here, the relevant materials clearly indicate that a “natural born Citizen” means a citizen from birth with no need to go through naturalization proceedings. The Supreme Court has long recognized that two particularly useful sources in understanding constitutional terms are British common law and enactments of the First Congress. Both confirm that the original meaning of the phrase “natural born Citizen” includes persons born abroad who are citizens from birth based on the citizenship of a parent.

“Natural born” means no naturalization process. Ted Cruz’s mother was a citizen by birth. She meets the residency requirements to pass on birthright citizenship. We have her birth certificate. We also have Ted’s birth certificate with her name on it as his mother. This ends the issue for all the people who are governed by reason and evidence.