Yes, this story is a scandal (actually, a series of scandals) but not the one that progressives think it is.

It is scandalous that so many journalists and commentators have gotten their basic facts wrong. They have conflated average “effective” tax rates with statutory rates. Under our complex and convoluted tax code, no American pays an effective rate that is as high as his top marginal rate (the statutory rate on the last dollar of income). As it turns out, Romney’s effective tax rate of 15 percent is higher than the effective tax rate of approximately 97 percent of taxpayers.

An even greater scandal is that Romney’s tax rate is as high as it is. Most of Romney’s income comes from his investments, i.e., from capital. Of course, those still influenced by the defunct labor theory of value and Marxian class envy think that taxing capital makes sense. They deride investment income as “unearned” income, as if capital doesn’t contribute anything of value to economic production, when, in fact, we owe our wealth almost entirely to capital.

Capital, far from being the cruel exploiter of labor, is labor’s major benefactor. Human labor and natural resources are found around the world, but the rich countries are the ones in which the productivity of human labor (and therefore wages and standards of living) have been multiplied by capital.

Americans’ relatively high standard of living exists because, according to the opponents of capitalism, greedy capitalists have “exploited” us more than people in poor countries. Well, we should be thankful for this type of so-called “exploitation.” Taxing capital diminishes its supply, thereby crimping labor’s productivity and lowering workers’ standards of living. Any tax on capital above zero percent is scandalously stupid and perversely anti-labor.

A third scandalous aspect of the Romney tax-rate story is that the very people making the tired, tedious complaints that America’s income tax code is “unfair” are those who are primarily responsible for the unfairness. Fairness, or justice, means equal treatment before the law. In taxation, that presents two options: Either tax everyone the same amount or tax everyone at the same percentage rate. There is no principle that defines the “right” degree of progressivity in tax rates; such rates are essentially arbitrary, determined by who holds political power—a “might makes right” calculus devoid of ethical content.

Finally, the most egregious scandal in the story about Mitt Romney’s tax rate is that the discussion about taxation is distracting us from what is, by far, the major problem our elected officials in Washington need to address: out-of-control federal spending. Granted, a flat tax, if not a consumption tax, would be a huge improvement over the current monstrosity that is our 72,000-plus-page tax code. However, we can survive our flawed tax code for decades, whereas runaway federal spending threatens our country’s financial viability in the short run.

Uncle Sam is racing toward a fiscal train wreck that requires a massive cutback of the 75-percent increase in federal spending that has been added over the past dozen years, but neither party is talking along those lines. The Republicans are willing to trim around the edges, whereas the Democrats are digging in their heels against even those token cuts.

Here’s an experiment you can try: Ask any candidate running for federal office this year how he or she would cut $1 trillion in spending. They won’t have a clue. That’s the real scandal of Election Year 2012.

Undoubtedly, still-escalating federal spending will have the government bumping up against the debt ceiling again. By then, total federal debt will be larger than our GDP.

Unemployment is likely to remain high.

The supply and reliability of our power-generating infrastructure will be stressed and at risk due to President Obama’s anti-energy policies.

Social Security and Medicare will still need to be reformed significantly to address long-term fiscal imbalances.

And the economy will encounter new headwinds as the landmines of tax increases with which Obama has salted the economic landscape are detonated. These include new taxes for Obamacare, the scheduled expiration of the Bush tax cuts, and the end of Obama’s temporary reduction in Social Security withholding.

Obama has shown no indication of modifying his policies or agenda. Presumably, any of the Republican candidates would favor change on these issues (although perhaps not on Social Security and Medicare), but would he or she actually be able to solve these problems, even if there were a veto-proof Republican Congress?

The big political question for election year 2012 is: How much change would Republicans want? Would they downsize government as much as Obama upsized it? Will Republicans nominate a safe, moderate candidate (think: Ford, Bush, and Dole)—a technocratic tinkerer who accepts the entrenched paradigm of Big Government, and seeks to manage Leviathan better than Democrats would? Or will they opt for an unabashed conservative, a major reformer with a radical vision for smaller government?

That question wasn’t even conceivable a year ago, but the tectonic plates in the American political landscape may be starting to shift. Whiffs of radical reform are in the air.

On Sept. 27, Newt Gingrich unveiled his “21st Century Contract With America,” proposing to replace such venerable bureaucracies as the National Labor Relations Board and the Environmental Protection Agency. In doing so, Gingrich dared to challenge two of the most powerful Democratic special interest groups in America, environmentalists and labor unions (the strangest political bedfellows in our country, since hardcore greens would eliminate jobs in industry if they could).

It is possible that such bold proposals are just so much noise—red meat offered by dark horse candidates designed to excite passionate conservatives, but that are anathema to Republicans who believe that a more centrist nominee would be more electable?

Another possibility is that a majority of Republicans will regard the 2012 election as an existential crossroad for our country, a last chance to change direction before we end up like Greece—financially bankrupt, economically moribund, and politically convulsed. In this scenario, just as the Democrats in 2008 nominated a man of the left, Obama, rather than a more centrist candidate, so the GOP will nominate an anti-Obama, a true-blue conservative as committed to a radical swing to the right, just as Obama pushed a radical swing to the left.

If the political pendulum swings far enough to the right to produce a 2012 conservative electoral landslide, and then Republicans follow through with bold cuts in federal spending and power, the years 2013 and 2014 will be crucial. If conservative policies revive the economy quickly, then Republicans could hold on to their 2012 gains in the 2014 mid-term elections. If not, or if they step on too many toes, then there could be an anti-Republican backlash for moving too far to the right, just as voters punished Democrats in the 2010 elections for moving too far to the left.

If a sizable Republican majority were elected in 2012, would they “roll the dice” and risk political suicide by instituting major reforms? I imagine there is some serious soul-searching going on now. I wonder how many of them are grappling with the dilemma that must confront every office-seeker in a democratic electoral system: Should I do what will get me elected or re-elected, even if I know that the policies I support will weaken our country, or should I vote for what I know will help the country, even if it costs me my political career?

These next few years will be fascinating.

Does China have a superior economic model? Ask yourself this: Superior to what?

Mr. Stern, who headed the Service Employees International Union, cited Andy Grove, founder and chairman of Intel, who concedes the twentieth century’s “decisive victory of free-market principles over planned economies.” That is true. However, both Stern and Grove proceed to assert that some unspecified degree of government economic planning will generate more prosperity than free markets. Stern writes that the “free-market fundamentalist” model that made America prosperous “is being thrown onto the trash heap of history in the 21^st century.” He argues that we should jettison our “empirically failing free-market extremism.”

Really? Pardon my candor, but what planet does Mr. Stern inhabit? For something to be “empirically failing,” it must first exist. Where in America is this supposed extreme “free market” system that Stern disdains?

In the United States today, government has largely nationalized the home mortgage market; cartelized the financial system; partially commandeered the auto industry; begun to take over the energy industry; and it plays the dominant role in the retirement, education, and healthcare of most Americans; has a leviathan bureaucracy that does everything from shutting down the development of domestic energy, to telling corporations which states they can operate in, to blowing taxpayers’ money on boondoggles. As for the boondoggles, they are both great (ethanol and solar energy) and small ($2.6 million to study whether alcohol increases a Chinese prostitute’s chances of contracting AIDS).

That said, I share Mr. Stern’s dissatisfaction with our sluggish economic growth, and agree that we should not be too proud to observe and learn from competitors like China. In fact, there are two important lessons we can learn from China right now:

First, China’s impressive economic growth rates prove rather than disprove the need for free markets. While China’s leaders dictate certain economic priorities and parameters, and insist upon loyalty to the Communist Party’s political monopoly, they often practice a policy of benign neglect toward provincial and regional entrepreneurs, giving them considerable latitude in a free-wheeling, Wild West scramble to find ways to create as much wealth as they can.

A second important lesson from the Chinese, and one that helps to explain why their growth rate is higher than ours, is that we are drowning in debt while they are awash in savings.

Before we jump to the conclusion that China’s economic model is the way of the future, we should remember that we have heard similar projections before. In the late 1980s, commentators raved about the Japanese economic model. Predictions abounded that the Japanese economy was so powerful and unstoppable that it would soon surpass our own and be the wealthiest in the world. Like the Chinese state today, the Japanese government worked closely with businesses to forge an industrial policy that (allegedly) would prove far superior to a free-market model. Then the wheels fell off and the bubble burst. Since then, Japan has struggled with economic stagnation and malaise.

China, of course, has a much larger population than Japan, and it certainly is possible that it eventually will have the largest GDP in the world, but to the extent that the Chinese government calls the economic shots and tries to pick winners and losers, China runs the risk of ending up like every other country (including our own) that has squelched free markets—broke and stagnant.

It is ironic that the former head of a major American labor union is enamored with a political system and economic model in which workers earn low wages and are not represented by independent labor unions. The precarious state of individual rights and liberty in China doesn’t seem a great concern to Andy Stern. Instead, he is eager to sign on to a system which (according to Professor Ralph Reiland in an Investor’s Business Daily commentary) enables the sons of China’s top Communist Party leaders to buy $400,000 Ferraris and $32-million mansions.

China’s hard-working people and high savings rate are impelling China’s rapid economic development, and for that China deserves our respect. But the political system of crony capitalism run by the Chinese politburo is antidemocratic and elitist to the core. For Andy Stern to claim that such a model is superior to freedom and free enterprise … well, you can draw your own conclusions.

The bankruptcy of Solyndra, the solar-panel manufacturer that has collapsed despite receiving half a billion dollars from the federal government, is only the tip of the iceberg. The Wall Street Journal recently reported that several other green companies that received generous federal aid are teetering on the brink.

Ener1, whose subsidiary EnerDel received a $118 million federal grant, lost $165 million in FY 2010 and has dim prospects. According to the Journal, Ener1 had “lost its bid to supply batteries to Fisker Automotive, a battery-powered car maker which received a $529 million U.S. taxpayer-backed federal loan guarantee in 2010,” when “Fisker chose to buy its batteries from a company called A123 Systems, itself the recipient of a $249 million U.S. Department of Energy grant.”

Great! First Team Obama extends taxpayer dollars to green companies, then it torpedoes them by giving larger grants to their competitors. Meanwhile, Fisker, itself a recipient of over a half-billion dollar handout from Uncle Sam, is making its cars in Finland.

Team Obama’s record on creating green jobs is no more confidence-inspiring than its record in midwifing a viable electric car industry.

A recent study by the Labor Department’s Inspector General examined what became of $162.8 million of Obama stimulus money funneled to the Employment and Training Administration. Set up to “train and prepare individuals for careers in ‘green jobs,’” the score is this: 53,000 individuals were trained, 8,035 got jobs, and only 1,033 trainees still held those jobs after six months.

There are at least four important reasons why we should stop funding “green” government programs:

First lesson: government-appointed experts are incompetent economic planners—a fact of life that any intelligent adult should know after the spectacular failure of central economic planning in the socialist experiments of the twentieth century. No matter how brilliant and how well-intentioned government planners may be, they do not and cannot know what consumers want and how much they are willing to pay for it. Only free markets can solve this challenge. If electric cars are to be a viable industry, private companies will make them so.

Second lesson: The government’s involvement in Solyndra raises troubling questions about possible corruption. While I think the Solyndra deal stinks to high heaven, I wonder whether any laws have been broken. Where is the dividing line between influence peddling, legitimate lobbying, political deal-making, and actual crime? Many farm-state Republicans have supported the uneconomical ethanol boondoggle for decades in exchange for generous support of their electoral campaigns, so the practice is bipartisan.

Third lesson: Government job programs are a blatant failure. They have never been economically beneficial. In the 1930s, Franklin Delano Roosevelt had the department of agriculture hire 100,000 Americans to monitor how much acreage American farmers were cultivating. These federal jobs produced no wealth. Their jobs made no more economic sense than paying people to dig holes and then fill them up.

Today’s green workers are economically nonsensical, too. True, they sometimes produce something, but the economic value is invariably less than the amount of tax dollars needed to subsidize their job. In other words, federal jobs make us poorer.

Fourth lesson: Finally, we simply can’t afford these green boondoggles. Uncle Sam’s official debt is now $15 trillion, and when you include off-budget items and unfunded liabilities, the situation is far worse. Given this fiscal reality, it is the height of irresponsibility to throw taxpayer dollars at any special interests, and it is particularly egregious to subsidize enterprises that are plainly uneconomical.

I am not opposed to green industries. What we need is for the government to get out of the way and let green technologies prove themselves in the competitive marketplace. It’s time for change and an end to economic foolishness. Let’s get the burden of green boondoggles off the taxpayers’ back.

According to the U.S. Treasury Department, the average interest rate paid on federal debt, as of July, was just under 2.4 percent, implying an annual interest expense on $14.5 trillion of debt of nearly $350 billion. (Net debt, subtracting intra-governmental debt is lower; actual debt, including off-budget items, is higher.) If the average interest rate rose to 5 percent, the annual debt burden would rise correspondingly to well over $700 billion and consume approximately one-third of total federal revenues.

At some point, higher interest rates would consume such a large portion of federal revenues that only massive dollar creation by the Federal Reserve could provide funding for government’s myriad programs. Washington simply cannot afford interest rates to rise, and therefore, the Fed will keep them abnormally low for as long as possible. In essence, the Fed has declared an end to a free market in interest rates.

The market price of interest rises when demand increases relative to supply and falls when supply increases relative to demand. Today’s record-low interest rates imply that the supply of money saved, i.e., capital, is abundant relative to the demand for capital. It isn’t.

Today’s low interest rates are not the result of superabundant capital, but are the result of massive intervention by the Federal Reserve System. In response to the financial panic in 2008, the Fed adopted what is known as ZIRP—a “zero interest rate policy.” This August, Fed Chairman Ben Bernanke announced his intention to maintain this policy for two more years. Doubling down on this engineered low-interest-rate policy, on September 21 the Fed announced “Operation Twist”—its plan to force down long-term interest rates even more.

Without Fed intervention, the supply of savings—genuine capital—would not be sufficient to finance and refinance all of the world’s debt. Interest rates are this low only because the Fed has been using its extraordinary powers to boost the supply of capital with “fiat capital”—money that nobody has earned and saved, but that the Fed conjures up ex nihilo.

As with the supply of capital, Federal Reserve interventions, along with various government interventions, have manipulated the demand for capital. If the U.S. Treasury had to compete with vigorous private demand for capital, interest rates would rise, so it has been necessary to squelch private demand.

Government and its central bank have suppressed demand for capital in several ways:

First, the torrent of anti-wealth policies unleashed by the Obama administration have produced the “turtle phenomenon”—many businesses have gone into shells, postponing plans to open or expand until the cloud of uncertainty and fear of arbitrary wealth-destroying policies blow over.

Second, the Fed has been paying interest (albeit a modest .25 percent) on banks’ excess reserves, and that has reduced the incentive for banks to lend those funds.

Third, there is abundant anecdotal evidence that banks have been rationing credit so severely that even low-risk customers often are denied loans.

American savers are taking it on the chin. With interest rates on Treasury debt being ultra-low, when you factor in inflation and taxes, savers are paying the Treasury to hold their money instead of earning a positive and market rate of interest. By creating artificially low interest rates, the federal government benefits by making artificially low interest payments on its massive amount of debt. In effect, ZIRP is bailing out our bankrupt government at savers’ expense. This is one way that wealth is being “spread around” in the age of Obama.

By ZIRPing us unrelentingly, the Fed is proving that it is no friend of the people. To paraphrase the Gettysburg Address, the Fed is a tool “of the [government], by the [government], for the [government].” One is tempted to add: [May it soon] “perish from the earth.”

Furthermore, our increasingly unpopular president is known for being long-winded, and his progressive allies in Congress are infamous for concocting ridiculously long bills. Wouldn’t a simple, concise list of objectives accentuate the contrast between the two parties?

Instead of sticking to the main theme of reining in an insanely expensive and increasingly intrusive government, the pledge was padded with statements designed to rally the traditionally Republican pro-life, pro-military, and small business constituencies. Yes, those areas are important, but the single issue that unites the largest number of Americans today is the concern that if we don’t check runaway government soon, we never will. The too-broad pledge ends up being a hodgepodge of clichéd sloganeering. It offers superficially bold but often frustratingly vague proposals, occasionally dubious math, and at least one glaring omission.

Here are some examples of the pledge’s faults:

It expresses an intent to “make government more transparent … careful in its stewardship and honest in its dealings.” But doesn’t every party claim this? Why not pledge to drastically shrink government instead?

It also promises “a better America.” Who would promise a “worse” America?

It offers “[a plan whereby] the best ideas trump the most entrenched interests.” Sure. Then why not put entrenched interests on notice by forswearing earmarks? (This is the glaring omission I spotted.)

It aims to “eliminate wasteful and duplicative programs … while still fulfilling all necessary obligations.” Everyone promises to trim waste, but it never happens; instead, too-big bureaucracies proliferate and expand. More fundamentally, where do Republicans differ from Democrats on the “necessary obligations” of government?

It seeks to “require congressional approval of any new federal regulation that may add to our deficit and make it harder to create jobs.” Why not insert a period after “regulation” and leave out the qualifiers that follow? Currently, rules proposed by federal bureaucracies take effect automatically unless Congress—which is too busy to even read its own bills, much less reams of bureaucratic regulations—explicitly rejects them, and so they are almost never challenged. Change it so that no rule proposed by unelected bureaucrats takes effect unless Congress explicitly votes to adopt it.

The pledge suffers from occasional ambiguity. Its proposal to replace Obamacare with reforms like liability reform and permitting inter-state sales of health insurance makes sense. But then the Republicans sound just like Democrats when they promise to “ensure [do they mean “mandate?”] that those with pre-existing conditions gain access to the coverage they need.”

Remember the promise to eliminate “duplicative” programs? Then why promise “a net hiring freeze” for federal employees instead of reducing the federal payroll after Obama’s rapid expansion of it?

The pledge calls for “preventing the expansion of unfunded liabilities.” Fine, but simply freezing the amount of those unpayable promises isn’t enough. If we don’t eliminate many trillions of those liabilities, our financial doom is sealed.

Another intriguing proposal is to require every bill to include a citation of constitutional authority. Do Republicans regard such authority as the letter of the Constitution itself or merely judicial opinions written about the Constitution?

Overall, the pledge is not very bold. The authors’ numbers suggest very modest plans for downsizing Uncle Sam. At one point, they write about rolling spending back to “pre-stimulus, pre-bailout levels.” That sounds like at least a trillion-dollar cut to me, but then they say that such a step would save $100 billion. Huh?

The pledge has its redeeming features. Invoking the Declaration of Independence at the outset is inspiring. Some of the facts cited hit home—e.g., how much higher taxes will be next year for middle class families and single moms if the Bush tax cuts expire; the existence of 2,050 federal programs providing economic assistance to Americans.

At best, though, the “Pledge to America” is a mixed bag. Clearly, its Republican authors sought to chart a middle path between Democrats and the Tea Party movement. In that, they succeeded.

This is probably a sound political strategy for the GOP. With voters weary of heavy-handed, hatch-it-behind-closed-doors-in-the-middle-of-the-night-then-ram-it-into-law-before-anyone-reads-it legislation (not to mention counterproductive “stimulus” plans, in-your-face cronyism, and soaring national debt), 2010 is the Republicans’ election to lose. All they have to do is run to the right of Obama and they will make large gains in Congress.

Would the “Pledge to America,” even if adopted in its entirety, be enough to turn us off our current road to national bankruptcy? No. But perhaps it will prove to be the first of many steps needed to restore economically sound governance to our country.

The term “austerity” is problematic. It connotes sacrifice and deprivation. While “austerity” programs include cutbacks in some persons’ lifestyles, it seems odd to say that learning to live within one’s means is a sacrifice. What some call “austerity” is simply the recognition of reality: A society cannot chronically consume more than it produces.

Favoring “austerity” are those worried that today’s swollen budget deficits and national debts, if not corrected, will trigger an economic catastrophe through a sovereign debt crisis (i.e., the inability of governments to find buyers for their bonds). Opposing it are those who profess concern about the economic hardship that would be endured by innocent victims, and/or those who believe that the right economic policy is for governments to increase spending and budget deficits even more than they already have.

Traditionally, “austerity programs” have been International Monetary Fund (IMF) bailouts of heavily indebted, virtually bankrupt Third World governments. For governments to obtain a loan, the IMF has required them to get their fiscal affairs in order by reducing their budget deficits.

Today, by contrast, we find that some of the wealthiest countries in the world require “austerity programs.” The dangerous indebtedness of the PIIGS (Portugal, Ireland, Italy, Greece, Spain) is well known. This has deflected our attention from the salient reality that the United States has comparable degrees of debt and deficits to those European countries. We, too, are in danger of either a sovereign-debt and currency crisis.

We should be ashamed and alarmed that we are even talking about “austerity programs” for the United States of America. The very fact that we are doing so means that we have lapsed into a Third-World-style quagmire of fiscal incompetence and over-indebtedness. Like a banana republic, we have allowed a self-serving political class to spend tax dollars and borrowed funds to “buy” popularity and take us to the brink of national bankruptcy.

Uncle Sam has behaved like a guy earning $40,000 per year who—with the help of borrowing—has been spending $60,000 per year. Obviously, that can’t continue indefinitely. In fact, such a person can’t repair his balance sheet even if he reduces his annual consumption to $40,000; he has to consume less than $40,000 to be able to serve his debt obligations. So it is with Uncle Sam.

In recent years, our government has gone on a spending binge. As a result, today’s economy is sluggish and severely hung over. Yet Keynesian economists like Paul Krugman tell us that we haven’t binged enough. We’ve been belting down doubles, but Krugman says that the cure for our fiscal hangover is to go back to the bar and start chugging triples. No thank you.

Other pundits on the left are calling for tax increases instead of spending cuts. Their primary goal is the redistribution of wealth, and so they object to the alleged unfairness of spending cuts. This raises the issue of whether existing government payments to individuals ever were fair. There isn’t space to debate this now, but the overriding problem is this: If federal spending isn’t cut significantly, we will end up with a financial crisis and economic crack-up that will cause more economic pain for more people, including those that the redistributionists claim to want to help. What could possibly be fair about that?

It is clear what we must do: slash government spending. Tax rates should not be raised while we are in this weakened economic condition.

What some call “austerity” is simply a return to fiscal sanity and economic reality. We cannot continue to spend more than we produce. The adjustments will be painful, but the longer we wait to bite the bullet, the more painful those necessary adjustments will be.

One more point: The blame for the pain caused by “austerity” belongs, not to those who make the politically difficult decisions to cut spending, but, to those in the past who made politically facile decisions to spend beyond our means. They are the ones who got us into this mess.

[Editor’s Note: A longer version of this article first appeared in American Thinker.]

1) It warps corporate decision making, inducing expenditures made only to reduce a company’s tax liability.

2) The compliance costs are astronomical, often exceeding 60 cents for every dollar of revenue that the government raises from taxing corporate profits. How would you like to spend $6,000 per year calculating that you owe Uncle Sam $10,000?

3) It fosters over-reliance on debt. Corporations often need to borrow money to replace funds that government taxed. In fact, the tax code encourages debt, making corporate debt tax deductible.

The corporate profits tax is also ethically problematical.

Every year we read about some corporations that earned profits paying zero taxes, while other firms are ensnared in the tax net. This is patently unfair.

The unfairness is compounded by the periodic tax breaks that Congress writes. The timing of such tax breaks is arbitrary. Why should some firms receive an accelerated depreciation allowance for helpful upgrades paid for this year when their competitors upgraded last year and received no comparable break?

Another thorny ethical problem involves the tax-free status of non-profit organizations. Some of them engage in political lobbying where they enjoy a cost advantage vis-à-vis for-profit organizations that lobby on the same issue (though perhaps on the other side). Other non-profits compete directly with for-profits for personnel, supplies, etc. The newest ethical abuse is that formerly for-profit companies can convert to non-profit status as a loophole to make themselves eligible for additional federal earmarks.

Despite the glaring economic and ethical shortcomings of the corporate profits tax, such taxation enjoys widespread popular support. A large percentage of citizens like the idea of taxing “rich” corporations. However, the economic reality is different from the common perception.

It’s a cliché, but true: corporations don’t pay taxes, people do. Corporations are simply fictitious legal persons serving as unpaid tax collectors for governments. The actual economic burden of taxation is borne by real people, i.e., consumers, who pay higher prices; workers, who are left with lower compensation packages and diminished employment opportunities; and investors, particularly the millions of middle-class American who own stocks in their retirement and investment accounts, because the corporate income tax makes their investments worth less.

In addition to being economically irrational, ethically dubious, and a cynical disguise for taxing real people, most of whom are not rich, the corporate profits tax stunts economic growth. In a recent study, the Organization for Economic Cooperation and Development affirmed, “Corporate taxes are found to be most harmful for growth, followed by personal income taxes and then consumption taxes.”

Currently, the United States has the second-highest corporate income tax rate in the developed world, 35 percent. Should we trim this rate? No. We should scrap the tax entirely.

The biggest problem with eliminating the corporate profits tax, which raised $138.2 billion in fiscal year 2009, is that it would aggravate our budget deficit. To offset this sudden loss of revenue, Congress should terminate all federal subsidies to businesses. Although precise definitions of corporate welfare and exact dollar figures for such government favors are hard to tabulate, they surely exceed $138 billion per year. Let’s do away with the myriad privileges for special business interests and make them earn their income by serving consumers instead of milking the taxpayers.

American workers would benefit greatly from ditching the corporate profits tax. Business flooded into Ireland when it undercut the other EU countries by lowering its corporate income tax rate to 12.5 percent. A zero percent rate on corporate income here would be even more enticing, making the United States the favored destination of multinational corporations. Job opportunities would mushroom, and the resulting expansion of the tax base would lower the federal deficit.

The benefits of jettisoning the whole corporate income tax/corporate welfare mess would be many: More jobs, more production, more wealth, more fairness, and lower government deficits. Who could object?

Unfortunately, many people. Start with the strange bedfellows of corporate lobbyists and anti-capitalist ideologues. Then add the politicians who traffic in political favors and moral posturing. Finally, add the millions of American citizens who fail to perceive that, instead of soaking the rich, the corporate profits tax is a scorched-earth policy inflicting widespread economic damage on middle America.

Abolishing the corporate profits tax isn’t politically feasible today, but we can hope for a day when economic reason prevails and we get this albatross off our backs.

The title of the book requires clarification. Climategate is not a book-length dissection of the “climategate” scandal that erupted last November when a huge bunch of incriminating e-mails between key global warming advocates came to light. Instead, it gives a big-picture treatment of the science, politics, economics, ideological underpinnings, and personal agendas behind the global warming issue.

The author of Climategate, Brian Sussman, is a trained meteorologist who was a TV weatherman in California for many years. He currently hosts radio station KFSO’s top-rated morning talk show in the San Francisco Bay area.

For most of his book, Sussman writes in a breezy, folksy, upbeat style that makes learning important information enjoyable. The tone shifts to earnest eloquence toward the end, when he warns us about the great dangers to liberty and prosperity posed by the ruthlessly ambitious elitists behind the global warming scam.

The most prominent of these elitists is, of course, Al Gore, who—according to Sussman—is well on his way to becoming the world’s first anti-carbon billionaire. Gore’s elitism is encapsulated in his statement, “There are times when a small group has to make difficult decisions that will affect the future of everybody.” Gore is all too happy to accept his self-appointed responsibility to restructure our lives.

Sussman provides plenty of evidence that Gore and other global warming activists bend, if not mutilate, truth and science in pursuit of money, power, and prestige. For example, in Gore’s Oscar-winning horror film, An Inconvenient Truth, the graph showing an apparent correlation between global temperature and CO2 in the atmosphere is shown briefly, so that viewers won’t have time to notice that increases in CO2 occurred after increases in temperature, thereby demolishing the assertion that CO2 causes global warming.

Sussman also recounts how an English court found that Gore’s “film contains nine scientific errors” in the context of “alarmist” and “exaggerated” content. That court ruled that An Inconvenient Truth amounted to “political brainwashing” for partisan, nonscientific objectives, and further ordered that the movie could not be shown to British schoolchildren without being accompanied by a 56-page instruction guide which points out where Gore’s claims “do not accord with mainstream scientific opinion.”

Climategate is a wide-ranging exposé of characters and special-interest groups that have exploited the global warming scare for self-serving purposes. For example, Sussman reports that the grandstanding dictator of the Maldives has demanded billions of dollars from the developed world on the grounds that human-caused global warming threatens to cause his low-lying chain of islands to disappear. In fact, the sea level there is falling.

One group exposed by Sussman is the Society of Environmental Journalists. SEJ provides lists for journalists preparing stories on global warming. One list recommends trusted advocates of global warming; the other blackballs scientists who are global warming skeptics.

Sussman also explains some of the measuring errors that have clouded the global warming issue. For example, adding new weather stations near urban heat islands, and arbitrarily “expanding” the Arctic to include an additional four million square miles of territory farther south from the North Pole, both produce an illusory increase in average temperatures.

Climategate includes the most detailed explanation I have yet seen of how untenable the anthropogenic CO2-as-culprit theory is. Sussman gathers the scientific information about the relative heat-trapping capacity of different atmospheric gasses, shows CO2’s percentage of the whole (both with and without the major greenhouse gas, water vapor) then factors in mankind’s share of total global CO2 emissions. Bottom line? Humans are responsible for about one-ninth of one percent of the greenhouse effect (and, as Sussman briefly explains, the greenhouse effect is only one of several factors that influence earth’s temperature).

Sussman’s chapter summarizing the pros and cons of the various sources of energy provides an excellent primer on the subject. His information about how corporate and political insiders stand to make billions in controlling the government-rigged energy market under a cap-and-trade scheme while regimenting Americans under a yoke of Big Brother-like, high-tech monitoring devices is chilling.

It is difficult to overstate the importance of this book. Climategate provides a comprehensive debunking of global warming mythology. It sounds a timely warning about how grim our future will be if powerful elitists and special-interest groups succeed in imposing their agenda on us. If you only understand global warming in bits and pieces, this is the book that puts it all together for you in the proper perspective and context.

I have come to this conclusion after listening to Team Obama’s spokesman, Treasury Secretary Tim Geithner, assert that allowing the Bush tax cuts to expire on December 31, as currently scheduled, is good policy. In truth, raising tax rates when the economy is faltering is counterproductive. It will weaken the economy further. Given the sorry state of the economy—with the jobs markets, credit markets, construction industry, and small-business climate all in states of decline or stagnation—adopting a policy that will exacerbate economic stagnation and increase hardship for Americans is worse than ill-advised.

George W. Bush persuaded Congress to lower taxes on income, inheritance, capital gains, and dividends to resuscitate the moribund post-9/11 economy. Those tax cuts helped foster a pickup in economic activity. Today’s economy is moribund again, yet Geithner wants all those taxes to go up at year-end.

There is no justification—theoretical or historical—for such a policy. And it isn’t just free-market economists who believe that raising taxes during a time of economic weakness is counterproductive. Lord Keynes—the famous economist whose 1930s-era theories were exhumed by Team Obama in support of “stimulus” spending programs—maintained that economic sluggishness calls for tax cuts, not tax hikes. (Have you noticed how Keynes is invoked when his theories support what Team Obama wants to do, but they leave him in the closet when his theories conflict with their objectives?)

The historical evidence is also weighted against Geithner. As I have written before, the depression of 1920-21 was followed by cuts in both tax rates and government spending, and the economy recovered; by contrast, in the 1930s, both Hoover (Republican) and Roosevelt (Democrat) raised taxes and spending—Team Obama’s identical policy today—and the economic misery was prolonged.

Geithner’s arguments for letting the Bush tax cuts expire were, frankly, devious. He asserted that this step was needed to convince bondholders around the world that the United States is serious about reducing deficits. Apart from the inconvenient fact that raising tax rates often lowers tax revenues (e.g., the 1930s under Hoover and Roosevelt), Team Obama has engaged in a classic bait-and-switch maneuver.

It wasn’t that many months ago when the Obama administration, having jacked up federal spending by almost a trillion dollars in emergency stimulus spending, was talking about scaling back about half of that spending. That was a clever way for Team Obama to convince the gullible that the president and his administration are fiscally responsible, when their actual goal was to lock in a permanent 12-figure increase in federal spending.

Are you hearing any noise from Geithner about reducing Uncle Sam’s out-of-control spending as a means of persuading bond investors that our government is beginning to return to fiscal sobriety? Nope. All of the focus is now on high spending and high taxing—i.e., depression-inducing economic policy in its purest form.

Geithner played the class-warfare card by asserting that the tax cuts would only hurt the top two or three percent of taxpayers. That may be technically true (though even that is in doubt until we see if the other 97 percent of Americans are indeed protected by extending the Bush tax cuts for them), but it is economically untrue. You can explicitly and directly increase tax rates only on the top earners, but the indirect effects of such tax hikes will be profound. The reduction in production and investment caused by tax increases will end up harming many Americans in lower income brackets.

Perversely, the tax hike that Obama and Geithner want would hurt Americans of modest or low incomes more than the rich. In the name of “social justice” and making the rich pay “their fair share,” pro-tax-hike zealots are willing to sacrifice the economic well-being of Joe Lunchbucket. That raises interesting questions: Are the “soak the rich” clique economically blind and ignorant, not knowing what they are doing? Or do they know that their Big Government agenda will cause unnecessary economic pain, yet they are willing to pursue it anyway? Either way, these are some very troubling questions.