Northern Virginia business owner Timothy Donner is one of several candidates for the 2012 Republican nomination for the U.S. Senate, seeking to replace Senator Jim Webb (D-Va.), who is retiring after one term.
The likely Democratic nominee for Webb’s seat is former Governor Tim Kaine, but the Republicans have a large field of potential candidates, including former Governor and Senator George Allen, who lost to Webb in 2006, as well as Earl W. Jackson, David McCormick, Jamie Radtke, and Donner.
Donner, who describes himself as “increasingly libertarian” in his outlook, sat down for a wide-ranging interview with the Charlottesville Libertarian Examiner on July 12 in Richmond at the Tobacco Company restaurant, not far from the State Capitol complex.
Raise the debt ceiling?
The first question was about Topic A in Washington and the country at the moment: What is Donner’s assessment of the impending congressional vote to raise the debt ceiling and the raucous debate accompanying it?
“I would vote to raise the debt ceiling,” Donner said, “if I believed that there was a deal that was possible that would result in serious, structural reforms that could make major dents in the debt in the long run.”
Donner is skeptical, however.
“I don’t believe there is such a deal,” he continued, “so I oppose raising the debt ceiling under any of the current scenarios, including the $2 trillion reduction over ten years being proposed by the Republicans, the $4 trillion dollar — the “Grand Bargain” — being proposed by the President,” which would also include tax increases.
“None of those deals are acceptable in return for adding another two and a half trillion dollars on top of the astronomical $14 trillion debt that we already have,” Donner explained.
Any long-term debt-reduction program would have to involve the restructuring of major entitlement programs like Medicare and Social Security, he added.
A solution will not be found soon, however, “not in the next two weeks before the debt ceiling hits,” he said.
Nonetheless, Donner asserted that “there are realistic scenarios for attacking entitlements.”
The first, he noted, “is a Medicare reform proposal that I’ve put forward in my campaign.”
That proposal “would replace Medicare for the next generation with ‘Retirement Health Savings Accounts’ that would allow people to redirect their Medicare taxes” into privately held and –controlled accounts.
This reform, he said, “would sustain the program and sustain the concept of a secure retirement in health care. It would reduce the monstrous, almost incredible level of unfunded liabilities in Medicare alone, which is over $70 trillion.”
In addition to sustaining the program and averting default, Donner argued that his proposal “would head us toward a real free market in health care, would offer greater consumer choice, lower cost, a higher quality of care, and a genuine free market in health care, which we haven’t had in a long time.”
Donner understands how daunting the problem is.
“Will it take time to do this?” he asked. “Yes, but not as long as we might think, considering people like their 401(k)s and their IRAs and the next generation has zero confidence that the money they’re putting into Medicare will be there when it comes time for them to take it out.”
He posed another question, only partly rhetorical: “How can we, with a straight face, continue to confiscate their Medicare tax money when we know that the program will be insolvent and bankrupt?”
Flat Tax or Fair Tax?
Donner also weighed the pros and cons of two popular proposals for federal tax reform, the Flat Tax (the centerpiece of Steve Forbes’ 1996 presidential campaign) and the Fair Tax (popularized by radio talk-show host Neal Boortz).
“The pros of a Flat Tax,” he explained, “are that it will simplify an overly complex tax system. It will broaden the tax base because more people will pay income tax. More people will therefore have ‘skin in the game,’ so to speak.”
These new taxpayers, he said, will “have a stake in the system and therefore be more interested and involved in what their government is doing — and more informed and educated citizens is always a good thing.”
The Flat Tax also would, he continued, “rid ourselves of the institutionalized envy represented by progressive taxation where people who make [above] a certain level of income have to pay a higher rate of taxes. To me, there’s no justification for that because someone who makes five times as much money is already going to pay five times as [much in] taxes, no matter what the rate is.”
On the other hand, Donner noted the major advantage of the Fair Tax, which “is that it would eliminate the income tax and all payroll taxes and would replace [them] with a single national sales tax.”
The Fair Tax, he explained, “would be based, of course, on consumption. Ultimately, the reason this is a good idea is because it rewards savings, it rewards production, and it penalizes consumption.”
That, he said, is “what we were always taught when we were growing up and that’s what I think we all believe is right.”
Donner concluded by noting that “the reason it’s called a ‘Fair Tax’ is because it’s totally fair. It’s based on how much each person chooses to consume.”
In the first part of this interview, Tim Donner discussed his “libertarian roots” and contrasted himself with his principal opponent, George Allen.
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