It's time to saddle up. The Dark Pony Party is riding again. While we expect to have as little impact this time as last, America's most obscure third party would like to present some stronger alternatives to the pablum offered by the Democrats and the Republicans.

Yes, once again, I am a candidate for President. My running mate, again, is Brooks Hamilton; a Dallas benefits attorney, patriot, and friend. Four years ago, both of us wore beards. We resembled the Smith Brothers.   This year I am clean-shaven--- but backed with his grey bearded wisdom. Four years ago we had four major proposals. This year we add five more. Here are the earlier proposals:

* An integrated tax system. All employment tax payments would be credited against federal income tax liabilities. This would prevent politicians of either party from cutting taxes with one hand while raising them with the other. We still need this. It's still possible to be a middle-income earner and have a total tax rate (employment tax plus income tax) that is higher than a person with ten times the income.

We also need it because candidate John Kerry is proposing just that: he's promising income tax cuts for the middle class but also wants the cap on the employment tax raised from $87,900 to $120,000. That's a massive tax increase on upper middle-income earners.

* An autopilot for future tax cuts. We proposed future tax cuts be tied to reductions in federal debt. We'd still love to see that--- but two rounds of tax cuts from President Bush have committed the nation to massive deficits for the foreseeable future. Leaving debts for our grandchildren has become a bad habit with both parties.

* Normalized Congressional Benefits. We proposed that retirement and health benefits for elected officials be identical what was available to the average worker, adjusted annually. We're tired of politicians with Mercedes benefits fiddling with our Yugos. If the politicians had our Yugos, benefits would improve.

*   Massive Simplification of Tax Deferred Savings Plans. We proposed replacing the confusing, rule-ridden system of qualified savings plans with a single plan. Our Personal Capital Trust would allow unlimited savings from income, tax deferred, for as long as the saver lived. Withdrawals from the trust would be taxed at capital gains rates, a maximum of 15 percent. It's still a good idea.

Our new proposals:

* Major Change for Health Insurance. We propose that Health Savings Accounts, an idea pioneered by John Goodman at the National Center for Policy Analysis, become the model for all future health care insurance. This would put all first dollar health decisions back into the hands of individuals. It would put insurance companies back in the business of redistributing risk rather than making healthcare decisions. We also propose what writer Phillip Longman calls "The Americans WITHOUT Disabilities Act," a bill that would encourage exercise and better diets since a large proportion of our healthcare expenses result from poor personal habits--- smoking, alcoholism, lack of exercise, poor eating, etc. We need to stop eating pizza long enough to realize the wage benefits of better health.

* Radical Change in Energy Policy.   We would increase the CAFÉ (Corporate Average Fuel Economy) miles per gallon standards for cars. We would also extend them to all light trucks, forcing Detroit to start increasing fuel efficiency once again. We would initiate what energy guru Amory Lovins calls "Fee-bates" on new car purchases, putting a surcharge on low mpg vehicles and giving rebates on high mpg vehicles. The fees would pay for the rebates. Similar Fee-bates would be put in place for new housing, appliances, and other energy consuming equipment.

We put these proposals first because energy and health insurance costs, not taxes, are the two biggest levers for improving the real income of more than 75 percent of all households in America.

* Improve Employee Savings Plans. We would require that all 401(k) and 403(b) plans have automatic enrollment and automatic increases in contributions unless the employee specifically chooses otherwise. In addition, as recommended in the Burns and Hamilton paper "Reinventing Retirement Income in America," we'd require that all plans offer a low-cost managed option that would improve the chances of investment success for most employees. This option would have an annual cost of no more than 30 basis points (three-tenths of one percent). The difference over conventional plans would add hundreds of billions to retiree savings.

* Change the Taxation of Social Security Benefits.   The peculiar way Social Security benefits are taxed--- piggy backed on income from other sources like retirement plans--- burdens seniors who have saved for retirement with marginal federal income tax rates up to 47.5 percent. We would exempt income from any source under the inflation indexed poverty level income. Income from any source over that amount, including Social Security, would be subject to normal income taxes.

*   Radical change in Social Security. Rather than continue to make promises that cannot be fulfilled, as candidate Kerry proposes, or diddle with an ineffectual partial. privatization of Social Security, as President Bush proposes, we would institute a national sales tax dedicated to paying the benefits promised to people currently in the system. We would terminate conventional Social Security for younger workers.

Younger workers would begin a 100 percent private plan requiring them to save and invest for their future retirement. Like the low-cost managed option required for Employee Savings Plans, this program would have an annual cost of no more than 30 basis points. It would not be a major boon for the mutual fund or insurance industry. Plans that operate at this cost (and less) already exist. (Details on this plan can be found in the book "The Coming Generational Storm," which I co-authored with economist Laurence J. Kotlikoff).

On the Web:

Read economist Martin Feldstein on candidate Kerry's employment tax proposal

Read about the hows, whys, and history of Medical Savings Accounts

Read Burns and Hamilton about "Reinventing Retirement Income in America" (NCPA publication #248)

Read earlier column about the taxation of Social Security benefits:

Read Kotlikoff and Burns about "The Coming Generational Storm"

Tuesday, February 11, 2003: Torpedo Tax Can Cause a Sinking Feeling

Read about the first ride of the Dark Pony Party: Sunday, November 5, 2000: Enough of this Tomfoolery, Vote for Me!