During the Sunday morning debate in New Hampshire, presidential candidate Newt Gingrich delivered this indictment of rival Mitt Romney: “I think what Republicans have to ask is who’s most likely in the long run to survive against the kind of billion dollar campaign the Obama team is going to run. And I think that a bold Reagan conservative with a very strong economic plan is a lot more likely to succeed in that campaign than a relatively timid Massachusetts moderate, who even The Wall Street Journal said had an economy plan so timid it resembled Obama.”
Just how “timid” are the economic platforms of the various GOP candidates? Whether their past records suggest they would be willing to fight for bold reforms, or whether the boldest reforms are possible in the face of determined Democrat (and perhaps no small measure of Republican) congressional opposition are important, but separate, questions.
After examining everyone’s proposals, I would rate the candidates’ platforms from most to least “timid” as follows: Santorum as most timid, then Romney, Huntsman, Gingrich, Perry and Paul, as least timid. Santorum and Romney propose changing our overall system of government less dramatically than the others. It’s a tough call between Gingrich and Perry, because their plans have many similarities, but I awarded a few extra chutzpah points for Perry’s willingness to tackle Social Security reform – something he took bruises for, a few hundred debates ago.
Mitt Romney, for his part, has a rather detailed list of proposals. If the many points in his platform could be converted into bonus points at a fast-food restaurant, he would certainly earn a free milkshake with his next hamburger. Some of these points are actually quite bold. For example, while he’s a bit vague on personal income tax reform, he does tout a means-tested elimination of taxes on capital gains and interest income. That’s a game-changer even when hobbled with a silly class-warfare means test. He wants corporate taxes reduced from 35 percent to 25percent, which is arguably “timid” compared to what some of his rivals have in mind.
Romney favors block-granting Medicaid and introducing some limited private options to Medicare, where seniors would be able to choose between purchasing coverage from the government or competing private insurance plans.
He has a somewhat wonkish idea for controlling regulatory growth: after “directing all agencies to immediately initiate the elimination of Obama-era regulations that unduly burden the economy or job creation,” he would “cap annual increases in regulatory costs at zero dollars.” This would involve forcing government agencies to loosen up existing regulations whenever they seek to impose new ones, leaving the net economic impact at zero. If he could really make this work, it would produce considerable sweating beneath the white collars of the bureaucracy.
Romney’s overall platform contains little else that would dramatically restructure the existing system. Rick Santorum’s platform is arguably even more “timid,” in the sense that it’s built around changing the priorities of the existing system. He lowers personal tax rates a bit and flattens them considerably, but continues the practice of using deductions to subsidize behavior the government finds desirable – in Santorum’s case, the creation and maintenance of traditional families, in particular through a tripled tax deduction for children.
Santorum is likewise focused on reshaping the business sector, in what he believes would be productive ways, through targeted incentives. He trims capital gains taxes for everyone to 12 percent instead of 15 percent, and while he would greatly reduce corporate taxes for all companies – cutting the existing rate in half, to 17.5 percent – he would only eliminate them completely for the manufacturing sector. He also wants to increase the tax credit for research and development. These are adjustments, not bold reforms.
Jon Huntsman, who regrettably kicked off his campaign by declaring himself the moderate alternative to all those Tea Party maniacs, actually has a very aggressive economic platform. On the eve of the do-or-die New Hampshire primary, he made it even less “timid” by endorsing dramatic education reform, including a huge reduction of the federal role in education, and a substantial injection of privatization. However, he stopped short of calling for an end to the Department of Education, instead expressing a desire to “massively scale it down.”
Huntsman’s plan lowers personal taxes more than Santorum’s, ending with a top rate of only 23 percent instead of 28 percent. He trims the corporate tax rate back to 25 percent, and offers a tax holiday for repatriated profits brought back from overseas. More dramatically, he wipes out virtually all deductions and tax credits. He also completely eliminates taxes on capital gains and dividends, and puts a stake in the heart of the small-business-killing Alternative Minimum Tax. Those are huge changes to the existing system.
Rick Perry and Newt Gingrich both have flat tax proposals. They are both “optional,” which would considerably limit their impact, as those who fare better under the current system would be logically inclined to avoid the flat tax. Perry’s proposed flat rate is 20 percent. Unlike Huntsman, he keeps several deductions under his flat tax, including mortgage interest, charity, and means-tested deductions for state and local taxes.
Perry does away with the Alternative Minimum Tax, and eliminates long-term capital gains taxes. He restrains government spending (a topic about which Romney, Santorum, and Huntsman have relatively few specifics to offer) by imposing a spending cap of 18 percent of Gross Domestic Product, amending the Constitution to require balanced budgets, and placing a moratorium on new regulations. As everyone should know by now, he wants to do away with three federal departments: Commerce, Education, and Energy.
Perry would embark upon the gradual privatization of Social Security, by giving “younger workers the option to own their Social Security contributions through personal retirement accounts that Washington politicians can never raid,” as he described them in a Wall Street Journal editorial. Privatization enthusiasts have always believed that such private options would grow in popularity to eclipse, and then replace, the doomed government entitlement system.
For businesses, Perry cuts the corporate tax rate down to 20 percent, and offers a discounted rate of 5.25 percent for repatriated capital. He couples this with the elimination of various loopholes and targeted corporate tax breaks.
Newt Gingrich’s flat tax has a lower rate of 15 percent, as opposed to Perry’s 20 percent, but Gingrich does not allow the deduction of state and local taxes paid, as he believes such deductions amount to a federal subsidy for irresponsible tax-and-spend state governments. He also has a lower standard deduction than Perry does – which would, on balance, broaden the tax base at the lower income levels.
In the longer term, Gingrich wants to get away from payroll taxes and have people pay their taxes through personal investment accounts, which would induce a rather dramatic change in the attitudes of many people, as taxes siphoned painlessly out of their paychecks are largely invisible to them.
Gingrich slashes the corporate tax rate to 12.5 percent and allows one hundred percent expensing of new equipment purchases. Like Huntsman, he would do away with capital gains taxes completely. He wants to transform the Environmental Protection Agency into the “Environmental Solutions Agency,” which would not have job-killing poisoned fangs. He would knock out the National Labor Relations Board completely.
Finally, you’ve got Ron Paul, who would lop $1 trillion off the federal government right off the bat, putting down five departments: Energy, HUD, Commerce, Interior, and Education. We would also bid farewell to the Transportation Security Agency. Paul wants to cut the federal workforce by 10 percent, and of course, there would be some tense days ahead for the Federal Reserve.
Paul targets the same regulations as Gingrich for repeal, and plans to “cancel all onerous regulations previously issued by Executive Order.” It would be fun watching the same liberals who applauded Obama’s power grabs and non-recess recess appointments suddenly rediscover the soul-numbing horror of the “unitary executive” under President Paul.
Paul would take corporate taxes down to 15 percent, and do away with taxes on capital gains and personal savings. He won’t support flat tax or “Fair Tax” reforms until the 16th Amendment is repealed, meanwhile preventing the Bush tax rates from expiring and zeroing out the “death tax.” He ultimately wishes to do away with income taxes altogether.
The political feasibility of implementing these proposals, and their consequences – both expected and unforeseen – are matters that should also be taken into consideration. Boldness is not the only reasonable metric for assessing presidential platforms, but in an hour of massive systemic crisis, it’s not a bad idea to take it into account. On the other hand, it’s worth remembering that bold doesn’t automatically mean good. ObamaCare was a rather bold reform, after all.