Santorum Lays Out Economic Agenda
Accusing Mitt Romney of "tinkering at the margins," Rick Santorum takes to the pages of the Wall Street Journal today to lay out his campaign's "pro-growth and pro-family Economic Freedom Agenda." See the column for full details, but here's the gist:
- Increasing domestic energy production, including approving the Keystone XL pipeline and giving the states more flexibility to approve energy exploration and fracking regulations.
- Repealing all Obama-era regulations with a cost to the economy of over $100 million.
- Two income tax rates -- 10 percent and 28 percent -- along with a tripling of the deduction for children and elimination of the marriage penalty.
- Cut the corporate tax rate in half (interestingly, the WSJ piece is totally silent on the proposal to eliminate the tax altogether for manufacturing)
- Spending cuts of $5 trillion over five years, plus a 10 percent cut in the federal workforce (excluding defense).
- A Balanced Budget Amendment that includes a cap for federal spending at 18 percent of GDP.
- Five free trade agreements in his first year in office (Santorum doesn't specify with whom).
- Repeal and replace Obamacare
- "Cut means-tested entitlement programs by 10% across the board, freeze them for four years, and block grant them to states." Plus reforms to Medicare and Social Security to make them "fiscally sustainable."
- Phasing out Fannie Mae and Freddie Mac.
What do you think? For my money, it's a decent package, although it suffers -- as most election-year promises do -- from a reach that probably exceeds its grasp. I also don't know that it's going to create a particularly stark contrast with Romney -- while they may differ on the details, the principles behind a lot of these proposals would receive almost universal assent from the Republican field.
A few minor quibbles: a two-tiered income tax system, with an 18 percent gap between the two rates, is an invitation for distortions as people attempt to avoid the higher bracket. While I prefer a flat system, if you're not going to have one it behooves you to keep the increase between brackets modest. I'm not a big fan of upping the child tax credit either, which (even though it's a fairly innocuous iteration) still reeks of making social policy through the tax code.
Finally, while I'm deeply sympathetic to the goal, I've never thought the Balanced Budget Amendment worth the candle. It's an awful lot of effort to erect a system that Congress will inevitably find a workaround for, much as they do in states like California.
- Comment (37)
- · Quote
- · UnfollowFollow (1)
- Pages:
- 1
- 2
Comments:
Apr '11
Re: Santorum Lays Out Economic Agenda
Those items don't go nearly far enough. It's like aiming for the tops of your shoes when you need to hit the moon.
Are we such suckers that agreeing to 18% of GDP spending is just fine? We can do better things with our wealth than pour it down that hole.
Dec '10
Re: Santorum Lays Out Economic Agenda
Frozen Chosen
Correct me if I'm wrong, KP, but don't all the big 3 support these points? Doesn't seem to be much of a differentiator for Santorum. · 50 minutes ago
To my knowledge Santorum is the only one who has not lumped defense employees in with the useless dead weight in all the other departments of government. This is a big deal for me since I work for the Navy. We'd have more than enough federal money for the things that actually matter if we didn't spend so dang much on useless pursuits of "social justice" and other nonsense.
Re: Santorum Lays Out Economic Agenda
I am sympathetic to Santorum's proposal to increase the dependent exemption--not the same as the refundable child credit. The exemption began as a Republican measure in 1948 and contributed to earlier marriage and the famous baby boom. If the deduction had been indexed to inflation, today it would be $5,499, 50 percent higher than where it currently stands. If indexed to per capita income, the deduction would now be $17,189, four times the current per child deduction. (Source: Tax Policy Center).
Intact families are much more likely to be self-sufficient. The increase in single parenthood goes hand-in-hand with an expanded social welfare state. How can we downsize the government against a trend of increasing out-of-wedlock child-rearing?
I also support the tax preference for manufacturers. It's a lot easier to start a software company employing computer scientists here in Silicon Valley than a manufacturing outfit with lower entry-level employment standards. The environmental regulations are mind-boggling. Therefore, until we untangle the web of interlocking anti-manufacturing rules and regulations, a lower-tax rate will serve as an incentive to bring new manufacturing jobs back to the United States.
Edited on February 28, 2012 at 1:16amDec '10
Re: Santorum Lays Out Economic Agenda
George Savage: I am sympathetic to Santorum's proposal to increase the dependent exemption--not the same as the refundable child credit. The exemption began as a Republican measure in 1948 and contributed to earlier marriage and the famous baby boom. If the deduction had been indexed to inflation, today it would be $5,499, 50 percent higher than where it currently stands. If indexed to per capita income, the deduction would now be $17,189, four times the current per child deduction. (Source: Tax Policy Center).
Intact families are much more likely to be self-sufficient. The increase in single parenthood goes hand-in-hand with an expanded social welfare state. How can we downsize the government against a trend of increasing out-of-wedlock child-rearing?
I wonder if it is possible and desirable to increase the dependent exemption more for married couples than for single parents.
Re: Santorum Lays Out Economic Agenda
Interesting point. I don't think it's desirable to deny the exemption to single parents. However, anything the government can do to reduce the tax burden on young families with children is a good thing. This is a very stressful time of life--financial stress being only one component--but the consequences of deferring marriage are not good for the next generation or for the future of our constitutional republic.
Oct '10
Re: Santorum Lays Out Economic Agenda
DocJay: Medicare and Medicaid are non sustainable without massive rationing and cost controls on every level. No one in our country has the stomach for this. Very few on Ricochet have the stomach to deal with this on a rational level either.
These health care agencies will swallow our budget whole in 40 years and yet they remain and have expanded. · 5 hours ago
Thank you. I was going to post essentially this, but put more poorly.
Simply put, one of the major reasons I can't be a Republican in good conscience anymore is because the Republican Party is in only a slightly milder form of denial over America's bankruptcy than the Democratic Party is. Noshing at the edges of the tax code is irrelevant. Fiddling with this credit or that refund is hopeless. Entitlement spending needs to be slashed like a 1950's Hammer horror film, and we need some adults in politics to do it.
Dec '11
Re: Santorum Lays Out Economic Agenda
Subsidies and tax credits for thee but not for me? How is that fair or just? No tax for my friends who gave me big donations. Once you give a break to one, how do you stop everyone else from claiming they deserve special consideration? How does it make any economic sense to give some individuals and businesses special breaks?
When there are subsidies and tax credits businessmen will manage their businesses to maximize their government benefits rather maximize the prosperity of all.
This is the problem with all the candidates. They can't resist playing favorites.
Perhaps someone can recommend a tax reform bill that would provide a "level playing field" and would maximize the prosperity of all rather than a select few.
Dec '10
Re: Santorum Lays Out Economic Agenda
Ralph Baskett
Subsidies and tax credits for thee but not for me?
Tax preferences, tax credits and subsidies are three entirely different animals.
We can compare how a subsidy, a tax credit and a tax preference would have affected Solyndra, the Federal government and Company X:
1) $500 million subsidy: Company X pays the Government $500 million to fund the subsidy to Solyndra. Company X is $500 million poorer and Solyndra $500 million richer. The Government shows no change in its balance sheet. Solyndra gets to waste Company X's money.
2) $500 million refundable tax credit: the Government shows $500 million in debt and Solyndra shows a $500 million infusion. Company X is unaffected (for now). Solyndra wastes money the Government borrowed.
3) Tax rate reduction for Solyndra targeted to be worth $500 million if they hit their growth and profit targets. Solyndra can use its tax preference to attract private capital.
If Solyndra is a bust, the Government loses zero and Solyndra gets no cash. But if Solyndra does well, the Government collects payroll and income taxes from its employees as its owners enjoy tax relief.
Re: Santorum Lays Out Economic Agenda
Ralph, I'm with you: my preferred corporate tax rate is the Gingrichian goose egg for all. However, I'm sympathetic to Santorum's basic point: manufacturers today play on a field tilted against them at every level by accumulations of impenetrable rules and regulations. A factory cannot move and is a sitting duck for any politician with a plan. Unraveling all this will take time we don't have, so an immediate shot in the arm seems justified to me.
I also embrace Rick's conservative pitch to blue collar workers. Where I work people with advanced degrees generally do just fine (and vote Democratic), but everyone else is squeezed more and more each day. Early in my career most start-up entrepreneurs manufactured locally (the first Apple plant was in Fremont, California). Today we often can't, not because of "cheap labor" but because we aren't allowed to build and operate a plant that makes economic sense.
This has got to change.
Dec '11
Re: Santorum Lays Out Economic Agenda
George Savage
Ralph, I'm with you: my preferred corporate tax rate is the Gingrichian goose egg for all. However, I'm sympathetic to Santorum's basic point: manufacturers today play on a field tilted against them ...by accumulations of impenetrable rules and regulations.
... Early in my career most start-up entrepreneurs manufactured locally (the first Apple plant was in Fremont, California). Today we often can't, not because of "cheap labor" but because we aren't allowed to build and operate a plant that makes economic sense.
You are mixing costs imposed by government on businesses with government imposing cost on everyone else to support favored businesses.
On the one hand, good government fosters a good environment so that businesses can be competitive. This includes plentiful economical energy, efficient transportation, raw materials, etc. But if a business cannot be competitive, one way or the other everyone else will have to subsidize that business.
And, so corporations will pay no tax but the small business they compete with will?
Jul '10
Re: Santorum Lays Out Economic Agenda
Troy Senik, Ed.: For my money, it's a decent package... don't know that it's going to create a particularly stark contrast with Romney -- while they may differ on the details, the principles behind a lot of these proposals would receive almost universal assent from the Republican field.
A few minor quibbles: a two-tiered income tax system, with an 18 percent gap between the two rates, is an invitation for distortions as people attempt to avoid the higher bracket.
I agree. It is a good plan, but the 28-10 split is too drastic.
I told each of my partners about this, all asked exactly the same question: "Where is the break?" (i.e. At what income level do the brackets change?)
If Rick wants "flatter" as a shading, three brackets make sense.
I know a bunch of people are inclined to say: You have to ask for a mile to get an inch! or some such. But Rick is the underdog, in that role he has two choices:
1. Be aggressive and separate himself from the field with bold strokes.
2. Have an immediately implementable proposal that appeals to both supply-siders and deficit hawks.
Apr '11
Re: Santorum Lays Out Economic Agenda
Businesses pay taxes on what income remains after deducting expenses. The personal exemption applies that principle to individuals. In 1950, the personal exemptions protected 75% of the median family income for a family of four. By 1990 the ratio was inverted; exemptions protected 25% of median family income. The child tax credit counters this reduction in the effect of the exemptions.
Dec '11
Re: Santorum Lays Out Economic Agenda
Palaeologus
I agree. It is a good plan, but the 28-10 split is too drastic.
.
But Rick is the underdog, in that role he has two choices:
1. Be aggressive and separate himself from the field with bold strokes.
2. Have an immediately implementable proposal that appeals to both supply-siders and deficit hawks.
True supply-side tax reform eliminates special tax favors and lowers the top rate substantially. It treats all individuals and businesses equally.
Santorum adds more tax gimmicks.
Dec '11
Re: Santorum Lays Out Economic Agenda
Tax credits encourage and enable fraud. The Earned Income Tax Credit is a perfect example.
http://www.smartmoney.com/taxes/income/how-refundable-credits-encourage-tax-fraud-1295992506594/
Let citizens keep what they earn. Why should government take money from poor workers and then give it back to them when they satisfy government's requirements.
Edited on February 28, 2012 at 3:06pmRe: Santorum Lays Out Economic Agenda
Not so. Sole proprietorships will simply incorporate, reversing the process of unincorporating begun decades back for the same reason: changes in the tax code.
Most small businesses are sole proprietorships because it makes no sense to pay a 35% federal corporate tax then pay yourself a salary and pay income tax on this and then pay an additional dividend tax on any money left over at the end of the year (don't even think about paying yourself dividends instead of a salary; the IRS will not be amused).
But if there is no corporate income tax and earnings are taxed only when distributed as salary or dividend, well now I can accumulate capital in my small manufacturing enterprise tax free. Now, finally, under the Santorum plan both General Electric and George's Metal Shop will enjoy a zero percent federal tax rate.
Edited on February 28, 2012 at 6:30amDec '11
Re: Santorum Lays Out Economic Agenda
George Savage
Not so. Sole proprietorships will simply incorporate, reversing the process of unincorporating begun decades back for the same reason: changes in the tax code.
Most small businesses are sole proprietorships because it makes no sense to pay a 35% federal corporate tax then pay yourself a salary and pay income tax on this and then pay an additional dividend tax on any money left over at the end of the year (don't even think about paying yourself dividends instead of a salary; the IRS ...not ... amused).
Perhaps you have never been engaged in business or maybe you have very clever lawyers. One of our businesses was a corporation. Corporations are restrictive in other ways beside taxes. It took forever to finally liquidate the corporation and at great expense. As you noted, money paid out of a corporation is taxed TWICE. And if the corporate tax rate is reduced to zero, that will only last till Democrats take power again. So your solution is that all sole proprietorships should change the way they do business. No expense there.
Edited on February 28, 2012 at 3:05pmDec '11
Re: Santorum Lays Out Economic Agenda
Stuart Creque
Tax preferences, tax credits and subsidies are three entirely different animals.
...compare...
1) $500 million subsidy: Company X pays the Government $500 million to fund the subsidy to Solyndra. Company X is $500 million poorer and Solyndra $500 million richer. The Government shows no change in its balance sheet. Solyndra gets to waste Company X's money.
2) $500 million refundable tax credit: the Government shows $500 million in debt and Solyndra shows a $500 million infusion. Company X is unaffected (for now). Solyndra wastes money the Government borrowed.
3) Tax rate reduction for Solyndra targeted to be worth $500 million if they hit their growth and profit targets. Solyndra can use its tax preference to attract private capital.
1) If the 500 million subsidy is a GOVERNMENT subsidy. Taxpayers lose. If Company X pays 500 million, that's a stupid INVESTMENT, not subsidy.
2) "Solyndra wastes money the Goverment borrowed." Taxpayers still lose.
3) So Solyndra get out of paying 500 million in taxes. Taxpayers still lose. They pay the difference.
All three results reduce our prosperity because 500 million is not invested where it will produre more of what we need at a lower cost.
Edited on February 28, 2012 at 3:04pm