The sluggish economy isn’t going to change until policies in Washington change.
So I was glad to see Tim Pawlenty, one of the aspiring GOP nominees, put forth an economic plan yesterday in a speech at the University of Chicago. Bus trips are great, but economic plans also deserve attention in this era of no-growth, and I am sure Pawlenty isn’t the only aspirant coming up with one.
Here is the text of the speech which was entitled “A Better Deal.” Pawlenty is relatively charisma-free (which I predict will be the New Charisma of 2012, the country having suffered through the economic doldrums that came with electing the most charismatic president since George Washington), but I thought his opening was tough-talking in the same way that made Donald Trump a nine-day wonder:
How are you enjoying your recovery Summer? That’s what the President said we were having. And that was last year.
Now – gas is nearly $4 a gallon. Home prices are in the gutter.
Our healthcare system – thanks to ObamaCare – is more expensive. And less efficient.
Unemployment’s back over 9%. Our national debt has skyrocketed.
Our budget deficit has grown worse. And the jobs and manufacturing reports are grim.
If that was a recovery – then our President needs to enter economic rehab. And the American people need to stop his policies. Cold turkey.
If you read the speech, you’ll agree it was refreshing not to hear a lot of class warfare. Added to that I knew I would like the plan when Arthur Laffer, guru of the supply side economics that gave us the Reagan prosperity, praised it on Fox.
The Wall Street Journal has an excellent piece that notes:
Mr. Pawlenty would extricate the economy from this government cul de sac by enhancing the incentives to work, invest and create jobs. He sketched out yesterday a Reagan-like tax reform of lower rates for individuals and businesses. The first $50,000 in individual income ($100,000 for couples) would be taxed at 10% and after that a top marginal rate of 25%. This would give a big lift to the small and medium-sized businesses that file under the individual tax code and create most new jobs. He’d also zero out taxes on capital gains, dividends and estates.
Mr. Pawlenty says that families earning under $50,000 would pay an effective income tax rate of 0%, because he would maintain tax benefits like those for mortgage interest or the child credit that use the tax code as social policy. Mr. Pawlenty is right not to buy into the liberal objection that tax reform must be revenue neutral according to scoring rules that assume no growth dividend, but minimizing tax credit carve-outs would raise revenue by making the tax code more efficient.
Adding to that mild criticism, as much as I like this clean, two-tiered tax system, I don’t think anybody but the poor should be exempt from income taxes (unless we get a new system that replaces income taxes with something else). The reason isn’t that I like taxes-it’s because if people don’t pay them they will always be willing to vote for people who want to raise taxes.
The Journal notes that Pawlenty would reduce corporate taxes, allowing businesses to expand, and would pare down the damage done by “regulatory overreach.” Alana Goodman of Commentary says that the hint that Amtrak could be privatized is “over the top” but likely to appeal to the Tea Party-and most definitely to Amtrak regular me. The proposal means not only that Pawlenty is headed in the right direction but that someday I may be able to get coffee on the Northeast Corridor train before Baltimore. Oh, and the café server won’t be surly!