This isn’t just campaign rhetoric.
(Page 2 of 2)
Gingrich also called for a balanced budget, first through restoring booming economic growth that would revive surging revenues and itself reduce spending obligations. But that would also involve sharp spending reductions and money-saving reforms that were specified in detail in his 2010 book To Save America, similar to the policies adopted by the Republican Congressional majorities he led in the 1990s to balance the budget then, as discussed further below.
That would also include fundamental entitlement reforms. In To Save America, Gingrich explicitly called for each worker to have the freedom to choose personal savings, investment, and insurance accounts eventually to finance all of the Social Security and Medicare benefits now financed by the payroll tax, eventually displacing that tax entirely. He also called for sending all federal welfare programs back to the states with the same welfare block grant reforms adopted in 1996, as also discussed below. The reduction in federal spending that would ultimately result from such reforms would be unprecedented.
President Reagan’s economic program included four components, explicitly articulated in his speeches and proposals throughout the 1980 campaign. Those included sweeping reductions in tax rates to restore incentives for investment, job creation, and economic growth. It included spending reductions as reflected in the much vilified at the time Reagan budget cuts. It included restrained monetary policy that slashed the 25% increase in prices over 1979-1980 to less than half by 1982 and less than half again by 1983, taming inflation. And it included deregulation that reduced costs for consumers and in particular unleashed the private sector at the time to produce bountiful American energy.
Each of these components are included in the Gingrich plan in spades. With a 15% optional flat tax, a 12.5% corporate tax, zero capital gains and death taxes, and 100% expensing for investment, the plan includes full scale supply-side policies that cannot be improved upon. That applies as well to monetary policy which is also essential to economic growth, often publicly overlooked. The comprehensive energy policies that Gingrich has advocated for years would restore a world leading American energy industry with good paying jobs.
Just as Reaganomics created a record-smashing, world-leading, 25-year economic boom, the comprehensive economic policies Gingrich advanced last Friday would in my opinion restore booming, long-term, job-creating economic growth to America.
Gingrich’s record as Speaker of the House in the 1990s provides a strong foundation of credibility for these policies. His famed budget clash with President Clinton leading to a government shutdown resulted in policies that not only balanced the budget but produced $560 billion in budget surpluses over four years from 1998 to 2001. That resulted from cutting rather than increasing tax rates, most particularly a nearly 30% cut in capital gains rates, and sharply restrained spending that allowed revenues from the growing economy to surge past spending.
Total federal discretionary spending, as well as the subcategory of non-defense discretionary spending, declined from 1995 to 1996 in actual nominal dollars. By 2000, total federal discretionary spending was still about the same as it was in 1995 in constant dollars. As a percent of GDP, federal discretionary spending was slashed by 17.5% in just four years, from 1995 to 1999. Total federal spending relative to GDP declined from 1995 to 2000 by 12.5%, a reduction in the federal government relative to the economy of about one-eighth in just five short years.
This was accomplished in part by important entitlement reforms. The New Deal era Aid to Families with Dependent Children (AFDC) program was sent back to the states with federal spending on the program limited to finite block grants for each state that remained flat in nominal terms for at least a dozen years, saving taxpayers hundreds of billions over that time from prior trends. Two-thirds of those on the program went to work as a result, and enjoyed a 25% increase in family income. Gingrich also led adoption of Freedom to Farm, which provided for a phase-out of New Deal era farm subsidies.
It was after Gingrich retired as Speaker and Bush was elected that the Republicans lost control of spending, more than reversing the Gingrich gains with a one-seventh increase in government spending relative to GDP. The Congress ditched Freedom to Farm, although the AFDC block grants survived because they were so undeniably so successful.
Gingrich successfully led a national revolution against the Democrats before, rising from the backbenches of the House to guiding a persistent Republican takeover of Congress for the first time in 70 years, continuing for a dozen years. Can he do that again?
A man of faith in a godless age is hitting Americans where it hurts.
Mr. and Mrs. American Spectator Reader, let P.J. O’Rourke talk sense to your kids.
In Britain, defending your property can get you life.
It won’t take long for conservatives to scratch this presidential wannabe off their 2008 scorecard.
Was the President done in by the economy, or by the politics of the economy?