If you could change three economic policies immediately in order to get the economy on track, what would they be?
- Cutting corporate income taxes would be number one. The U.S. has the highest corporate tax rate in the world. There are hundreds of trillions of dollars in international capital markets that will flow to where investors can get the highest rate of return. The U.S. rate is about 40 percent. If you invest in Canada, you get to keep 14 cents more of every dollar that you earn. If you invest in Ireland, you keep 28 cents more. Where are you going to invest?
Increased investment makes workers more productive and raises their wages. As companies expand, it increases the demand for workers
- Cutting government spending. When Obama ran for president during 2008 he promised over and over again that he was going to cut net government spending. If you don’t remember it, look up the second and third presidential debates. During the third debate he reminded voters that he had made that promise “throughout this campaign.” But he was right. Government was too big then. Now it is much, much bigger. Americans have to ask themselves whether the $100,000 worth of debt per family that Obama promises to pile up during his two terms in office is worth the increase in the size of government that he has created.
If Obama was right in 2008, cutting government spending back to where it was in 2007 would practically eliminate the deficit.
- Cutting the deficit. Getting spending down to where it should be will solve this problem. Cutting corporate taxes will also generate more revenue. With the highest tax rate in the world, we have taxed us out of the competition.
What do you think of Paul Ryan’s Path to Prosperity? Some think it is too timid in addressing America’s fiscal crisis.
Paul Ryan’s plan is a good start. He cuts taxes and he cuts spending. By contrast, according to the Congressional Budget Office, Obama’s budget for next year would increase the already huge projected deficits by over $3.5 trillion over the next 10 years.
How do you respond to those who say that Reagan also built up huge deficits and sometimes deficit spending is necessary in order to jump start the economy?
Reagan’s deficits as a percent of GDP were nothing like Obama’s. The highest they were under Reagan was less than half the percentage reached during Obama’s first year.
What mattered was Reagan’s cuts in marginal income tax rates. Giving people a greater percentage of the money they earned gave them an incentive to work hard and make the pie bigger.