Economic decline is fueled by DC

By Kevin Price

One of my best votes for President came in the Republican primaries of 1988 in which I supported former Delaware governor, Pete du Pont, who is now chairman of the National Center for Policy Analysis (NCPA). He points out that our massive increases in federal spending that the federal government has pushed under this Administration is going to cost over $30,000 per household this year. This is $5,000 more than two years ago.

The fiscal crisis can be seen everywhere and is far reaching. Our deficit of $1.5 trillion this year alone is fifty percent higher than the entire national debt just a few decades before. The situation has gotten so bad, NCPA notes that we could eliminate "the military, federal education funding, agriculture support, housing programs, federal prisons, the FBI, Central Intelligence Agency, Coast Guard, and border patrols, and we would still have a deficit."

The government is going to have to become aware of the fact that nations compete for business, just like states and cities. We all know about cities boasting about the economic environment they offer and use that as a tool to attract companies. The US needs to do the same as we lose business to countries with lower tax rates. According to NCPA, "Tax rates must be reduced to promote economic growth; start by not letting the Bush tax cuts expire next January, then repeal the ObamaCare 3.8 percent Medicare tax on investment income and the additional 0.9 percent Medicare tax on wages before their 2013 start date."

I have advocated more radical measures. For example, businesses do not pay taxes, they are mere tax collectors. Everyone knows that if corporate income taxes disappeared today, some businesses (like Walmart) would transfer all the savings (or very close to such) directly to customers, forcing other companies to do the same. This would make the US a job magnet as companies would come from around the world to take advantage of the low tax rates. The increase in employment would reduce the strain on social services and lead to increase revenues as people became taxpayers instead of revenue takers. It is pretty simple economics.

NCPA goes on to note that the government needs to stop the breakneck pace towards government control of the larger economy. This would come by "reversing the current federal policy of growing the size and scope of government; not enacting cap-and-trade would be a first step and repealing ObamaCare is another."

This will only happen if we have a consensus in government against more spending. du Pont suggests several practical steps to achieve that objective, including "getting the congressional change in November"... Republicans need "to step up to the plate and enact substantial spending and tax rate reductions and increase economic growth"... and we must "win the presidency in 2012 so that the Obama governmental expansion comes to an end." I think that is a platform that many Americans will find attractive.

© Kevin Price