A GOP 2012 dark horse’s ‘emergency economic reform’

Mitch Daniels, the governor of Indiana, is on a short list of possible Republican contenders in 2012 who intrigue me. His fiscal record as a two-term governor is very impressive, giving him the track record as an executive to take on a sitting president. (I call him a “dark horse” in the headline only because he typically isn’t among the most-discussed and -polled group of potential candidates: Sarah Palin, Mitt Romney, Mike Huckabee, Newt Gingrich, et al.)

So, I was interested to read, in today’s Wall Street Journal (subscription required), his proposal for an “emergency economic reform.”

It does not constitute a long-term plan, and it certainly wouldn’t work as a platform for his own presidential run. If the economy is still in “emergency” condition two years from now, these policies would most likely be insufficient.

But as a contribution ahead of mid-term elections in which his party stands to pick up dozens of seats? I think it beats a plan to spend $50 billion on infrastructure projects that weren’t deemed to have an immediate impact the last time around. Decide for yourself:

Republicans may not reach a majority [in November's elections], but they will be looked to for constructive answers to this central dilemma of our era. A time-limited, emergency growth program aimed at triggering new private investment should be a primary goal of the next Congress, one hopes on a bipartisan basis.

What might such a project comprise? Here are a few suggestions:

• Payroll tax holiday. Suspend or reduce for the emergency period, say one year, the Social Security payroll tax on workers. Offset the revenue loss twice over through a combination of the following four policies.

• Impoundment power. Presidents once had the authority to spend less than Congress made available through appropriation. On reflection, nothing else makes sense. Plowing ahead with spending when revenues plummet is something only government would do. In Indiana, we are still solvent, with no new taxes, money in reserve, and a AAA credit rating only because our legislature gave me the power to adjust spending to new realities. I promise you that a president who wanted to could put the kibosh on enormous amounts of spending that a Congress might never vote to eliminate, but the average citizen would never miss.

• Recall federal funds. Rescind unspent Troubled Asset Relief Program (TARP) funds and any unspent funds from last year’s $862 billion “stimulus” package, as well as large amounts of the hundreds of billions of “unobligated funds” unspent from previous appropriations bills.

• Federal hiring and pay freeze. Better yet cut federal pay, which now vastly outstrips private-sector wages, by 10% during the emergency term, and freeze it after that.

• A “freedom window.” Might we try some sort of regulatory forbearance period in which the job-killing practice of agonizingly slow environmental permitting is suspended, perhaps in favor of a self-certification safe harbor process? Businesses could proceed with new job creation immediately based on plans that meet current pollution or safety standards, or use best current technology, subject only to fines and remediation if a subsequent look-back shows that the promised standards were not met.

• Accelerated or full expensing of business investment. Economists differ about its success on past occasions, and certainly it involves a degree of pulling forward investment that would have happened eventually. But it seems well matched to the current situation where so much money is cowering on the sidelines, and a burst of new investment might jump-start growth that enables more investment in the future. (Reports indicate that the administration is about to propose this very idea. If so, good.)

Surely there are better ideas or variations on these suggestions that a jobs-minded Congress could fashion. And clearly permanent tax and regulatory moderation is vastly superior to temporary. But to have a prayer of avoiding fiscal ruin, we need to go to economic general quarters immediately.

87 comments Add your comment

Bubba Bob

September 8th, 2010
11:07 am

Bubba Bob

September 8th, 2010
11:08 am

This proposal makes too much sense. It’ll never pass.

barking frog

September 8th, 2010
11:09 am

or we could follow in Indiana footsteps and put tolls
on all the Interstate Highways then lease them to
foreign corporations and watch the money roll in.

chuck

September 8th, 2010
11:35 am

For the most part, the proposals are sound, however, the payroll tax holiday is a little gimmicky. We need to either fund social security or do away with it. Since there is no political will to do the latter, I suggest that we take it off budget. As much as I despise AlGore, the lock box idea was a wise one. The feds need to put all of the money that they have removed from the program back into it and leave it alone. BUT, we need to raise the retirement age to 68, and we need to eliminate the SSI disability benefits for MOST, especially children who supposedly have ADD and things like that. If someone has severe mental incapacities or are wheelchair bound, I can see the need for disability payments assuming that they paid into the program. We also need to insure that no illegals are receiving benefits of ANY KIND from Social Security. Once SS is funded and on track, we should begin the process of privatizing it.

It's a shame what he did to that dog

September 8th, 2010
11:46 am

Daniels/Cristie 2012

Metro Coach

September 8th, 2010
11:50 am

Make Social Security, Medicare, and Medicaid voluntary contributions. We can’t get anything back that has already been paid, but on Jan. 1 2011, all these programs need to be volunteer only. But then the government couldn’t move that money to another part of the budget, so none of that will ever happen either.

Dems lose big

September 8th, 2010
11:54 am

The left wing focuses too hard on Sarah Palin and the majority of American’s are sick of the name calling. Liberal journalists are already jumping off the SS. Obamatanic which is sinking fast. No matter how much Chris Matthews or Katie Couric scream about how stupid W or Palin is, America will vote in a Republican president in 2012.

The Democrats know that they are going to get destroyed this coming November and most of them are wondering just how many losses they will suffer. Dick Morris says that the dems will lose both the house and the senate which will render Obama useless.

If the GOP repeals Obamacare, we will probably never see another democrat president for at least 15 to 20 years. Had the elder Bush not gone back on his “no new taxes” line then Clinton would have never become president. When presidents govern from the center right, they always win. When they decide to govern from the left they lose.

It’s not a coincidence that the American people see Obama as worse than Carter.

JF McNamara

September 8th, 2010
11:55 am

This is just a Republican style giveaway instead of a Democrat style giveaway.

Here’s a synopsis.
1. Give away a small amount of money through payroll tax to get votes.
2. Cut or reduce pay on people even though you don’t know the job titles or responsibilities of those in the federal system. It doesn’t matter to him because he has no authority, but you get to look tough. Congratulations.
3. Give money away to big business by giving them less rules or deregulation (ie natural gas deregulation). Who needs rules anyway, business always does what’s in our best interest.
4. Give money away to big business the old fashioned way. Just hand it to them.

How about this Kyle. How about no new spending or giveaways at all. How about letting the supply and demand situation work itself out the free market way. Isn’t that what fiscal conservatives should be saying.

Dems lose big

September 8th, 2010
11:56 am

Even America’s liberal elites concede that Obama’s Presidency is crumbling

Democrats in Congress are no longer asking themselves whether this is going to be a bad election year for them and their party. They are asking whether it is going to be a disaster. The GOP pushed deep into Democratic-held territory over the summer, to the point where the party is well within range of picking up the 39 seats it would need to take control of the House. Overall, as many as 80 House seats could be at risk, and fewer than a dozen of these are held by Republicans.

Political handicappers now say it is conceivable that the Republicans could also win the 10 seats they need to take back the Senate. Not since 1930 has the House changed hands without the Senate following suit.

http://blogs.telegraph.co.uk/news/nilegardiner/100052779/even-americas-liberal-elites-concede-that-obamas-presidency-is-crumbling/

ByteMe

September 8th, 2010
11:57 am

Either nibbling around the edges or just plain wrong.

How exactly would recalling unspent Federal funds improve the economy? Get past the sound-bite and you see that unspent Federal funds are just a line item on the books and not money going out or a true cost against the Federal debt.

How exactly would a “one-year Payroll Tax holiday” get businesses to spend some of the over trillion in cash they have sitting in corporate coffers that they’re afraid to spend? If it doesn’t do that, it won’t help the economy.

Didn’t we already do “regulatory forbearance” with Wall Street from 2005-2008? How’d that work out?

How exactly would a Federal wage freeze help the economy? Would it put more money into consumer’s pockets so they can buy stuff from local companies? No? Then why does it qualify as an “emergency economic reform” that we need right now?

The stimulus bill was about half tax cuts. Can we get that money back now? Will a Republican ask for it any time soon? No? Then STFU about the stimulus.

Nothing to see here but a populist attempt to put a pretty bow on a turd.

Dems lose big

September 8th, 2010
11:57 am

“How about no new spending or giveaways at all.”

Great, but the only problem with that is the democrats will lose their entire base of slackers.

Dems lose big

September 8th, 2010
11:58 am

“The stimulus bill was about half tax cuts. Can we get that money back now? Will a Republican ask for it any time soon? No? Then STFU about the stimulus.”

Desperation time for democrat voters.

Linda

September 8th, 2010
12:05 pm

Since WW II, the House has flipped parties 6 times (’46, ‘48, ‘52, ‘54, ‘94, & ‘06). Every time the House flipped, the Senate also flipped, even when it had not been predicted to do so.

Ivan

September 8th, 2010
12:08 pm

” Federal hiring and pay freeze. Better yet cut federal pay, which now vastly outstrips private-sector wages, by 10% during the emergency term, and freeze it after that.”

I like this. I see no reason why a federal employee should make 30% more than someone else doing the same job in the private sector. I’m not sure why it would take an “emergency” to make this happen though.

Dusty

September 8th, 2010
12:11 pm

This Mitch Daniels sounds very good. He even knows that when you are in debt you stop spending and economize. That obvious comclusion seems to be absent from the Democrat mentality. The words stop, drop or cut are not in their vocabulary.

Republicans MUST be different. That’s our only hope.

get out much?

September 8th, 2010
12:14 pm

I wonder how much of Governor Daniels fiscal record can be attributed to using federal funds for state needs.

chuck

September 8th, 2010
12:25 pm

Byteme,
There is more to the economy than just stimulus. One of the things keeping the economy stagnant is the fear that the country is going to go bankrupt. Decreasing wages is exactly what the State did through furloughs. When there isn’t enough money to pay employees you either cut pay or cut employees. The federal government should do both. Federal workers already make a much higher wage than private sector equivalent workers. A 10% cut and then a freeze would reduce the budget deficit by a huge amount.

The sub-prime mortgage debacle was NOT about regulation forbearance. It was about WASHINGTON meddling in the banking business and pressuring banks to loan money to people who could not afford it.

The so-called stimulus tax cuts were nothing more than an attempt at social engineering…bribery. ALL of the Bush tax cuts should be made permanent and the marginal rate should be reduced across the board.

ByteMe

September 8th, 2010
12:30 pm

One of the things keeping the economy stagnant is the fear that the country is going to go bankrupt.

Bzzzzzt. Nope. Thanks for playing. Read more varied sources… you’ll find out that the sources of your current knowledge are seriously flawed.

Dems lose big

September 8th, 2010
12:32 pm

“Bzzzzzt. Nope. Thanks for playing. Read more varied sources… you’ll find out that the sources of your current knowledge are seriously flawed.”

Like what “varied sources?” Oh that’s right, you mean huffpost and media matters.

JF McNamara

September 8th, 2010
12:36 pm

Its desperation time for everyone in America. If a Democrat had come forth with these same proposals, this board would already be full of people calling it a giveaway by big spending Democrats. We had tax cuts under Bush and more tax cuts in the stimulus, we had wholesale deregulation under Bush, and we still ended up with a collapsing economy.

Both Democrats and Republicans are using these tactics to pay off their bases and buy votes and are leveraging all of our futures. I’m tired of it, but both party bases are either too brainwashed to just call it as it is or have their hands out.

Stop spending and cutting taxes now. Things are stable now and we are just going further in debt. Nothing anyone does is going to make it like it was before the crash. Its just going to take time.

Dems lose big

September 8th, 2010
12:49 pm

“We had tax cuts under Bush and more tax cuts in the stimulus, we had wholesale deregulation under Bush, and we still ended up with a collapsing economy. ”

The tax cuts didn’t cause the economy to crumble. Now you’re just things up.

“Things are stable now”

What fantasy world do you live in?

chuck

September 8th, 2010
12:50 pm

Byteme, by your own admission businesses are flush with cash that they are “afraid to spend”. Your exact quote was:(”over trillion in cash they have sitting in corporate coffers that they’re afraid to spend?”)

There are 2 reasons that they are afraid to spend cash. First, the uncertainty of what will happen with the economy because of runaway spending and impending bankruptcy (and I could give you multiple sources for that, but you’re a big boy. Google it yourself. Second, they are afraid that they will be taxed into oblivion for all of the things that Obama is piling on…can you say Obamacare?…which will make the cost of new employees too high.

Road Scholar

September 8th, 2010
12:55 pm

Dems lose big: Nice to see that you finally got on topic. Attention deficit disorder? I still haven’t seen one original idea from you….just insults. Try reading articles/reports on bth sides and not be so dismissive; you might learn something other than rightist talking points!

McNamara: Good post! But I like the infrastructure spending proposed by Obama. They may need to be design/build projects that have enviro clearance already to get them underway soon. I do like sweeping all the unspent dedicated spending approved in past years from the books though. And NO EARMARKS!

Linda

September 8th, 2010
12:57 pm

Consumer confidence was replaced with consumer uncertainty, which was replaced with consumer fear. The only certainty is that mid-term elections are about 55 days away & the Bush tax cuts will all expire in less than 4 mts. We’ve heard talk but have seen NO action. There’s not a single taxpayer in the country who knows absolutely for certain what ANY of their federal taxes will be by January.

Obama’s former budget director, Peter Orszag, said in the NYT Mon., “…Yet no one wants to make an already stagnating jobs market worse over the next year or two, which is exactly what would happen if the cuts expire as planned.”

Dems lose big

September 8th, 2010
12:57 pm

“I still haven’t seen one original idea from you….just insults.”

What insults? As far as original ideas, there aren’t any coming from either side. Fact is, conservatism works every time.

Conservatism leads to wealth. Liberalism leads to bankruptcy.

“Try reading articles/reports on bth sides and not be so dismissive; you might learn something other than rightist talking points!”

The only thing I’ve learned from left wing news is that Obama walks on water and that he can do no wrong.

Dems lose big

September 8th, 2010
12:59 pm

Linda

If Obama extends the Bush tax cuts, he knows that Bush will have been vindicated. Obama has so much hatred for Bush that he would allow Americans to suffer.

Now, if Obama doesn’t extend the tax cuts, unmemployment will shoot up at least 5 percentage points.

Dismayed Federal Worker

September 8th, 2010
12:59 pm

Well, while I was waiting for my new Mercedes to be prepped for delivery to moi, I thought I’d check in here to see what the little people are up to. And I’m sorry I did. All this talk about cutting federal pay has ruined my appetite for my usual lobster and martini lunch.

So toodles for now, and thanks a bunch. Morons!

DEWSTARPATH

September 8th, 2010
1:02 pm

Dems lose big = It’s a shame what he did to that dog

Peter

September 8th, 2010
1:03 pm

Kyle……….

Let the infrastructure fall apart, and when kids and family’s are killed as bridges fall apart…….who you gonna sue ?

As the road deteriorate, and your car get beat up…….who you gonna sue ?

AS we become a third rate country falling apart……..it will be time for Republican’s to ….. START ANOTHER WAR …..and avoid all the issues here in the states !

Dems lose big

September 8th, 2010
1:03 pm

DEWSTARPATH = whack job

Linda

September 8th, 2010
1:04 pm

Letting the Bush tax cuts expire on the “rich” will include about 750,000 small business owners. They will not only not hire but will need to lay off employees. That’s an average of about 13,000 small business owners per state.

Is this decision from stupidity, inexperience, ideology (social justice, socialism) or intentional sabotage?

Dems lose big

September 8th, 2010
1:04 pm

“AS we become a third rate country falling apart……..it will be time for Republican’s to ….. START ANOTHER WAR …..and avoid all the issues here in the states !”

More democrat presidents have started wars than republicans.

Dems lose big

September 8th, 2010
1:04 pm

“Is this decision from stupidity, inexperience, ideology (social justice, socialism) or intentional sabotage?”

All of the above.

Linda

September 8th, 2010
1:12 pm

Dems lose big @ 1:04, How did you respond to my comment at the same minute I wrote it? You are fast! Do you have ESP?

Linda

September 8th, 2010
1:16 pm

There is a big sign up in the Capitol cafeteria in the ice cream dept. that says, “We are no longer filling orders for Double Dips.”

ByteMe

September 8th, 2010
1:17 pm

There are 2 reasons that they are afraid to spend cash. First, the uncertainty of what will happen with the economy because of runaway spending and impending bankruptcy (and I could give you multiple sources for that, but you’re a big boy. Google it yourself. Second, they are afraid that they will be taxed into oblivion for all of the things that Obama is piling on…can you say Obamacare?…which will make the cost of new employees too high.

Not even a good try, Chuck. We’re so far away from “impending bankruptcy” that it’s just blowhards in the fake media who want to stir that pot to see what happens. As for “piling on”, do tell what the current system’s Medicare and health care costs would have been relative to the plan passed in Congress? Do your own research, I can tell you haven’t been reading much of the studies from non-partisan sources who spend their lives researching the health care market that are anticipating lower overall costs.

DEWSTARPATH

September 8th, 2010
1:17 pm

Dems lose big = stupidity, inexperience, intentional sabotage…..

All of the above.

Dems lose big

September 8th, 2010
1:18 pm

“Dems lose big = stupidity, inexperience, intentional sabotage…..”

tick…tick….tick…….

Jefferson

September 8th, 2010
1:22 pm

What a waste of bandwidth.

DEWSTARPATH

September 8th, 2010
1:26 pm

Dems lose big = 12 posts by 1:30 pm.

tick…tick….tick…….

Dems lose big

September 8th, 2010
1:27 pm

“Dems lose big = 12 posts by 1:30 pm.”

13. tick…tick…tick….

DEWSTARPATH

September 8th, 2010
1:39 pm

Dems lose big – September 8th, 2010
1:03 pm

DEWSTARPATH = whack job

TICK…TICK…..TICK…….

Linda

September 8th, 2010
1:45 pm

Hillary Clinton said today, “I think that rising debt levels poses a security threat…in 2 ways. It undermines our capacity to act in our own interest & it does constrain us when constraint may be undesirable & it also sends a message of weakness internationally.”

She is either about to join the Tea Party or run for president.

jconservative

September 8th, 2010
1:45 pm

Couple of thoughts.

“…aimed at triggering new private investment…”. Who is doing the aiming? Look, I am not a big supporter of economic programs that are based on the prediction of human behavior. No one can predict human behavior. Remember the Reagan tax cuts that were to generate a new wave of investment in the US. What happened? Companies took the tax savings and used the money to finance the expansion of their business
overseas. That is when the great exodus of US manufacturing overseas began.

“Impoundment power.” I have always supported this. But the political environment has changed. Remember that Congress gave Clinton the “Line Item Veto” but Mitch McConnell and his bi-partisan group filed suit in Court and the Supreme Court ruled the legislation unconstitutional. I can just about guarantee that if Obama “impounds” several billion dollars someone in Congress will file suit. And I would just about guarantee the Roberts court would say “no can do”.

JF McNamara at 12:36. Really nice post. Good job.

Dems lose big

September 8th, 2010
1:46 pm

DEWSTARPATH

Not sure what to say but you came on here and called me three different names.

Linda

September 8th, 2010
1:46 pm

P.S. The debt has increased 26% in 1 1/2 yrs.

P.P.S. But we do have monkeys on cocaine.

Dems lose big

September 8th, 2010
1:48 pm

Ah yes, if it’s not Bush’s fault it MUST be Reagans.

DEWSTARPATH

September 8th, 2010
1:52 pm

I’m sure of what to say.

– All I did was point out that you used another handle -
the one you used to post 50 times in one day downstairs –

and you called me a whack job.

tick..tick….tick…..BOOM !

DEWSTARPATH

September 8th, 2010
1:59 pm

- I stand corrected. It was 78 times “dog” posted for Sept. 7.

Not So Casual Observer

September 8th, 2010
2:00 pm

Dems lose…

“If Obama extends the Bush tax cuts, he knows that Bush will have been vindicated. Obama has so much hatred for Bush that he would allow Americans to suffer.”

or,

If Obama extends the Bush tax cuts, he knows that CAPITALISM will have been vindicated. Obama has so much hatred for FREEDOM that he PREFERS Americans suffer.

After the past 19 months why would anyone still believe Obama has the best interests of the United States at heart? If you view his Presidency from the standpoint of hate for Americans and freedom (as he has written in his books-or at least had written for him in the books) then all of his steps regarding the economy begin to make sense.

I have never believed the “war” declared by Islam against the “Great Satan” was war in the historical sense but more of an economic war. Destroy the wealth of the United States and in the process the country is destroyed, or so the Left Loons and Islam believe. Refer to the Cloward-Piven Strategy for verification.

Obama is simply in position to accelerate the Cloward-Piven timetable and serve his Middle East friends at the same time.