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.
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87 comments Add your comment
Not So Casual Observer
September 8th, 2010
2:05 pm
jconservative,
“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.”
Actually the exodus is a result of the US having the 2nd highest corporate tax rate of the industrialized nations. How exactly do you blame the “Reagan tax cuts” for a run from tax rates among the highest?
Dems lose big
September 8th, 2010
2:07 pm
Not So Casual Observer
Good points.
Not So Casual Observer
September 8th, 2010
2:08 pm
Byteme,
Apparently you choose to ignore the CBO estimate of a cost of Obamacare in excess of $1 TRILLION and accept the Dems flatly stated cost of $800 Billion. Ahhh, those truthful Dems caught in another falsehood – what a surprise!
Linda
September 8th, 2010
2:16 pm
This is Linda’s plan for 2012. Just for starters:
Appoint Johnny Isakson, a great real estate broker, to Land Management with the responsibility to transfer state land back to the states where the federal govt. owns:
84.5% of Nevada
69.1% of Alaska
57.4% of Utah
53.1% of Oregon
50.2% of Idaho
48.1% of Arizona
45.3% of California
42.3% of Wyoming
41.8% of New Mexico
36.6% of Colorado
Shut down the EPA.
Appoint Sara Palin to the Energy Dept. & start drilling on all this land the fed. govt. confiscated to prevent just that. Have her build refineries, nuclear power plants & nuclear waste facilities & replace the word “green” with the words “red, white & blue” in the energy strategy policy.
Appoint Sheriff Joe Arpaio, Arizona, head of ICE.
Steve
September 8th, 2010
2:20 pm
There has never been a better time for the country to see the Republicans take back the House majority, but not for the reasons they think. In this sliver of time, we have the DUMBEST crop of right-wing politicians ever (plus they’ve added on the Tea Party knuckleheads for sheer freak value). Nobody is offering any ideas or policies, plus the best leadership they can offer is Tan Man Boehner or Bi-polar Bachman. It’s a perfect storm a’brewin’ for their political self-destruction and it ought to have caved in on itself nicely by 2012.
So, HELL YEAH, here’s hoping for a big win in November to remind us again why this twisted group of Republicans had to go four years ago. Let’s hope the next eviction is permanent.
Not So Casual Observer
September 8th, 2010
2:24 pm
Unfortunately the Left Loons and Islam have been aided by leaders in the Republican Party as well.
The northeastern elite, mostly Ivy League graduates, are in concert on the idea of a one-world government and one-world currency. The lack of attention to our borders by both Republican and Democrat Presidents and Congresses speak more to this issue than I care to write.
Additionally the failure to drill for and refine oil from within our borders and cease the dependence on foreign oil, speaks to the dream of the Ivy League Elitists. Again, this is a failure by both major parties.
The failure by both parties to stop the raid upon our welfare system by illegal aliens and by career welfare mothers is another sign the major parties are in concert and look upon the American taxpayer as the proverbial “Golden Goose”.
The ongoing major role of Goldman Sachs in the federal government, and as a driving force in every economic downturn since the Great Depression (see Rolling Stone article for time line), is yet more evidence of the similarity between the two major parties.
Hillbilly Deluxe
September 8th, 2010
2:27 pm
Presidents once had the authority to spend less than Congress made available through appropriation. On reflection, nothing else makes sense.
Not a bad idea.
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.
Not a bad idea.
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?
Bad idea. (Think BP in the Gulf and the coal mining accident in W VA)
Accelerated or full expensing of business investment.
In my opinion, this would have about the same effect as Cash For Clunkers.
Suspend or reduce for the emergency period, say one year, the Social Security payroll tax on workers.
In my view, this is about the same as borrowing from the Social Security trust fund, which has been done repeatedly over the years, and isn’t a good thing. Any tax cut, rebate, suspension, etc., isn’t going to have the effect it’s had in the past. The smart people have learned something through all this, as did another generation in the 1930’s, and they would save the money they got, rather than spend it. The orgy of consumerism is over, and it’s not coming back again, until enough time has passed, until no one remembers the lessons that were learned. That’ll take a generation or two. We’re in a long-term retrenching and it’s going to be a long and painful process.
Not So Casual Observer
September 8th, 2010
2:29 pm
Steve,
The only eviction that should be permanent is the Democrat Party and all of the America hating leaders the party has produced over the years. Obama is just the loudest and most obnoxious. Hopefully all of the Republicans (L. Graham of SC is one) who are their buds will go with them.
Dems lose big
September 8th, 2010
2:49 pm
Linda
You rock!!!!!
Avery Bundren
September 8th, 2010
3:14 pm
Dems lose big, Linda, and Not So Casual Observer: No wonder this country is in such trouble. But then I thought, you can’t be serious.
Linda
September 8th, 2010
3:26 pm
Avery @ 3:14, Just for that, I will nominate you as ambassador to Somalia. Do you have an eye cover?
Steve
September 8th, 2010
3:42 pm
Not so casual @ 2:29
I really would like to know…what exactly do you expect to change if the Republicans win in November? It’s the same people who turned a blind eye to what the the banks were doing while they nearly destroyed the economy. I was financially hurt big time when they were last in power, but now my 401K has recovered (and is growing) and the corporation I work for gave out substantial raises this year. I’m not inclined to let those middle-class-hating Republicans get another crack at me. Quite frankly, I can’t afford them!
Linda
September 8th, 2010
3:53 pm
Steve @ 3:42, Sorry to butt in, but do you mind telling me in your own words what the banks did that nearly destroyed the economy.
Dems lose big
September 8th, 2010
4:11 pm
“No wonder this country is in such trouble. But then I thought, you can’t be serious.”
You must be under the false impression that I care what you think.
Dems lose big
September 8th, 2010
4:12 pm
“what exactly do you expect to change if the Republicans win in November?”
Less spending. Also, I’d like to see Obama cry like the little girl that he is.
Jefferson
September 8th, 2010
4:35 pm
Would that be different that the way you cry everyday? It too is enjoyable.
Steve
September 8th, 2010
4:45 pm
Sure, Linda, but that’s kind of a strange question after the exhaustive dissection of the Crash.
In my own words and in the short time I have, here goes…banks were unfettered by oversight due to a systemic unravelling of regulations beginning in the early 80s. This in turn opened the floodgates to increasingly high-risk but lucrative credit default swaps and other high-risk ventures for short-term profits. In my own words, banks and investment houses, such as Goldman-Sachs, became casinos using other people’s money, in some cases leveraging themselves 30:1. Why? Because nobody stopped them and there were no laws against what they were doing.
In the words of others, I would recommend reading Michael Lewis’ book “The Big Short”.
Steve
September 8th, 2010
5:14 pm
“what exactly do you expect to change if the Republicans win in November?”
Less spending. Also, I’d like to see Obama cry like the little girl that he is.”
Oh, boy “less spending” and you think you’re gonna get it from THOSE guys?
You do realize that these are the same “borrow-and-spend” guys who passed a tax cut bill on borrowed money from the Chinese, right? The same guys that kept the war budget as “supplemental” so it wouldn’t be in the official fiscal year budget, right? The same guys who pushed through Medicare Part D with a codocil WRITTEN INTO THE BILL that the federal government COULD NOT negotiate for better drug prices, right? And the same guy who sponsored Medicare Part D, Billy Tauzin, went on to take a $2MM/year gig as CEO of Big Pharma’s main lobbying arm, right?
And you still think you’ll get “less spending” from THOSE guys?
md
September 8th, 2010
5:29 pm
“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?”
Actually, depends on which consumer one is referring to. May take from one and give to another, but that is basically how gov’t employees are paid to begin with. Lower salaries would require lower taxes and the “consumer” would have more to spend. But……….wouldn’t count on any of it working with the current misfits as any surplus would get spent anyway.
And yes, companies are sitting tight BECAUSE of this admins policies. Healthcare cost to corps is unknown, hc cost to states is unknown but substantial, financial reform costs to corps unknown, crap and trade looming on the horizon if the dems have their way – costs unknown, share the wealth mentality of current President (regardless of effort), special treatment of unions in hc and bankruptcy, and many more.
Why in the world would any sane corp not sit on their capital when so much uncertainty is flung in their face????
md
September 8th, 2010
5:32 pm
“what exactly do you expect to change if the Republicans win in November?”
Balanced group of misfits……….neutered to our advantage.
Total control of gov’t by either party is detrimental to our well being……………….
Linda
September 8th, 2010
5:37 pm
Steve @ 4:45, The committee appointed to dissect the crash is still meeting, although the Dems. have already passed the financial reform bill under the guise of preventing another one.
How do you think deregulation in the ’80’s led to the crash in 2007/8?
Credit default swaps have been around since the late ’90’s & were not a problem until mortgage backed securities that included subprime loans were being insured, bet on & traded. There was cause & effect. Credit default swaps were the effect. Subprime loans were the cause. Without subprime loans, there would have been no CDS crisis.
Banks do not make mortgage loans.
What do you think was the cause of the subprime loan crisis that led to the CDW crisis?
deb
September 8th, 2010
5:42 pm
I didn’t see any mention of what this would cost, is it deficit neutral, deficit reducing, balanced budget or is it 1.3 trilllion in unfunded liabilities? Anybody know?
Dems lose big
September 8th, 2010
6:16 pm
Steve
We’ll see. I think the GOP learned its lesson.
Linda
September 8th, 2010
6:39 pm
deb @ 5:42,
Rep. answer: Look at his record by clicking on “fiscal record” on 2nd line of Kyle’s blog above, but scan his entire resume. Has a 70% approval rating. VERY fiscally conservative. Note stock he sold for $1.45 M & donated proceeds to charity. Note nickname “Blade” for cuts.
Dem. answer: Who cares?
Dems lose big
September 8th, 2010
6:44 pm
Linda
I think it’s awesome to see the left wingers cringe and squirm because their “messiah” is an utter failure. I’ve watched MSNBC for the past week and they are doing everything they can to sweep the coming destruction of the democrats under the rug.
Mike
September 8th, 2010
6:47 pm
You Republicans had your chance at an outstanding presidential candidate: Ron Paul.
Dems lose big
September 8th, 2010
7:12 pm
“You Republicans had your chance at an outstanding presidential candidate: Ron Paul.”
Oh we Repubs are in great shape! Dems not so much.
Linda
September 8th, 2010
7:17 pm
Mike @ 6:47, Well, at least we’re grooming his son. Anyone for a mint julep?
Steve
September 8th, 2010
7:18 pm
“How do you think deregulation in the ’80’s led to the crash in 2007/8?” And then the rest, oh geez.
Linda, I want to compliment you. You write rather well for being that clueless.
Dems lose big
September 8th, 2010
7:21 pm
Linda
Ain’t it great to make left wingers angry!
Linda
September 8th, 2010
7:23 pm
Dems lose big @ 6:44, I trust you, but won’t that enormous bulge cause an accident & a world of hurt. I’d just vacuum the dirt bags up & throw them out with the trash. What happened with the chill bumps up the leg? Maybe it was really a poison ivy rash.
Dems lose big
September 8th, 2010
7:39 pm
“Maybe it was really a poison ivy rash.”
I’m sure it was something else. Maybe Barney Fwank gave Chris Matthews a gift.. wink..wink..nudge..nudge…
@@
September 8th, 2010
7:56 pm
Put him on the ballot!!!!!
Reining in government and giving business its head?
We’d be in the winner’s circle after running on Obama’s muddy track.
Mitch Daniels, eh? I think he was one of the contenders Grand Forks mentioned.
Linda
September 8th, 2010
8:11 pm
Steve @ 7:18, In other words, you can’t dispute the 3 points I made at 5:37 nor answer either of the 2 questions I asked you, & as a typical liberal, you want to be childish & just call me a name.
I can assure you that I am far from clueless. I was in the middle of the real estate financing agenda for decades.
You asked a question @ 3:42 & blamed the Reps for turning a blind eye. I am prepared to answer your questions & explain to you how we came to the financial mess we are in. I will present documentation for anything I say.
I was testing you to see how much you knew & you skipped about 25 yrs. in your answer @ 4:45.
I will debate you or any other liberal anytime as long as you can be civil. Try it. We might learn something from each other.
Linda
September 8th, 2010
8:18 pm
Steve @ 2:20, I had planned to let this slide, but at 2:20, you called Reps. dumb, knuckleheads, freaks, tanned, bi-polar & twisted. I think you’ve got global warming under your collar.
lester maddox
September 9th, 2010
12:52 am
I think Linda and Dems lose big should have a baby together. They seem so well suited for each other.
Not So Casual Observer
September 9th, 2010
8:54 am
Steve,
If Linda has not sent you running with your tail between your legs…
The mortgage loan “crisis” was a result of the Clinton administration ordering lenders to make loans to those who could not afford a home. Read the comments by Frank, Watters, Dodd and the rest of the Dems for verification. Failure by the lenders to make the loans would have put them out of business, or at least that was the threat from the Clinton administration.
Also, the Bush administration sought to control Fannie and Freddie and again the Dems listed above led the charge under the guise there was “no problem” at Fannie and Freddie.
Steve you apparently read one book on the subject and bought the author’s premise without question. You are a good little leftie, but the 60-70% of the American people who oppose the Obama road to Socialism will defeat the Dems for that one simple reason.
By the way, government has never been the answer to an economic downturn and will not now – American Capitalism and business growth are the only means to balance the budget and return the US to prosperity.
On your 401K, you had better cash in now. The market is a fraud and when next year’s earnings are compared to 2010, as 2010 was to 2009 to create this little up-tick, you best be prepared for a long slide down.