Gingrich Policies Would Create 6.6 Million Jobs in First Two Years; Balance Budget in First Term

Newt 2012 Senior Economic Policy Advisor Peter Ferrara released the following topline summary of the official score of Newt’s Jobs and Economy Recovery Plan, which predicts Gingrich policies would balance the budget within the first term of a Gingrich presidency and lead to 6.6 million new jobs created in two years:

Newt Gingrich has proposed a very aggressive, comprehensive, supply side economics, jobs and economic recovery plan. It features dramatically lower personal and corporate tax rates, the elimination of the capital gains tax and death tax, deregulation and sound monetary policy. The plan would especially roll back regulatory barriers to energy production, unleashing the private sector to maximize all forms of American energy production. Full details of the plan can be found in Appendix A.

Art Laffer, supply side economics guru and architect of Ronald Reagan’s economic recovery package, has endorsed Gingrich’s economic recovery plan as the most promising pro-growth package, saying, “Newt has the best plan for jobs and economic growth of any candidate in the field.” He predicts that the plan “would create a boom of new investment and economic growth leading to the creation of tens of millions of new jobs over the next decade.”

To demonstrate the impact of Newt Gingrich Jobs and Economic Growth Plan, as well as his other polices for controlling spending and reforming government, Newt 2012 hired Fiscal Associates and its lead economist Gary Robbins to score the impact of Gingrich’s polices. They were chosen because they have a fully developed economic model with demonstrated ability to estimate the effects of rate cuts in promoting jobs and economic growth.

President Gingrich’s pro-growth policies would create 6.6 million new jobs in the first two years;

President Gingrich’s pro-growth policies combined with sensible spending reductions and increased federal royalties from American energy development would balance the budget in his first term;

President Gingrich’s structural reforms to entitlements would keep the budget balanced.

President Gingrich Pro Growth Policies Would Create 6.6 Million New Jobs In Two Years

The Fiscal Associates score projects that Gingrich’s supply side program would restore the economy to the long term economic growth path of 1947 to 2007, when the economy averaged 3.2% real growth per year, up from the current trend predicted by CBO of 2.4%. That catch up would involve average real growth over the first 10 years under the Gingrich program of 4.4% a year.

That booming economic growth would produce 6.6 million jobs in the first two years alone, reducing the unemployment rate ultimately to 4.6%. The overall results from the Gingrich path would be a 20% higher standard of living for the American people compared to the Obama path, indefinitely into the future.

This findings are consistent with the Reagan expansion resulting from similar policies. The score does not include further economic deterioration under the Obama policies likely to begin next year, stemming from his dramatic tax rate increases already enacted into current law for 2013, not to mention the further tax increases Obama called for in the State of the Union, and in his recent budget. Those policies will cause another steep recession next year. President Gingrich Would Balance the Budget in his First Term

It was Newt Gingrich’s leadership as Speaker of the House of Representatives which led to the last balanced budgets, and the Fiscal Associates score of Newt’s policies show he would achieve this goal again. In fact, with the above Jobs and Economic Recovery Plan, President Gingrich would be able to balance the budget within his first term.

The first step to balancing the budget is to restore booming economic growth, which produces both surging revenues and reduced spending, all by itself. In fact, each percentage point of increased GDP growth by itself reduces the deficit by close to $3 trillion over 10 years.

The Gingrich tax reform plan was not designed to be revenue neutral, but to maximize job creation, economic growth and prosperity. The Gingrich plan is not to bring revenues up to the level of federal spending, but to reduce federal spending to the level of revenues produced by a maximum jobs and growth economy.

The Fiscal Associates score projects a net revenue loss on a dynamic basis from the above tax cuts of $140 billion in the first year. But the pathbreaking paper published by Harvard’s Martin Feldstein in 1996 in the prestigious American Economic Review projects the present value of the net gain in GDP of shifting to personal savings and investment accounts for Social Security of $20 trillion. Based on that analysis, we estimate that the additional revenues produced by the pro-growth effects from those accounts would be at least $26 billion in the first year.

In addition, the free market energy policy referenced above, unleashing American companies and workers to maximize production of American energy from all sources, would produce at least another $18 trillion in future increased royalties and other pro-growth effects. While that too would grow sharply over time, we estimate at least $15 billion in the first year from those effects alone, reducing the net revenue loss below $100 billion.

That revenue loss would be overwhelmed by a budget policy of returning every federal line item to 2007 levels, except Social Security, Medicare, Medicaid, defense, debt interest, and federal employee retirement benefits. That was just a few years ago, and America survived perfectly fine with those levels of spending. The first year savings from that policy would be almost $500 billion, growing larger in future years due to the lower trend line.

That would just be a down payment on the desirable budget cuts, as federal spending grew by one-seventh as a percent of GDP during the Bush years, and by another one-fourth already in the Obama years, less than half the time for the Bush increase. Further cuts would come from eliminating every corporate welfare program and bailout, and outdated or counterproductive programs such as Fannie Mae and Freddie Mac. Repealing Obamacare would save at least $725 billion in the first 10 years alone.

Additional spending reductions proposed by House Budget Committee Chairman Paul Ryan in his 2012 and 2013 budgets, and by the Simpson-Bowles Commission, would be adopted as necessary to balance the budget. The Fiscal Associates score shows that these budget cuts would easily balance the budget in the first Gingrich term. Indeed, that score shows that the pro-growth effects of the tax reforms alone would balance the federal budget within 10 years. The budget plan that Speaker Gingrich negotiated in the 1990s in fact produced a balanced budget in 3 years.

That budget balance would be maintained over the long run by the sweeping entitlement reforms specified in great detail at Newt.org. Those include beginning and expanding an option for personal savings, investment and insurance accounts for Social Security and Medicare, eventually expanded to finance all the benefits financed by the payroll tax today. That would ultimately shift federal spending equal to 10% of GDP to the private sector, where the private savings, investment and insurance would pay better benefits than Social Security even promises today, let alone what it could pay. The transition to the accounts is financed entirely by the reduced spending from the other entitlement reforms, as was accomplished for the personal accounts proposed in the Ryan Roadmap, as scored by CBO.

The transition financing plan also includes extending the enormously successful 1996 AFDC welfare block grant reforms, adopted under Speaker Gingrich’s leadership, to all of the nearly 200 federal means tested welfare programs, block granting welfare back to the states. Based on the results of the 1996 reforms, we estimate that would likely reduce federal spending by $4.14 trillion over the first 10 years alone, while the poor would benefit further as they did under the 1996 reforms.

Further transition financing would result from adopting the Medicare reforms proposed by Sen. Ron Wyden (D-Ore) and House Budget Committee Chairman Paul Ryan (R-WI), along with ultimately a personal account option for the Medicare payroll tax that would generate additional resources in retirement to help pay for private insurance in place of Medicare. Each senior would be free to choose among those private alternatives or traditional Medicare if they preferred. That choice would benefit seniors by freeing them to escape the rationing President Obama is imposing on traditional Medicare.

The entitlement reforms would also include repealing and replacing Obamacare with Patient Power, as proposed by the godfather of Health Savings Accounts, John Goodman of the National Center for Policy Analysis. These reforms would reduce federal spending by 50% as a percent of GDP over the long run. That would be the largest reduction in government spending in world history, and a complete solution to America’s fiscal and entitlement crisis.

Thank you Marguerite for all your hard work, keeping us up to date and informed, BREAKING NEWS or NOT. ROFL hahahaha.

Newt Gingrich is the ONLY candidate who has the ability and know how to save America, he's been there, done that.

Post whenever, and whatever you like about NEWT, Jim Robinson won't mind, and many of us (thicker skins),won't either. lol If I have not read it, to me it's BREAKING NEWS.

I understand your focus on keeping a close watch on the environment, and hey I think that is a lofty admirable goal, as far as that goes. The problem is, we hand off the framework to the Left, and they inevitably turn things into the EPA.

We’ve got to quit making these assists, which facilitate the Left making another three-pointer. I’m not sure what the real fix for this is when it comes to the EPA.

Personally, I’m more of a mind to simply erase it and let the states pick up the pieces.

I understand your focus on keeping a close watch on the environment, and hey I think that is a lofty admirable goal, as far as that goes.

C'mon... I'm not hippy! ;o)

We’ve got to quit making these assists, which facilitate the Left making another three-pointer.

I agree with you there, for sure.

I’m not sure what the real fix for this is when it comes to the EPA...Personally, I’m more of a mind to simply erase it and let the states pick up the pieces.

I could as easily adopt your mindset as my own as not... But... since Newt has put together a plan, I am inclined to believe he has given a lot of thought to how to approach the problem and present a solution in a way that will appeal to a large majority of the nation.

I IMAGINE, that he has concluded that reform will be ineffective, abolishing it with no replacement will garner inadequate support, but that abolishing the existing monstrosity and replacing with a well engineered "environmental solutions" agency, run and staffed by smart visionary non-enviro-wackos will be both effective and "salable" to a large majority of Americans. If done properly (with REAL solutions, instead of anti-business crap) it might actually "steal" the "environmental issue" from the Democrats.

Granted, I've only heard his plan in very general terms, but, if you judge from his past, you can expect he has a solid thoughtful structure in mind.

My only quibble with your thoughts on the well thought out plans of candidates isn’t necessarily exclusive to Gingrich, but I have often found out after the fact, that they hadn’t really thought these things out as much as I had hoped they had.

We’ll see.

You’re not a hippy? Awwwaaaah! LOL

Take care.

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.