Analysis: Gingrich tax plan starves government, say economists

Reuters ^ | Dec 19, 2011 | By Kim Dixon

[Jim Robinson]

(Reuters) - Newt Gingrich's tax plan could blow a gaping hole in U.S. government revenues, while preserving special interest tax breaks, said economists aligned with the Republican presidential candidate's own party.

While other Republican contenders have made headlines with their tax proposals, Gingrich quietly released his months ago. It calls for slashing the corporate rate, giving individuals big tax breaks, and retaining many major deductions and credits.

Conservatives have applauded his proposal to lower rates, but economists on both the left and right have said his plan would drain federal coffers in the near term, making it impractical amid concerns about the federal budget deficit.

"The revenue loss in this plan is absolutely staggering," said Alan Viard, an economist at the American Enterprise Institute, a conservative think tank.

Viard based his assessment on an estimate by the Tax Policy Center, a left-leaning think tank, that he called reasonable.

The center forecast that Gingrich's plan would slash government revenues by at least $850 billion in one year, more than a third of the $2.3 trillion in 2011 government revenues.

A Gingrich adviser refuted the center's estimate and said the candidate's plan was not designed to be revenue neutral, but to be "growth maximizing."

"They made up the details," Gingrich economic adviser Peter Ferrara said of the TPC study. "They also did not take into account the impact of lowering rates on economic growth."

The idea that tax cuts can pay for themselves through growth is a controversial notion, dismissed by all but a handful of economists, but it is deeply entrenched in the Republican Party.

[Graewoulf]

All of your points are consistent with the hope that the “rate of increase” , (DC’s definition of what is ALLOWED to be cut), will somehow slow the rate of growth of the increase in the size of Public Enemy Number One: THE US FEDERAL GOVERNMENT.

All y’all recognize the problem, but I doubt that any of us have found a Candidate that agrees with us on how to SOLVE the problem.

Gingrich is a good case in point. What he SAYS could slow down the always hungry Steely Beast, but the spendaholic lust is still there to, (choose your favorite cliche’), “Grow the Economy,” “Pay for any tax cut,” “Find a Bipartisan Compromise,” “Find a balanced solution,” “Everyone should pay their Fair Share,” “Reach out to those in need,” “Get the Deficit under control,” and my personal favorite, “Provide Transparency.”

In other words, “Vote for ME and I will continue to expand our bloated Federal Government, AND I will be much more efficient in the manner that I will continue to increase your tax burden, and trust me, it won’t cost you a penny!”

The problem is that NONE of these Snake-oil Salesman slogans involve reducing Federal Spending below what was spend in the previous fiscal year.

It is all well and good to elect a Nanny-State Warrior such as Newt IF one realizes that Newt would be a President to merely slow down the rate of growth of Public Enemy Number One.

Newt would be a Plateau President, a Transition President, a Fat-Trimmer President, but he would not be one to privatize the vote-getting, safety net, Ponzi schemes that all of us, in the 53 % who pay taxes, are forced to buy at the point of the damned Federal Gun.

These schemes include the following: SSS, Medicare, Medicaid, Obama”care”, No Child left behind, Aid to dependent children, Federal aid to Education, School Lunch Programs, Student Loan Program, Housing assistance Program, and all of the other “Programs” that ARE the sacred ENTITLEMENT PLANTATION, with HQ in The Big House at 1600 Plantation Avenue.

The Graph in Post # 19 is by far the most eloquent statement as to what must be done to pass on to our Grandchildren a National Debt below 5 TRILLION Dollars. A National Debt similar in size to what it was before the Keynesian, Spendaholic Twins (GWB and Obama) burdened us with Debts of 4 Trillion dollars, EACH!

BTW, I define a politician as anyone whose word cannot be trusted, so be careful who you vote for as you just might get surprised - - - . (Harken back to: “Read my lips, NO NEW TAXES.”)

[Wordkraft]

“Gingrich tax plan starves government, say economists.”

They say that like its a bad thing.

[trisham]

Gingrich keeps looking better and better.

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Go Newt!