“In the short run it will cut federal receipts and increase the deficit. That was true under Reagan, there is no reason to believe it won’t be true under Perry.”
That was not true under Reagan. The fact is that Reagan’s tax cuts reduced the top marginal rate from 70% down to 50%, then to 35%. He also cut everyone else’s taxes across the board by an average of 25%. During the Reagan years, receipts to the treasury DOUBLED. This of course is because when the job creators are allowed to keep more of what they earn, they tend to invest it back into growing their business, which in turn creates more jobs and more taxpayers.
Under Reagan, we didn’t have to wait several years for this to happen, it was already happening by 1983, and continued non-stop until the small recession we had in 1991-1992. The only reason deficits increased under Reagan is because we had a Dem Congress during that entire time that spent more than we took in. When this same kind of growth occurred in the late 1990s under a Republican-controlled Congress, we had budget surpluses.
Part of Perry’s plan lowers the corporate tax from 35% to 20%, taking us from one of the least competitive business environments to one of the better ones. This along with elimination of the cap gains and dividend tax will encourage massive investments by the job creators, which is not something we will need to wait several years to see the affect of.
On the spending side, all it takes is a will to reign in the spending. It’s really not that complicated. We may not be able to get back to 18% of GDP overnight, but we can do it over time. If we just returned to pre-Obama spending levels FY 2007, accompanied by strong economic growth, we could reduce the deficit back to where it was under Bush-a couple hundred billion instead of 1.5 trillion, which would be a big step in the right direction.
One last thing-asking the question “where are these cuts going to come from?” tells me that you are not really a believer that government can and should make some drastic reductions in its spending levels. We were getting along just fine with 2007 spending levels-even then the government was far too bloated, so I don’t think it will be too hard to identify places we can cut. It just requires the will to follow through with these cuts.
One place to start is by eliminating base-line budgeting, so we stop calling a reduction in the rate of increase a “cut.” Then, we can look at some of these departments like the EPA that don’t really serve much purpose. I don’t know what specifically Perry has in mind, perhaps you should ask him. But I do know that his overall goal is to bring spending back to 18% of GDP. I think that’s very achievable over time, especially if we have strong economic growth, which will make the GDP that much larger.
I think Gingrich, Cain and Perry all recognize the need to reign in this bloated, oversized govn’t. Romney, on the other hand, he just wants to tinker around the margins, and not upset the applecart. With the question “where are these cuts going to come from”, it seems that this is your mindset as well, in which case, maybe Romney is your guy.
Over time it did go up. In the first years following the deficit doubled or tripled as well. If Perry does that we're talking $2.5 trillion to $3 trillion annual deficits. It'll make Obama look like a piker by comparison. Unless, of course, Perry also cuts spending. Something he doesn't seem to want to talk about in any detail.
On the spending side, all it takes is a will to reign in the spending.
We have a Congress without the will, and suspicions about the candidate as well.
One last thing-asking the question “where are these cuts going to come from?” tells me that you are not really a believer that government can and should make some drastic reductions in its spending levels.
That sounds like the kind of comment one would expect from someone who has no idea how to cut the spending either.
Then, we can look at some of these departments like the EPA that don’t really serve much purpose.
The current deficit is running about $1.3 trillion. You know what the EPA's budget for 2011 is? $9 billion. Get real.