Within the last 2 months or so, Newt Gingrich has laid out an economic policy for the 2012 election that is in-line with his conservative ideology. In short, he wants to deemphasize the hand of government within the economy, and restructure the tax code. He would totally eliminate the IRS, to allow the private sector to do what it’s supposed to do unfettered with undue regulation: creating jobs and providing goods and services throughout the world. His plan also intends to repeal and replace the health care reform law signed by President Obama, strengthen the U.S. dollar, implement an American energy policy, and strip regulations, programs and bureaucracies impeding job creation. Much of what he has proposed for the economy is summarized below:
Newt Gingrich’s Tax Proposals
In terms of his tax code proposals, while at the Iowa Forum on 1/1/11, Gingrich offered a list of taxes he favored eliminating, including the capital gains tax, double taxation on dividends, and the estate tax. He also favored reducing the corporate tax rate to 12.5%, allowing a 100% expensing of plants and equipment purchased during the tax year in which they occurred, and offering an alternative optional flat tax at 15% as a choice for taxpayers. In short, Newt wants to replace existing tax regulations with a simplified and fundamentally new tax code. He would also repatriate company income from overseas operations, with no tax penalties (under certain conditions). Gingrich told Bloomberg Television in September, “I am not for raising taxes on American companies… I am for reducing taxes on American companies.”
Newt on Regulation
Eliminating “Excessive Regulation” is a key plank in his platform. These regulations play a role in supressing economic growth. Specifically, Gingrich would repeal the Dodd-Frank legislation, which implements ineffective and heavy-handed financial regulatory reform. Gingrich would also eliminate Sarbanes-Oxley, which sets new or enhanced standards for all U.S. public company boards, management and public accounting firms. Taken in Toto with the aforementioned Dodd Frank bill, the repeal of this legislation that serves to hobble and restrict corporate competitiveness will have a beneficial effect on the economy.
Newt Gingrich’s Unemployment Plan
Gingrich believes that those receiving unemployment compensation should also be obligated to attend mandatory job training while on unemployment, saying that new skills required for a robust economy are essential. The manufacturing sector would be obligated to provide this training. The reasoning behind this is the following: if laid-off workers are receiving up to 99 weeks of unemployment, they also should be re-trained, if possible to receive additional skills. However, on the other hand, he has indicated that he would cut the receipt of unemployment benefits to 3 months or less. This might then make his unemployment retraining initiative slightly problematic.
Gingrich’s Plan to “Rebuild America”
The “21st Century Contract with America” is a proposal which includes vastly restructuring, and/or replacing, various agencies, such as the EPA, to make them more supportive of a growth economy. Currently, many of these agencies have encourqaged companies to develop operations off-shore in countries with fewer onerous regulations. The concept he has advocated is that many of these agencies have been hobbling industry and economic development within the country, and that too many overseas competitors, unfettered by such heavy handed government regulations, are producing products overseas and selling them back to America. His plan serves to strengthen the economy, and make U.S. products competitive on the world-wide market.
Overseas Trade and Open Markets
Gingrich has proposed that free trade agreements involving the U.S. should be more aggressive against Europe and China. Additionally, he has (according to the Club for Growth) “…called for the creation of “Free Cities,” Hong Kong-style free trade zones, developed from scratch according to agreements reached between the United States and the “receptive governments” controlling the agreed-upon locations.”
U.S. Tax Credits
Gingrich maintains that one and two-year tax credits for encouraging economic development are foolish, and should be replaced by 10-year time-horizon tax credits, because businesses will not typically invest on a one or two-year time horizon. With a longer-term tax credit horizon, stability with respect to business investment will be enhanced.
Elimination of Federal Industry Subsidies
According to the Political Hot sheet, “Gingrich, the Speaker of the House in the mid-1990s, was the only Republican presidential candidate at the forum to say he supported continuing the wind power tax credit.” On the other hand, Gingrich has also said, “Nobody who comes from oil country seems to think that any of that is picking winners and losers,” when speaking of oil industry tax incentives. These statements appear to show that he believes that certain technologies need be promoted by the federal government.
China Balance of Trade
Gingrich has publicized no specific plans about repairing the unbalanced trade between China and the U.S., other than stating the obvious: economic growth at home will improve the situation with China.
Obamacare: a Drag on the Economy
Gingrich envisions health plans that are pro-jobs and pro-responsibility, and that place all health care decisions back into the hands of the patient and the doctor. This effectively eliminates Obama’s Health Care plan, the Patient Protection and Affordable Care Act of 2009, aka Obamacare. In the current atmosphere, even before ‘Obamacare’ is implemented, health care decisions are often made between the insurance provider and the doctor with the patient having little control over his or her health destiny. The economic implications are obvious: health care today is roughly 1/6th of the U.S. economy. With Obama’s plan soon to be implemented, costs will rise and the economy will experience a real drag as a result.
Employment and Job Growth
“Creating jobs and getting back to 4% unemployment is the most important step to a balanced budget,” according to Gingrich’s campaign site, which emphasizes that America only works when Americans are working. Gingrich believes that he has a pro-growth strategy similar to the policies that worked to balance the budget, pay down the debt, and create jobs while he served as Speaker of the House.
Newt Gingrich’s Economic Plan
The above information is a snapshot of where Gingrich stands, and what he advocates for the U.S. economy should he be elected president. Newt appears to offer a more conservative stance than politicians such as Governor Mitt Romney, but Gingrich is still a politician who could be forced to modify his stance, should conditions change. He has been forthright about his conservative leanings and credentials, however, and would certainly be a polar opposite choice when compared with the current President, Barack Obama.
Bloomberg. Gingrich Agrees With Obama on Need to Extend Payroll Tax Cuts. (September 13, 2011). Accessed November 15, 2011.
Club For Growth. 2012 Presidential White Paper #1. Accessed November 15, 2011.
CBS News Political Hotsheet. Perry and Gingrich Split on Wind Credits. (November 1, 2011). Accessed November 15, 2011.
111th Congress, 1st Session. H.R. 3962. (October 29, 2009). Accessed November 15, 2011.
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