A State of the Union From a Small Businessman, Capitalist Evangelist, Tea Party Enthusiast, and Reagan Libertarian.
Because Small Business Really is Too Big to Fail.
Only Small Business Can Turn Economic Armageddon into Economic Boom Overnight.
By Wayne Allyn Root, 2008 Libertarian Vice Presidential Nominee
We are not recovering from a recession. The spin, propaganda and wishful thinking from Obama, Congress and the Fed are wearing thin on the average American. Anyone with a brain and common sense can see that we are not recovering at all. Even the voters of Massachusetts realize things are bad and Obama’s plan isn’t working. There may be a recovery at GE, Haliburton and ExxonMobil (because of the legal bribery given to big business called stimulus and bailouts)- but not on Main Street where all the jobs are created.
Obama is about to present his State of the Union. But he doesn't have a clue about the true state of the union for small business owners. I am a small businessman. My friends are almost all small business owners. We all believe that Obama’s prescription for saving the American economy is a disaster. His policies of tax and spend are killing jobs, destroying confidence, and wiping out small businesses by the thousands per month.
Without a recovery by small business, there can be no recovery for the U.S. economy. Today I present a plan that can save small business…direct from the only small businessman-turned 2008 Vice Presidential nominee. I’m proud to call myself a Tea Party REAGAN LIBERTARIAN. My hero Ronald Reagan understood small business. That is why he created the largest tax cut in U.S. history- a tax cut aimed squarely at small business. That one brilliant stroke of capitalist incentive ushered in the greatest economic expansion in world history, leading to 25 years of virtually uninterrupted economic success.
My plan is “Reagan squared.” It has one goal in mind- creating tens of millions of new jobs by motivating and encouraging small business. This plan allows small business owners to keep more of their own money, and encourages them to invest it, risk it, and spend it on building new businesses, expanding old businesses, and creating new jobs. That is how you save the U.S. economy from economic disaster.
Things are bad…and getting worse. As a small businessman, with my finger on the pulse of Main Street, not Wall Street, I see the true state of the union. This is not a recession; it is a depression. We are not in recovery. We are in the depths of a long-term depression. I believe America is on the verge of economic collapse. For us to get out of this Great Depression II, we must focus on small business- not big government, not big corporations, not unions, not lawyers, not lobbyists, not government spending, not stimulus spending, not the hiring of more government employees. None of those create jobs (as Obama has proven). Jump-starting small business is the only way out of this catastrophe.
Printing money and passing out piles of fake cash in the form of bailouts and stimulus may make things look better for the short term, but they only make the long-term situation worse. The fact is governments around the world are out of ammunition. As soon as the stimulus and bailouts run out, we will all feel the REAL effects of this economic Armageddon: devaluation of the dollar; dramatically higher interest rates; dramatically higher taxes; dramatically higher inflation; dramatically lower government bond ratings; default on our debt; and sooner, rather than later, economic collapse. That is the future we are facing- and it is ugly.
Barack Obama hasn’t a clue what to do. He is a typical lawyer, community activist and career politician. None of those groups knows anything about small business. Obama arrived at the White House without having ever created a private sector job in his life. His track record is still perfect- after a year as President, he still hasn’t created a private sector job.
Mr. Obama needs an economics lesson- saving or creating government jobs doesn’t count. Each government job is actually a drain on the economy- they COST taxpayers’ money (not just today, but for decades to come with pensions and benefits like free healthcare). The size of big government is like a giant vortex- sucking money out of the economy, as well as damaging, discouraging and punishing small business and taxpayers. Government spending, and government employee unfunded liabilities are combining to dig a hole so deep for the U.S. economy that we may never recover. The millions of government jobs at the federal, state and local level aren’t the solution…they are the problem.
BUT there is a solution. There is still time to save America. We can turn this depression into the greatest economic turnaround in world history. We can create an economic boom- just as Ronald Reagan (inspired by my other hero Congressman Jack Kemp) did when he saved us from the malaise and misery of the deep recession and bleak future created by Jimmy Carter. The turnaround started then, and starts today with an economic plan aimed squarely at small business. Small business is the economic engine of the American economy. Small business has created virtually all of the tens of millions of new American jobs since the Reagan Revolution. Without small business leading the way, there can be no economic or jobs recovery.
The Obama economic plan is all wrong. He is an intellectual who has spent a great deal of time reading books. Unfortunately many of those books were written by Karl Marx. Have you seen the results of Marx’s economic prescription on the economies of Cuba, Argentina, Venezuela, the old Soviet Union, the old communist China, and even most of Europe today? Those economies share similar results- limited economic growth, no job growth, no small business creation, and a far lower quality of life for their citizens. Redistribution of wealth, tax hikes on the rich, punishing the business owners, encouraging unionization of the workforce, forcing up minimum wages, massive entitlement programs, massive government spending and hiring have never created job growth in the real world. America, under Obama, is headed in the wrong direction.
So how do you save the world’s biggest economy? The same way that Reagan created the greatest economic explosion in world history- by allowing small business owners and investors to keep more of their own money. Obama will call this plan a “giveaway to the rich.” But someone needs to explain to Obama, Reid, Pelosi and their socialist cabal that it can’t be a giveaway, when it’s your money in the first place. Tax revenues belong to taxpayers and business owners- not the government. Allowing someone to keep more of the money they earned is quite simply a smart and lightening quick way to encourage the creation of millions of new jobs. As my father used to say, “I’d like to hate rich people, but the problem is no poor person has ever given me a job.” Mr. Obama has yet to learn that lesson. It’s clear that any Columbia University economics professor who ever gave Obama an “A” is a socialist.
Obama has given away money by the trillions as President- but to the wrong groups. He has redistributed it from the business owners and job creators…to people with their hands out, who didn’t earn it. He has given what he calls “tax cuts” to people who never paid taxes in the first place. He has rewarded unions that destroyed and bankrupted their employers in the first place. He has turned GM and Chrysler into $100 BB government welfare programs (that happen to build a few cars). He has given away corporate welfare by the trillions (calling it “bailouts”) to big business, but given nothing to small business. Those are in fact all the definition of “giveaways.” That kind of spending runs up the debt and bankrupts the nation. If Obama claims we can't afford to cut taxes on small business, America has a strong, loud and clear message for him: CUT GOVERNMENT SPENDING. The reason for our deficit and national debt isn't that we tax too little, it's that government spends too much.
Obama can’t tax us out of a depression. Obama isn’t saving the America economy with income tax hikes, capital gains tax hikes, healthcare tax hikes, VAT taxes, FICA tax hikes, Medicare tax hikes, cap and trade taxes, new taxes on banks and Wall Street. He is killing the motivation and spirit of the only group of people that can save us from disaster- small business owners and investors. He’s CAUSING a depression and destroying capitalism. Perhaps that’s his plan to socialize America. If so, it's working.
This Tea Party plan is simple. It allows the citizens and taxpayers of this great country to keep more of the money they earn. This plan aims to inspire the small businessman and woman; to motivate them; to get them excited again about risking and investing in the American Dream. A government handout doesn’t do that. A tax cut does. That kind of common sense isn’t found in books read by Ivy League intellectuals. Surprisingly, it isn’t even found on Wall Street anymore. It is only found on Main Street.
Ronald Reagan proved that you can turnaround even an economic disaster quickly with a giant tax cut aimed at the most important people in any economy-SMALL BUSINESS OWNERS. These courageous financial risk-takers create virtually all the jobs, pay most of the taxes, allow all of their employees to build their own American Dream. These are the heroes of the business world. This simple, common sense 5-step plan to motivate small business goes even further than my hero Ronald Reagan. It is Reagan SQUARED. It is the Tea Party/Reagan Libertarian solution to saving the U.S. economy.
Step # 1: CREATE A ONE YEAR NATIONAL INCOME TAX VACATION:
Liberals (who lack common sense) will scream that Obama already gave us a giant “tax cut.” But he gave it to the wrong group. It went to his voters- people who rarely pay any taxes in the first place. What a gigantic mistake. Aim the tax cut at the people who make all the difference in a capitalist society- the taxpayers. Can you imagine the audacity of that? Actually giving tax cuts to people who pay the taxes in the first place! My plan allows everyone in America who already pays taxes to keep 100% of their own income for one year. Stand back and watch the economic explosion created when they spend it (helping retail sales), invest it (helping stocks and real estate), use it to pay down their mortgages (helping banks and ending the foreclosure crisis), and use it to start businesses in record numbers (creating jobs).
Obama will say, “How would we run government without taxes? We can’t afford it?” Really? The cost of this income tax vacation is a measly $1.2 trillion. None of those issues seemed to bother Obama when he spent trillions on bailouts and wasted stimulus- all of which created zero jobs and did nothing to improve the economy (except reward his voters and contributors). So either shut up and try it, or simply find $1.2 trillion in spending cuts. The American economy is in freefall because government spends too much, NOT because taxpayers pay too little. Cut taxes so that people can keep more of their own money (in this case ALL of their own money) and you will create an economic boom that no amount of government spending can replicate.
Let people keep their own money and watch what they do with it- they will choose to multiply it. Simply put- they will put it to work. They will start small businesses at the fastest rate in history. Keeping 100% of your own money puts people in a positive, confident mood. Watch them be motivated and inspired to create more where that came from. All of which enriches the economy and creates jobs.
Small business owners and investors are only motivated to get up in the morning and risk their life savings, and work long hours (that no union or government employee would ever put in) to improve their lives…to buy things they desire…to create financial security…to send their children to private school instead of failing public schools…to give the best in life to their families. That’s the only reason that entrepreneurs and capitalists risk their life savings. No amount of wishful liberal thinking can change that fact. That’s why Obama is failing so miserably. No entrepreneur gets up in the morning to make government rich with the fruits of his or her labor. Obama understands nothing about what made America so successful. We are a nation of risk-takers. But we risk so courageously to benefit our families, not government. That’s the foundation of capitalism- risk and reward. That is precisely why we lead the world in entrepreneurship and job creation. Reagan understood that.
This Tea Party plan actually creates more tax revenues in the long run by eliminating them temporarily. First, this plan leads to massive sales taxes- as people spend their extra money on goods, clothes, restaurants, homes, stocks, home repairs, and building new businesses. Second, this plan creates millions of new jobs- which leads to a dramatic increase in payroll taxes (and reduction in welfare and unemployment spending). Third, all the business and jobs created by this one-year income tax vacation will create an avalanche of taxes for years to come. This one-year income tax vacation is actually the foundation of a long term tax revenue explosion.
STEP #2) ELIMINATE CAPITAL GAINS TAXES PERMANENTLY:
The key to the success of our economy is small business investment. Even Obama mouths that concept. But a temporary capital gains cut or elimination will not work. Small business owners and investors need security and certainty. There is only one way to spur small business investment and expansion in the middle of a depression- eliminating capital gains taxes permanently. What a synergistic combination- a one-year income tax vacation, combined with the elimination of capital gains taxes! The income tax vacation gives taxpayers $1.2 trillion in extra money in their pockets. The capital gains tax elimination motivates them to invest it- exactly what we desperately need them to do.
As a lifelong serial entrepreneur, I understand small business owners. If you let me keep 100% of my money for one year and tell me capital gains are eliminated, I will put that money to work immediately. I will invest 100% of this extra money in my business, or new business startups. This is the opportunity of a lifetime. The money I invest in this one year could make me financially secure for the rest of my life. I'm sure that liberals will hate this idea. Obama might ask, “What do the poor get out of this?” Well how about jobs? Millions of them. Just as Reagan’s tax cut led to the creation of over 40 million jobs- virtually every one of them in small business. Yes, trickle down did in fact work. Not everyone got rich. But everyone had a job. Now they don't. In retrospect, I think it’s clear that trickle down worked just fine. Every time an entrepreneur opens a business he is helping create jobs, paying salaries, paying payroll taxes, paying for health insurance, paying the taxes to fund the government. Entrepreneurs allow others to live their American dream.
The bonus is this step allows us to compete with our #1 competitor China- who has a zero capital gains tax. China understands how to motivate entrepreneurship and small business creation. If Obama raises capital gains taxes (as he plans in 2011), we lose the economic battle with China- PERIOD. China catapults past the USA forevermore.
Finally think of the biggest bonus of all. If there are no more taxes on capital gains (and investment income of all kinds) older Americans can afford a much higher quality of life in retirement. Anyone can now retire on HALF the amount of assets- because your interest, dividends and investments are now tax free. Think of what older Americans would do with that extra money- fuel the economy, buy homes, buy stocks, travel (thereby enriching the tourist industry), dine out more often (thereby enriching the restaurant industry), and pay for their grandkids’ college educations. A capital gains tax elimination is good for jobs…good for stocks and real estate…good for small business…good for older Americans…and GREAT for the America economy.
STEP #3) CREATE A SMALL BUSINESS PAYROLL TAX VACATION FOR TWO YEARS:
Once again, this tax suspension is a boon for small business. Employees and employers each pay half of payroll taxes. The employees are already getting a one-year income tax vacation. But here we give the business owner a payroll tax vacation- by suspending the employer’s half of the payroll tax for two years. That means for the next two years, it costs far less for any business owner to create a job. Without a penalty for every new employee hired by a business owner, there is now incentive to hire. This idea also frees up capital for business owners. Every dollar saved by not having to pay half of each employees’ payroll taxes, can now be used to expand businesses, expand inventory, buy business supplies and equipment, advertise, market or promote. All of those actions create jobs. Money going to payroll taxes does not. This one idea- combined with the capital gains tax elimination- makes it a joy (instead of a burden) to own a small business again.
STEP #4) TURN IMMIGRATION FROM A DRAIN ON THE ECONOMY…INTO AN ECONOMIC BOOM:
Immigration could be the most controversial and important topic of America’s future. America was built by immigrants. Studies prove that immigrants actually fare financially better in this country than native-born Americans. Now, however, illegal immigrants are draining the American economy. They cost taxpayers billions in welfare, food stamps, free meals at school, English as second language programs, free education and healthcare (and eventually Social Security).
Let’s first secure the borders to dramatically reduce future illegal immigration. At the same time let’s enact the exciting and creative step of offering instant residency and an easy, quick path to citizenship for skilled, educated, and financially secure immigrants, which will help trigger a turnaround to small business and the American economy.
Specifically any immigrant who invests $250,000 into either a home, or a small business creating jobs in the United States, should be granted instant residency and a path to citizenship. Current programs are limited and so bureaucratically entwined as to be practically worthless. This plan is simple, loud and clear: bring money, skills, and resources to start businesses and create jobs and you will be instantly welcomed into the land of opportunity.
This step would instantly unleash the greatest period of immigration to America ever. But not just any immigrants. This plan promotes the right kind of immigration explosion. This plan would encourage millions of patriotic new Americans excited and motivated to live the American Dream. New citizens that love and appreciate capitalism and entrepreneurship. The passion of these new citizens will create an avalanche of new jobs, taxes, consumer spending, and investment in stocks, real estate and small business. America would suddenly add millions of the best and brightest and most ambitious middle class citizens from every country in the world. These immigrants would add jobs by the millions, instead of taking them. These immigrants would pay taxes by the billions, all while utilizing few, if any, government services. What a boon to the U.S. economy!
As it stands now, we send away or discourage the skilled, educated, wealthy immigrants we need to enrich our economy, and allow millions of illegal immigrants that strain our resources to stay forever. That’s simply crazy. That’s self-destructive. That lacks common sense.
When these hungry, ambitious, educated, skilled, middle class and upper middle class immigrants move to America by the millions over the next 5 years they will buy millions of homes- thereby ending the housing and foreclosure crisis. Home prices would instantly rebound for every American homeowner. They will buy or start new businesses- thereby creating millions of new jobs. They will pay into the payroll tax system- thereby delaying the eventual bankruptcy of Social Security (which should be privatized with this new reprieve). They will put their money into U.S. banks- thereby ending the banking crisis. They will buy things- thereby increasing consumer spending and enriching small business. This is the instant fix we so desperately need to turnaround the U.S. economy.
No one is stopping traditional legal immigration. Nothing changes there. That will continue unabated so that people around the world without money or assets still get a shot at the American Dream. But this plan stops illegal immigration and encourages the right kind of healthy immigration to feed a new American economic renaissance. These new immigrants that my plan encourages to come to America will form the foundation of our future.
STEP #5) LEGALIZE AND TAX SIN TO FUND HEALTHCARE REFORM:
Yes, I’m a proud card-carrying Reagan fiscal conservative. But here’s where I showcase my true Libertarian bona fides. We have to stop being busybodies or nannies toward our neighbors. Let people do what they want to do- as long as it involves consenting adults, and doesn’t harm you. It’s called personal freedom. That’s why the Pilgrims first risked their lives to come to a new land. It’s why we fought and won- against all odds- the America Revolution.
Secondly, it’s just none of your business what other people choose to do with their free time, or their money, in their own home or bedroom. If you don’t agree with their choice, then don’t do it yourself. But leave them alone to make their own choices, or mistakes.
Third, prohibition has never worked- anywhere in the world, at any time in history. People will always find a way to do what they want to do. I say we should capitalize on their “sins” by legalizing them. If it’s necessary for government to regulate and tax them to accomplish this, then let’s do it on the state level. Keep the federal government out of it- as per the Constitution. It’s not my ideal to ever tax anything- but it beats throwing Americans in jail who have harmed no one else.
Fourth, we simply cannot afford this Nanny State- the cost of locking up harmless people in prisons is helping to bankrupt many states. Not only would legalizing and taxing “sin” save billions, it would raise billions more that could solve the looming state budget deficit disaster.
We live this credo of economic and personal freedom in Nevada- my home state. We are the laboratory for the experiment- and we have proven it works. Taxes on gambling (and even legal prostitution) fund our state government- enabling us to have no income taxes, no business income taxes, no capital gains taxes, no death taxes, and the 16th lowest property taxes in America. You know what I call that? HEAVEN. The result- until this depression destroyed tourism, thereby effecting Nevada’s tourist economy more than most states, we featured the fastest growing population and fastest growing economy in all of America for the last 25 years. That’s one heck of a track record.
If people want to choose “sin,” that’s none of your business. But interestingly, Las Vegas also leads the nation in churches per capita. What that proves is that allowing freedom does not stop citizens who choose not to indulge in sin, from living their lives. Ironically it helps law-abiding, church-going citizens lead a much better quality of life. The taxes that gamblers and other “sinners” pay in Nevada allow the rest of us to keep more of our own money and lead a better life.
Studies prove that the legalization of marijuana and online gambling would generate almost $300 billion in new tax revenues. People gamble online and smoke pot every day- you cannot stop it. Daily our government wastes billions and ruins the lives of consenting adults by enforcing these ridiculous laws and bans on personal freedom. The only groups benefiting from this lunacy are big government, police, prisons, courts, lawyers, drug dealers and bookmakers. It’s time to legalize, regulate and tax sin, just as we already do with alcohol. That will produce almost $300 billion in new tax revenue can be used to reduce taxes on small business; or fund healthcare reforms at the state level- without raising taxes one dime on the rest of us. In fact, if allocated wisely, it should allow us to be able to reduce other taxes.
Legalizing and taxing “sin” will allow us to solve our healthcare problems without new taxes or bigger government. We don’t need universal healthcare, new mandates, new taxes, and draconian fines or prison sentences to reform healthcare. We need more freedom. We need to get government out of the way. We need to allow consumers to find the best healthcare policy anywhere it is offered- beyond state lines or not. We need to allow anyone to buy the policy that best fits their needs. We need high deductible catastrophic health plans, combined with HSA (Health Savings Accounts). We need tort reform- which Obama won’t even mention in his universal healthcare plan (because he is a lawyer-and he’s bought and paid for by lawyer contributions). And we need to stop trying to ruin or change healthcare for the 80% of America that is satisfied with their current plan.
The best way to “reform” healthcare (besides reducing the role of government and lawyers) is to help the small portion of society facing tragic and expensive, catastrophic medical needs, those with pre-existing conditions, and the indigent. Leave everyone else alone. I believe that private charity should play the biggest role in cases like this. I’m skeptical that turning to big government is ever in the best interest of our citizens. But if there must be any involvement by government, it should only be at the state and local level, where at least it would be Constitutional. That prescription will cost far less than the trillion dollars Mr. Obama wants to spend on healthcare reform. This smaller and more reasonable fix can be paid for with the almost $300 BB in new taxes flowing to the government from the legalization of marijuana and online gambling (and we should even have room left to reduce or eliminate other taxes as a result). This is the way to reform healthcare for the few who need it, while leaving the rest of us alone, without raising our taxes one dime. Problem solved.
This is a simple, common sense 5-step plan to quickly turnaround the U.S. economy and save capitalism. It turns economic Armageddon into economic boom. All it relies on is the idea that letting people keep more of their own money makes them happy, positive and confident…and motivates them to create more, invest more and risk more. That is how you restore and expand the American Dream for centuries to come. God Bless America.