A Detailed and Specific Plan to Save the U.S. Economy
“If you analyze it I believe the very heart and soul of conservatism is libertarianism.”
— Ronald Reagan
I am a proud Reagan Libertarian. Ronald Reagan turned the worst economic slump since the Great Depression into the greatest economic turnaround and expansion in world history with one simple stroke of genius — the largest tax cut in U.S. history (ultimately reducing top marginal tax rates from 70% down to 28%). That tax cut benefited and motivated the groups that produce virtually all of the jobs and tax revenues in America — small business owners and taxpayers. These are the very groups that President Obama chooses to punish, instead of reward. Obama redistributes money from taxpayers and small business owners to his voters — who create virtually nothing, pay almost no taxes, create no jobs, and ask for handouts and entitlements from cradle to grave. In short, Obama’s voters are bankrupting this once great country. This is precisely why the U.S. economy has fallen off a cliff. We are staring at the abyss — economic Armageddon, chronic massive unemployment, and worldwide depression. It is time for dramatic measures to stave off disaster, deficit, debt and depression.
It is time for a Reagan Libertarian Contract with America, a daring plan aimed squarely at motivating entrepreneurs, small business owners, and taxpayers. These are the people who risk, invest and build America. Without their cooperation, motivation, and success, there can be no recovery. This daring plan is the polar opposite of the Obama socialist plan. But unlike Republican plans, it places equal importance on limiting the size of government, shrinking spending, and limiting the power of politicians, as opposed to simply cutting taxes.
Can it be done? Look south to communist Cuba to see Raul Castro cutting 500,000 government employees, with a promise to cut 500,000 more. Castro is privatizing vast swaths of government and encouraging Cubans dependent on communism and big government to find a private sector job, or start a small business. Even communists are getting the message that desperate times call for daring measures (and a dramatic change in strategy).
Or look north to our neighbor Canada, which in the late 1990’s stared down economic disaster and debt, and pulled off an economic miracle with both spending cuts and tax cuts. Canadians turned a large deficit that threatened to destroy their economy and credibility into a budget surplus. If Cuba can do it…if Canada can do it…the greatest nation in world history can do it bigger and quicker.
Here is the 20-point Reagan Libertarian Contract with America:
#1) One-Year Income Tax Vacation — Award every taxpayer in this country a one-year income tax vacation. This plan costs about the same $1 Trillion that Obama spent on his failed Stimulus-to-nowhere. But watch this version of stimulus turn a bust to boom as taxpayers and entrepreneurial risk-takers invest record sums, now sitting on the sidelines, into business creation and expansion, stocks and real estate- thereby creating a jobs explosion.
#2) Welcome taxpayers back from the income tax vacation with a permanent and simple Flat Income Tax, combined with zero Capital Gains tax. This emulates the most successful economy in the world- Hong Kong. Start the flat tax at 20%, to be reduced to 15% when the budget deficit is reduced to no more than 3% of GDP. This combination will stimulate and reward risk-takers and small business innovators, thereby creating millions of new jobs.
#3) Offer “angel investors” a New Investment Tax Credit. Investors would receive dollar for dollar tax credits up to $100,000 for investments in IPO’s, secondary offerings, startups, and new real estate developments. This would stimulate the economy by rewarding entrepreneurship and job creation. Two of every three new jobs are created by small business. But almost 100% of these jobs come from business startups.
#4) Suspend the Employer Payroll Tax for two years. Small business needs a break. Give them two years without having to pay for the payroll taxes of their employees. The savings will be invested in new job creation, expansion of a business, a new startup, or capital improvements. Millions of new jobs will be created overnight.
#5) Cut the corporate income tax rate from 35% (currently 2nd highest in industrialized world) to a flat 15%…but in order to pay for it, eliminate all corporate welfare. We should support free market capitalism — not a crony capitalist government that picks winners and losers, and awards favors, subsidies, and sweetheart deals to the biggest campaign contributors.
#6) Turn illegal immigration from a cost to a benefit. First, secure the borders with a combination of virtual technology and greatly enhanced border security. Then offer INSTANT CITIZENSHIP for any immigrant in the world that brings $250,000 or more to invest in a U.S. home or business within six months of arrival. This brings tremendous wealth to America; creates millions of new jobs; ends the real estate, foreclosure and banking crisis; and brings in new employers and employees to resolve the Social Security crisis.
#7) Social Security, Medicare and Medicaid are eating up the entire U.S. budget. They will single-handedly destroy the U.S. economy within twenty years. Social Security can be secured and the debt reigned in with an immediate rise in the age of retirement to age 68 for anyone younger than 55…and within five years raise the age of retirement again to age 70. This phase-in secures Social Security without raising taxes.
#7a) Combine this age raise with a Partial Privatization of Social Security for younger workers. This gives younger Americans ownership of their own retirement accounts. Upon death, it belongs to their family.
#7b) Convert Medicare & Medicaid into block grants and hand the entire budgets to the states. Let each state offer higher deductibles and incentives for recipients to save money on medical care. States get to keep the savings. This will turn the states into competitors, fostering competition to attract new residents and taxpayers.
#8) Legalize, regulate & tax online gaming and medical marijuana — raising almost $300 Billion over the next decade, directed to deficit reduction.
#9) Dramatically cut the size of government with an immediate freeze of all government hiring; freeze all salaries; and immediately cancel all cost of living raises and step-up raises. This freeze should stay in effect until the average compensation of government employees is equal to the private sector.
#10) Implement government employee pension reform by changing from defined benefit to defined contribution plans (just like a private sector 401k). This eliminates all debate over age of retirement for government employees and how government pensions are funded. It no longer matters, as the government is no longer responsible for funding their retirement.
#10a) Ban unionization of government employees, thereby eliminating collective bargaining. Government employees shouldn’t be squeezing taxpayers.
#11) Pass a Balanced Budget Amendment to the Constitution to take effect after the end of the Income Tax Vacation.
#12) To achieve a balanced budget, institute dramatic cuts in government spending — 30% across the board cuts for all departments, no exceptions (including military and defense) phased in over 3 years (10% per year). After that, limit any increase in spending to population growth plus inflation.
#12a) Give the President the line item veto to carve additional waste out of each and every bill passed by Congress.
#13) Audit all federal agencies and programs to determine if they or their spending are Constitutional. This would automatically result in the banning of TARP, stimulus and bailouts FOREVER.
#14) End the Iraq and Afghanistan wars — that includes bringing home the 50,000 troops remaining in Iraq presently.
#14a) Demand Congress issue a formal declaration of war before fighting any future wars (unless responding in self-defense). This would reduce the likelihood of future wars, thereby saving taxpayers billions in potential deficit spending.
#14b) Phase out ALL foreign aid by cutting out 10% per year for 10 years — thereby giving all our allies time to prepare.
#14c) Dramatically cut the number of military bases across the globe — specifically Japan, Germany and South Korea. It is time for our rich friends to pay their own way.
#15) Repeal Universal Healthcare, institute Tort Reform, expand freedom of consumer choice (allowing consumers to buy across state lines), and expand HSAs (Health Savings accounts). Make all health costs — including insurance — 100% tax deductible.
#16) Education — Eliminate the Department of Education, redirect the funds to the state and local level. Ban unionization of teachers. End tenure — job security and compensation must be based on performance. Encourage school choice, parental freedom, and vouchers at the state and local level. A well-educated country is essential to the economic future of America. Teachers unions have damaged education almost beyond repair.
#17) Energy — Encourage unlimited offshore drilling to dramatically lessen our dependence on foreign oil. But in return for unlimited drilling, end all special tax breaks and subsidies to the oil industry.
17a) Have the U.S. Government offer a $27 Billion prize to the company or companies that find an economical, domestically-sourced replacement for fossil fuel. The amount of this prize is roughly equal to the annual budget of the Department of Energy. By offering a prize for performance and closing down this agency, we save the taxpayers tens of billions in future spending. And once a company succeeds and claims the prize, we eliminate the motivation of going to war to secure access to foreign oil. This “open source problem solving” should be used to solve many of the biggest challenges facing our country.
#18) Perhaps most importantly, LIMIT THE POWER OF CONGRESS:
a) Limit all members of Congress to two terms.
b) Limit the amount of time Congress can meet to only four months per year. The less time they have to create more laws, the less damage they can do to the American people and the U.S. economy.
c) Limit Congress to passing only bills that are PROVEN constitutional (Enumerated Powers Act).
d) Place a three-year moratorium on passing any new rules, regulations or mandates on the American people or American business.
e) Immediately ban Congress from hiring staff with outstanding tax debts or liens. If the people that run the country can’t pay their tax bills, they have no right to ask us to pay ours.
f) Require that all bills be read out loud in front of a fully assembled Congress before voting on them. This will put an end to 2,000 page laws that no member of Congress ever reads, but all Americans are required to follow.
g) Post all bills online at least four weeks for public vetting before voting on them.
h) Mandate that all bills passed by Congress also apply to members of Congress.
i) Allow the legislatures of two-thirds of all states to overturn any Federal law or regulation. It’s time to provide states with a check on a runaway Congress.
#19) Forever ban the word “czar” from our government’s vocabulary. No President should ever be able to hire cabinet level executives without vetting and approval by Congress.
#20) Audit the Fed, then aim to eliminate this unaccountable organization that has done such damage to the U.S. economy.
This 20-point "Reagan Libertarian Contract with America" will put the U.S. economy back on solid ground. It will create millions of jobs- just as Reagan’s tax cut did in the 1980’s. It restores economic freedom. It rewards entrepreneurship. It stimulates small business. It limits the power of government- just as the Constitution demands. It proves that Libertarianism is the very heart and soul of conservatism. Ronald Reagan would be proud.
The author of the Reagan Libertarian Contract with America is Wayne Allyn Root, the 2008 Libertarian Vice Presidential Nominee. Wayne is Chairman of the Libertarian National Congressional Committee. His new paperback will be released next month, “The Conscience of a Libertarian: Empowering the Citizen Revolution with GOD, GUNS, GOLD & TAX CUTS.” His web site: www.ROOTforAmerica.com.