Skip to comments.Gingrich Policies Would Create 6.6 Million Jobs in First Two Years; Balance Budget in First Term
Posted on 02/23/2012 7:54:58 PM PST by Marguerite
Newt 2012 Senior Economic Policy Advisor Peter Ferrara released the following topline summary of the official score of Newts Jobs and Economy Recovery Plan, which predicts Gingrich policies would balance the budget within the first term of a Gingrich presidency and lead to 6.6 million new jobs created in two years:
Newt Gingrich has proposed a very aggressive, comprehensive, supply side economics, jobs and economic recovery plan. It features dramatically lower personal and corporate tax rates, the elimination of the capital gains tax and death tax, deregulation and sound monetary policy. The plan would especially roll back regulatory barriers to energy production, unleashing the private sector to maximize all forms of American energy production. Full details of the plan can be found in Appendix A.
Art Laffer, supply side economics guru and architect of Ronald Reagans economic recovery package, has endorsed Gingrichs economic recovery plan as the most promising pro-growth package, saying, Newt has the best plan for jobs and economic growth of any candidate in the field. He predicts that the plan would create a boom of new investment and economic growth leading to the creation of tens of millions of new jobs over the next decade.
To demonstrate the impact of Newt Gingrich Jobs and Economic Growth Plan, as well as his other polices for controlling spending and reforming government, Newt 2012 hired Fiscal Associates and its lead economist Gary Robbins to score the impact of Gingrichs polices. They were chosen because they have a fully developed economic model with demonstrated ability to estimate the effects of rate cuts in promoting jobs and economic growth.
Their study yielded the following key findings:
President Gingrichs pro-growth policies would create 6.6 million new jobs in the first two years;
President Gingrichs pro-growth policies combined with sensible spending reductions and increased federal royalties from American energy development would balance the budget in his first term;
President Gingrichs structural reforms to entitlements would keep the budget balanced.
President Gingrich Pro Growth Policies Would Create 6.6 Million New Jobs In Two Years
The Fiscal Associates score projects that Gingrichs supply side program would restore the economy to the long term economic growth path of 1947 to 2007, when the economy averaged 3.2% real growth per year, up from the current trend predicted by CBO of 2.4%. That catch up would involve average real growth over the first 10 years under the Gingrich program of 4.4% a year.
That booming economic growth would produce 6.6 million jobs in the first two years alone, reducing the unemployment rate ultimately to 4.6%. The overall results from the Gingrich path would be a 20% higher standard of living for the American people compared to the Obama path, indefinitely into the future.
This findings are consistent with the Reagan expansion resulting from similar policies. The score does not include further economic deterioration under the Obama policies likely to begin next year, stemming from his dramatic tax rate increases already enacted into current law for 2013, not to mention the further tax increases Obama called for in the State of the Union, and in his recent budget. Those policies will cause another steep recession next year. President Gingrich Would Balance the Budget in his First Term
It was Newt Gingrichs leadership as Speaker of the House of Representatives which led to the last balanced budgets, and the Fiscal Associates score of Newts policies show he would achieve this goal again. In fact, with the above Jobs and Economic Recovery Plan, President Gingrich would be able to balance the budget within his first term.
The first step to balancing the budget is to restore booming economic growth, which produces both surging revenues and reduced spending, all by itself. In fact, each percentage point of increased GDP growth by itself reduces the deficit by close to $3 trillion over 10 years.
The Gingrich tax reform plan was not designed to be revenue neutral, but to maximize job creation, economic growth and prosperity. The Gingrich plan is not to bring revenues up to the level of federal spending, but to reduce federal spending to the level of revenues produced by a maximum jobs and growth economy.
The Fiscal Associates score projects a net revenue loss on a dynamic basis from the above tax cuts of $140 billion in the first year. But the pathbreaking paper published by Harvards Martin Feldstein in 1996 in the prestigious American Economic Review projects the present value of the net gain in GDP of shifting to personal savings and investment accounts for Social Security of $20 trillion. Based on that analysis, we estimate that the additional revenues produced by the pro-growth effects from those accounts would be at least $26 billion in the first year.
In addition, the free market energy policy referenced above, unleashing American companies and workers to maximize production of American energy from all sources, would produce at least another $18 trillion in future increased royalties and other pro-growth effects. While that too would grow sharply over time, we estimate at least $15 billion in the first year from those effects alone, reducing the net revenue loss below $100 billion.
That revenue loss would be overwhelmed by a budget policy of returning every federal line item to 2007 levels, except Social Security, Medicare, Medicaid, defense, debt interest, and federal employee retirement benefits. That was just a few years ago, and America survived perfectly fine with those levels of spending. The first year savings from that policy would be almost $500 billion, growing larger in future years due to the lower trend line.
That would just be a down payment on the desirable budget cuts, as federal spending grew by one-seventh as a percent of GDP during the Bush years, and by another one-fourth already in the Obama years, less than half the time for the Bush increase. Further cuts would come from eliminating every corporate welfare program and bailout, and outdated or counterproductive programs such as Fannie Mae and Freddie Mac. Repealing Obamacare would save at least $725 billion in the first 10 years alone.
Additional spending reductions proposed by House Budget Committee Chairman Paul Ryan in his 2012 and 2013 budgets, and by the Simpson-Bowles Commission, would be adopted as necessary to balance the budget. The Fiscal Associates score shows that these budget cuts would easily balance the budget in the first Gingrich term. Indeed, that score shows that the pro-growth effects of the tax reforms alone would balance the federal budget within 10 years. The budget plan that Speaker Gingrich negotiated in the 1990s in fact produced a balanced budget in 3 years.
President Gingrich Would Keep the Budget Balanced
That budget balance would be maintained over the long run by the sweeping entitlement reforms specified in great detail at Newt.org. Those include beginning and expanding an option for personal savings, investment and insurance accounts for Social Security and Medicare, eventually expanded to finance all the benefits financed by the payroll tax today. That would ultimately shift federal spending equal to 10% of GDP to the private sector, where the private savings, investment and insurance would pay better benefits than Social Security even promises today, let alone what it could pay. The transition to the accounts is financed entirely by the reduced spending from the other entitlement reforms, as was accomplished for the personal accounts proposed in the Ryan Roadmap, as scored by CBO.
The transition financing plan also includes extending the enormously successful 1996 AFDC welfare block grant reforms, adopted under Speaker Gingrichs leadership, to all of the nearly 200 federal means tested welfare programs, block granting welfare back to the states. Based on the results of the 1996 reforms, we estimate that would likely reduce federal spending by $4.14 trillion over the first 10 years alone, while the poor would benefit further as they did under the 1996 reforms.
Further transition financing would result from adopting the Medicare reforms proposed by Sen. Ron Wyden (D-Ore) and House Budget Committee Chairman Paul Ryan (R-WI), along with ultimately a personal account option for the Medicare payroll tax that would generate additional resources in retirement to help pay for private insurance in place of Medicare. Each senior would be free to choose among those private alternatives or traditional Medicare if they preferred. That choice would benefit seniors by freeing them to escape the rationing President Obama is imposing on traditional Medicare.
The entitlement reforms would also include repealing and replacing Obamacare with Patient Power, as proposed by the godfather of Health Savings Accounts, John Goodman of the National Center for Policy Analysis. These reforms would reduce federal spending by 50% as a percent of GDP over the long run. That would be the largest reduction in government spending in world history, and a complete solution to Americas fiscal and entitlement crisis.
1. We have been deficit spending for over 50 years - not once in all of those years did we ever spend ONLY what we took in in revenues.
2. If Newt wont cut “Social Security, Medicare, Medicaid, defense, debt interest, and federal employee retirement benefits” he has a major problem - the total cost of these programs exceeds current revenues (2.7 Tr vs 2.3 Tr) - add the “2007” levels of the remaining programs and you will still exceed 3 Tr. AND he wants to cut taxes as well! IOW he is expecting at least 700 Billion in additional revenues from “royalties” annually(!) within 4 years ...
3. Even if he does “roll back regulatory barriers to energy production, unleashing the private sector to maximize all forms of American energy production.” The Enviro-Wackos will clog the courts for decades before anything can be done - IOW, it is nigh impossible that this promise will bear fruit in time for him to “balance” the budget in his first term...
4. It is all fine and well to have a “Plan” - but that plan must be based on reality, not another version of “hope & change”! What happens when interest rates rise on our debt (and they will!)? We currently pay ~14% of revenues on interest (@ 2.7%). If that goes up just 1%, we will be paying close to 20% of revenues on interest alone (450 Billion) . Just 10 years ago, we paid 5.7% on our debt. Carried forward that would be 680 Billion or 30% of revenues! For comparison - the current DOD Discretionary Budget is 683 Billion ....
So what’s Newt’s position on algae as an energy strategy?
“He may be the only person alive who can put forth such a bold plan, and be immune to the inevitable ridicule, since hes already proved hes able not only to be visionary, but to effectively make his vision a reality.”
Newt’s record speaks by itself.
A few highlights from his long career:
Newt started a Young Republican Club at the age 22, when he was still in college.
He never wavered from his conservative convictions. Never been “independent, reformer republican, progressive” like Romney.
His 20-year-old voting record in the House is 98% conservative.
His pro-life voting record is of 98.7% (one of the bill he voted for was taken into consideration, while not linked to pro-life topic).
Voted YES on the Reagan tax cut of 1981
Voted YES on the Reagan tax reform bill of 1986
Voted NO on the George H.W. Bush Read My Lips tax hike in 1990
(which unleashed the furor of the GOP elite).
Voted NO on the Clinton tax hike in 1993.
Voted YES on the capital gains tax cut in 1997.
His vote and leadership against the 1990 Bush tax increase is especially praiseworthy, as it exhibited political courage to fight against a bad policy that was promoted by the president and congressional leadership of his own party.
Further, Gingrich can be one of the most clear-eyed and forceful advocates for supply-side economics and the value of free enterprise.
He has most recently favored:
an immediate and permanent repeal of the Death Tax;
elimination of all capital gains taxes;
reduction of the corporate tax rate to 12.5 percent;
a 50 percent payroll tax cut for both employers and employees;
a 100 percent tax write off for businesses equipment purchases.
During his time in Congress, he had an exemplary voting record on a lot of the top spending proposals:
Voted NO on the Chrysler bailout in 1979
Voted YES on the Gramm-Rudman balanced budget bill in 1985
Voted YES on a balanced budget amendment (as part of the Contract for America effort that he led) in 1995
Led the effort and voted YES to cut $16.4 billion from the budget in 1995.
Voted YES on welfare reform in 1996
Because the Finance Association released its report on Gingrich plan yesterday, February 23.
“So whats Newts position on algae as an energy strategy?”
He called it “fantasy gimmick” for better words :)
The main problem I have with these type of programs is that if you have some guy who inherits all his wealth and lives off his capital gains investments he will NEVER pay any income tax. If I’m wrong someone tell me how the rest of us aren’t supporting him with our taxes.
I guess it’s Mitt’s “safety net.”
An optional 15% flat tax? At least one candidate isn’t stuck on offering a progressive Democrat lite. Or Ron Paul, fail to do any GDP/Revenue projection.
You really should apologize for your choice of words.
Where would Newt best serve in President Rick Santorum’s administration?
He would make a great Chief of Staff !
I’m ready to reelect him already!
I agree with you it shouldn’t be in Breaking News. As for FR being a different place these days, that is probably true too! Things are happening fast these days and it makes us all in a hurry I guess. :)
Hope things are going good up your way. When I see your posts I always think of my beautiful home state! Know your Primary isn’t till April 24th, so we can be sure things will be a lot different by then! I do hope Newt is leading by then, but of course will support anyone against BO!
I believe his emphasis is not that he wants a new name, but that he does want to completely eliminate the existing EPA and start an entirely new department with all new people. He's expressed that he does not "reform" the old one, specifically because it is stacked with environmental extremists.
I think his belief is that we do, in fact, need to protect the environment, but we need to do so reasonably and responsibly, with economic consequences and other factors in mind, not the anti-business enviro-wackism that pervades the current EPA.
Newt has my vote...
You really should apologize for your choice of words.
Thank you, airborne. For the record, I never ran to the Free Republic moderators regarding this thread. I simply posted "Why is this campaign piece in "Breaking News"? in #7 and left it at that.
FReeper seekthetruth replied to me in post #12. I then responded to seekthetruth's post in #17 and American Dream 246 directed his/her vile, bizarre post #18 - comparing me to a Nazi collaborator - to me for some unknown reason.
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