September 27, 2010 (202) 220-0202
Noted Economists Praise GOP Pledge to America, Call it “Big Initial Step” to Sounder Fiscal Policy
Posted by Kevin Boland on September 27, 2010
Some of America’s most noted economists are among the voices speaking out in support of the newly-launched GOP Pledge to America, the new governing agenda built through a process of listening to the American people. The Pledge emphasizes the need to aggressively cut federal spending and stop the coming tax hikes in order to help the nation’s economy get back to creating jobs – an approach much different from the path taken in Washington in recent years.
Noted economists Michael J. Boskin, John F. Cogan, Allan H. Meltzer, George P. Shultz, and John B. Taylor have issued an enthusiastic joint statement of support for the Pledge:
"The ‘Pledge to America’ is a big initial step to a sounder, wiser course for fiscal and regulatory policy, including the proposals to stop the tax increases scheduled to take effect on January 1, 2011, to roll back spending to pre-stimulus, pre-bailout levels, and to require congressional approval of any new federal regulation that has an economically significant cost. The Pledge is a refreshing dose of budgetary sanity and a restoration of proven economic principles and common sense."
Diana Furchtgott-Roth, a former chief economist at the U.S. Department of Labor who is now the director of the Hudson Institute’s Center for Employment Policy, endorsed the Pledge to America in an op-ed published in the Washington Examiner last week:
"Rather than tax increases in 2011, the Republican plan would make all current tax rates permanent, to reduce uncertainty for consumers and employers. It would cut non-security discretionary spending to 2008 levels. Cuts include ending the Troubled Asset Relief Program; rolling back this year's 5.8 percent increase in Congress' budget; and placing a hiring freeze on all non-security government workers. In addition, Republicans suggest reforming the congressional budget process to make it easier to cut spending. Current rules are rigged to make it easy to spend money unnecessarily, and not so easy to cut spending.
"Many businesses across America would applaud repealing the new health care law, freeing them of the upcoming requirement to pay $2,000 per worker per year beginning in 2014 if they don't offer the right kind of health insurance. Since the rule applies only to businesses of more than 50 workers, every 50-person business is trying to figure out how not to hire any more workers, and every 55-person business is trying to figure out how to lay off five workers. With a 9.6 percent unemployment rate, that's precisely the opposite of what's needed.
"The Republicans would end the new requirement, effective 2012, to file a tax form every time they spend more than $600 per year at any one company, such as an office supply store or a gas station."
Former Congressional Budget Office (CBO) director Douglas Holtz-Eakin, now president of the American Action Forum, has also joined American Action Network president Rob Collins in praising the economic prescriptions put forth in the Pledge:
"[T]he Pledge to America – the result of an innovative social media project by House Republicans called America Speaking Out – accomplishes its goal of being relevant, timely and in-tune with the attitudes of a disappointed but ever-hopeful electorate. We expect a vigorous debate over whether the Pledge contains the 'best' policies, and we look forward to being an advocate for policies that reduce the size of government, encourage freedom and expand opportunity. Regardless of the outcome of that debate, it seems obvious that this new direction dominates the profligate, dangerous leadership shown by President Obama and the Democrats in Congress. Democrats have paid lip service to job creation, but continue to burden small business, hammer large corporations and grow only the government. Unprecedented federal deficits threaten higher interest rates and financial panic, health care reform intends to impose costly mandates and administrative regulations on businesses, and the uncertainty of tax increases at the end of the year reduce any incentive to grow. Led by House Minority Leader John Boehner of Ohio and Rep. Kevin McCarthy, Boehner’s chief deputy whip, the Pledge includes commitments to growth incentives with extensions of the 2001 and 2003 tax cuts and a small business tax deduction. . .
"The Pledge also addresses economic and regulatory certainty by repealing measures that limit access to credit and the 1099 reporting provision through the health care reform. These policies eliminate the uncertainty facing growing businesses, and signal a dedication to their viability with incentives to invest. The president’s philosophy threatens not only businesses, but the financial future of our country. Over the next 10 years, according to the Congressional Budget Office’s Analysis of the President’s Budgetary Proposals, the deficit will never fall below $700 billion. Ten years from now, in 2020, the deficit will be 5.6 percent of the GDP, roughly $1.3 trillion, of which over $900 billion will be devoted to interest on previous borrowing. The problem isn’t that Americans won’t be paying enough taxes – the plan is to raise more than historically average – but rather the excessive spending intended by Obama. The Pledge to America identifies a strategy to reduce crippling deficits by cutting spending through discretionary caps and eliminating wasteful and duplicative programs, starting immediately. Getting the deficit under control is not a choice, it’s an imperative.
"Six months after passage, we are reminded again that [President Obama's health care law] did not accomplish the objective of comprehensive health care reform that delivered quality care at a lower cost and provides options to Americans. But the Pledge is committed to quality health care and includes replacing the reform with cost-savings initiatives and choice. [Americans] dislike the health care bill. They also detest the broken process in Congress epitomized by the health care debate littered with procedural tricks, legislative payoffs, and questionable lawmaking. In our polling, 89 percent favor requiring all legislation be available to the public for at least three days before a final vote. The Pledge to America supports this rule, and also calls for adherence to the Constitution with a citation of Constitutional authority added to every bill.
"Now to be fair, these commitments aren’t the same as action, and action by Republicans does not necessarily guarantee that both parties produce good legislative options. But the people have spoken and their discontent has been heard. The Pledge is a visible acknowledgement of the need for our nation’s leaders to listen and to lead."
###
