The nascent 2012 presidential field is inverting the GOP’s classic economic playbook. From Ronald Reagan through John McCain, Republicans have run for the White House on promises to cut taxes and limit government, in that order. Not today. Tax cuts are still a matter of dogma, of course, but now every serious GOP contender in this cycle will also offer detailed plans to overhaul the social safety net, slash federal spending, and balance the budget. The most important economic differences among the candidates will revolve around the size, scope, and emphasis of their proposed federal cuts, and entitlement reform. Specifically, who will cut the most, the fastest, and from where. Or, put another way: Will anyone go as far as Ron Paul?
Paul, a House member from Texas and a tea party hero, has been pounding the shrink-government drum louder and more effectively than anyone in the Republican Party for the past decade. He was an outlier on the GOP stage in 2008, calling for enormous spending cuts and abolishing the Federal Reserve. This time, the center of the field has moved in his direction, more or less co-opting his warning, “Shrink the government and the economy will grow.”
Paul remains unimpressed with his potential 2012 rivals. None of them, he said in an interview, are willing to slice into “the $1.2 trillion we spend maintaining our empire around the world,” including wars in Iraq and Afghanistan.
He has no love for the Wisconsin Rep. Paul Ryan budget, saying it does not cut nearly enough. Among the Republican candidates, Paul said, “I don’t see anybody—well, I don’t see any major proposal—that cuts both the military-industrial complex and the welfare state.”
RICK SANTORUM and SARAH PALIN
Other potential GOP candidates praised the Ryan plan, some carefully and some all but committing themselves to it. Former Alaska Gov. Sarah Palin complimented the Ryan plan without specifically endorsing all its provisions. Former Sen. Rick Santorum said he supported Ryan’s proposal for Medicare and wants it considered for Americans older than 55.
Indiana Gov. Mitch Daniels, a former Bush administration budget director and a potential 2012 candidate, called the Ryan budget “a spectacular contribution” that “absolutely should be the starting point” for a Republican nominee’s deficit plan: “It wouldn’t be a bad ending point.”
“I was always uncomfortable with public debt or borrowing of any size,” Daniels said in an interview. But now, “there are a lot of paeople who are much more alarmed, just because the arithmetic facts of life are much more alarming, by far. It was always clear—has been for a couple of decades—that Social Security and Medicare were locomotives headed for a cliff. But the degree of that, and the proximity of the cliff, both have increased.
“Our government programs, including health care, need to look more like a cash bar than an open bar,” former Minn. Gov. Tim Pawlenty writes in his recent book, Courage to Stand. “Any system that creates the illusion something is free, when we know it’s not really free, is doomed to fail.” He’s pushed to restrain the role of the Federal Reserve Board in spurring economic growth.
Pawlenty has endorsed a business-backed push to allow multinational corporations to repatriate income earned overseas to the United States and pay only a small fraction of the standard U.S. taxes.
In a March speech in Chicago, Gov. Haley Barbour of Mississippi declared, “What America needs today is a commitment to economic growth, not government growth; an absolute dedication to appropriately reforming entitlement, coupled with an understanding that budget cuts must be matched by policies that promote growth and spread prosperity.”
In his latest book, A Simple Government, former Arkansas Gov. Mike Huckabee writes that voters and politicians “should agree to stop considering entitlement programs the third rail of politics … we have to reduce the growth rate of entitlement costs.” Huckabee goes so far as to suggest eliminating the very concept of entitlements and making all programs, including Social Security, subject to annual appropriations.
He jokes about U.S. indebtedness forcing him to buy a Rosetta Stone language course in Mandarin. Last month in South Carolina, he said, “We ought to be building America, not China.”
Former Massachusetts Gov. Mitt Romney has perhaps the most creative and controversial proposal. In his book No Apologies, he suggests levying a revenue-neutral energy tax—a tax on gasoline or carbon emissions, fully offset by, say, a reduction in the payroll tax. “Higher energy prices would encourage energy efficiency across the full array of American business and citizens,” Romney writes. “It would provide industries of all kinds with a predictable outlook for energy costs, allowing them to confidently invest in growth.”
Rep. Michele Bachmann, R-Minn., has taken to invoking Chinese President Hu Jintao with a stock line decrying Beijing’s ownership of U.S. debt: “With all the money that we owe China, I think you might correctly say, ‘Hu’s your daddy.’ ”
She electrified an Iowa crowd with calls for a fair, flat-tax system, declaring, “Our current United States tax code is a weapon of mass destruction.”
The wild card on China could be former Utah Gov. Jon Huntsman, who is ending his stint as Obama’s ambassador in Beijing. Huntsman has ramped up his critiques of Chinese human-rights abuses, an issue that some analysts believe he could build into a broad campaign criticizing China’s economic policies and their effects on Middle America.