Former Speaker of the House Newt Gingrich, now the General Chairman of American Solutions, addressed an audience of several hundred at the New Orleans Marriott Hotel Thursday, assessing the current state of interaction between Washington and the American people and then presenting an alternate road for the country to travel.
Gingrich’s assessment of where the country currently sits is a bleak one. He discussed the state of local, state and federal government as “the fourth bubble,” after those of the dot-com, housing and Wall Street variety, and outlined government spending as thoroughly unsustainable. He gave several examples of dysfunctional and wasteful government – one of them being the fact that 97 percent of the Long Island Railroad’s retirees do so on disability, which costs American taxpayers over $200 million per year, or that in New York it takes some seven years to fire a bad teacher, so those who are removed from a classroom for poor performance can spent seven years going to work and hanging out in a break room all day for full salaries – at a cost to the state of some $50 million per year.
He also forecasts a major crisis this summer as a result of mark-to-market accounting, which he noted that the European Central Bank as far back as 2004 considered to be a disaster.
What to do from here? The former Speaker put forth a three-part plan to transform the economy back into a dynamic model. First, he addressed budgetary policy. Gingrich pointed out that in the late 1990’s as Speaker, he achieved a balanced budget. “It’s not magic,” he said, “it’s just hard work.”
The bulk of his message was tax policy, however. Gingrich focused on four tax policies he says will turbocharge America’s economy and put it in a position to compete with China and India, the two countries from whom our greatest challenges will come.
The first is a 50 percent reduction of the payroll tax over the next two years, in an effort to put more disposable income in the hands of workers and to help finance expansion for employers. Gingrich noted an added benefit to conservatives with such a plan, in that people would realize what their payroll tax burden is currently because they’ll see half of it in their paychecks.
Next up is a move to expense 100 percent of equipment in the first year for businesses. Gingrich calls that a competitiveness initiative, as he said to compete with the rest of the world American workers need to have the best equipment and technology on the market. Helping to create a greater market for new equipment would also favor the manufacturing sector.
Gingrich brought down the house when he mentioned eliminating the capital gains tax. He went further, and noted that China – Communist China – has no capital gains tax. That America has one is rank lunacy if we are to compete with the Chinese.
Finally, Gingrich advocates pegging America’s corporate income tax – which combined with state and local taxes makes the corporate tax burden the highest in the world – to Ireland’s 12.5 percent. Dropping the corporate tax from 35 percent to 12.5 would repatriate billions of dollars currently parked overseas, which might actually increase revenue to the government.
And Gingrich closed with an exhortation to do something about domestic energy – which in front of a New Orleans crowd didn’t require much of an explanation.
He mentioned that none of this agenda has a chance to be enacted until Republicans take control of Congress and in all likelihood especially not until a Republican president is inaugurated in 2013. But he’s confident that will happen, and he also thinks it’s a priority for his organization to assist Democrats not committed to what he calls “secular socialism” to win primaries against the ruling clique – Henry Waxman being a prime example – in districts where a Republican simply can’t be viable.