GOP Economy: Rick Perry's economic plan
Home State: Texas
Economic platform: Texas Gov. Rick Perry initially based his economic plan on increasing domestic energy exploration and production while cutting regulatory agencies like the Environmental Protection Agency. Recently though, he’s expanded his economic platform with a plan he’s calling “Cut, Balance, and Grow.” It’s also been dubbed the 20-20 plan because of Perry’s proposal to reduce some Americans’ income taxes and all corporate taxes to 20 percent.
Perry also wants to close corporate tax loopholes and encourage repatriation of overseas profits by temporarily lowering the rate to 5.25 percent -- a number suggested by a study done for the U.S. Chamber of Commerce. The current corporate tax rate is 35 percent.
Individuals would have the option of keeping their current income tax rate or switching to a flat 20 percent. Perry says the flat tax would simplify the tax code and thereby “allow Americans to file their taxes on a postcard.” Those who are taxed at less than 20 percent of their income can keep their current rate, so the plan would immediately benefit those who pay more than 20 percent in income taxes, and the wealthiest Americans would be the ones to benefit most. Unlike Herman Cain’s 9-9-9 plan, Perry would preserve deductions for mortgage interest, charitable giving and state and local taxes.
Lee Ohanian, a professor of economics at UCLA, sees Perry’s plan as a direct response to Cain’s. “Flat tax has always been considered politically unacceptable, and by keeping these tax deductions, Perry is trying to find a more politically palatable way of selling it than Cain.”
Perry's economic plan also calls for repealing Obama’s healthcare overhaul and capping federal spending at 18 percent of GDP.
Thomas D. Griffith, holder of the John B. Milliken Professorship in Taxation at the University of Southern California Gould School of Law, isn’t sure how Perry plans to balance the budget without raising taxes or cutting defense spending. “Perry’s plan is so terribly flawed, I’m not sure where to begin,” Griffith said in a phone interview.
And as for filling out tax returns on a postcard? “Well, yeah,” said Griffith, “If you’ve got size six font or a really large postcard.”
Defense: On his campaign website, Perry says he “believes in American exceptionalism, and... believes allies and adversaries alike must know that America seeks peace from a position of strength.” He has no plans to cut defense spending and believes that “there can be no homeland security without border security.”
Education: There’s no comprehensive plan for education outlined on his website, but Perry made big cuts in education in Texas this year, including budget cuts of $4 billion in funding to public schools and $223 million in state grants for at-risk pre-school students. Texas public colleges and universities faced 9 percent cuts across the board.
Health care: Perry wants to repeal Obama’s health care plan, calling it “a misguided, unconstitutional and unsustainable government takeover of our health care.” He thinks the best way for the government to improve healthcare is to create more jobs so people are covered by their employers’ health care plans.
Social Security: In his book “Fed Up!,” Perry called Social Security a Ponzi scheme for young people. He has stood by this assertion at speeches and debates. “The idea that they’re working and paying into Social Security today, that the current program is going to be there for them, is a lie.” Perry wants to raise the retirement age and give the option of putting some money that would normally go toward Social Security in private accounts. “The liberals think the American people cannot be trusted to safeguard even a portion of their own retirement dollars,” he said at in a recent speech. “It is time to end the nanny state and empower our people to exercise greater control over their money.” President George W. Bush also tried to privatize Social Security, but the idea failed in Congress.
The National Debt: Perry writes in his book that the federal debt is “too overwhelming to comprehend.” To tackle the debt, Perry proposes reducing non-defense discretionary spending by $100 billion in his first year. For details on exactly how this would be done, he references a proposal by Sen. Tom Coburn (R-Okla.). Perry believes Bush’s Troubled Asset Relief Program was a mistake when it was signed into law in 2008, and pledges not to bail out troubled financial institutions.
Taxes: See 20-20 plan.