Color me cranky about this week’s Republican presidential debate in Iowa. The headline stories were about whether Newt Gingrich actually lobbied for Freddie Mac, or why Mitt Romney changed his positions on gay rights, guns, and abortion. But a GOP growth message to defeat President Obama was completely missing in this debate. It was a supply-side whiff.
This election is principally about the economy and its poor performance. It’s about the slow rate of growth, the high rate of unemployment, and the tax, regulatory, spending, and monetary obstacles conjured up by Obama that are holding back the animal spirits which are so essential to job creation and prosperity.
Risk-taking is virtually absent today. Business profits are strong, but firms won’t make commitments in front of Obamacare, regulations, mandates, and tax threats. The president is on the campaign trail with a leftist, class-warfare message. He blames successful entrepreneurs for their wealth, and slurs high-powered businesses at every turn. His is a big-government planning vision, an FDR-like vision.
But where was the GOP response in Sioux City, Iowa?
Newt Gingrich, for example, has a pro-growth 15 percent flat-tax-reform program. But he never mentioned it. He recalled that he campaigned with Ronald Reagan and Jack Kemp. But he neglected to talk about their supply-side tax reforms that ignited growth and ended the stagflation of the 1970s.
If Newt truly understands the supply-side power of low marginal tax rates, he should talk about it and connect it to job creation and growth. But he didn’t. This was a disappointment.
Mitt Romney has a business-tax reform to lower the corporate rate to 25 percent. This is good as far as it goes (lower would be better). But so far, Romney has not proposed a flat-tax reform for individuals that would slash rates and broaden the base. Meanwhile, his staff has been trashing the flat taxes proposed by Gingrich and Rick Perry. Does Romney believe in the incentive-model of growth?
Oh, by the way, what about sound money and King Dollar, preferably linked to gold, which would have avoided the subprime financial catastrophe? Does either Romney or Gingrich have a dollar policy? If so, tell us.
If you go back to the Reagan era, recall that the Gipper had a simple yet powerful economic-growth message: Across-the-board tax cuts to generate growth incentives, deregulation to unleash business, limited domestic spending to stop government meddling, and a strong dollar to vanquish inflation.
It was a simple four-point program, sometimes called the “four pillars of wisdom.” It was easy to understand, made good practical sense, and constituted a completely different vision than the big-government plans of Jimmy Carter. Today’s candidates need to emulate Reagan.
Now, there are kudos for the two frontrunners. All is not dark.
Newt had a terrific moment when he defended the Keystone pipeline in terms of job creation, energy security, and saving blue-collar workers from extinction. He understands that Canada is our friend and ally, but that they’ll build a pipeline to the Pacific and sell oil to China if we turn them down. This is good. He also understands that Obama is ruled by the radical environmentalists who are destroying blue-collar jobs and American energy security.
And Romney gets kudos on reforming Medicare with a hybrid system that would keep the existing plan as an option, but would offer free-market choice and competition for private health-insurance programs. Wunderkind Paul Ryan recently adopted this Romney approach. This is good.
But the best I can say is that on taxes, spending, regulations, and money, the frontrunners skirted around the edges or missed completely. Regarding economic growth, they did not clarify. They did not connect. They did not vanquish Obama in the Iowa debate.
– Larry Kudlow, NRO’s economics editor, is host of CNBC’s The Kudlow Report and author of the daily web log, Kudlow’s Money Politic$.