This is the sort of thing that I like to hear from Rick Perry: “The flat tax will unleash growth, but growth’s not enough. We must put a stop to this entitlement culture that risks the financial solvency of this country for future generations. I mean, the red flags are alarming.” Governor Perry’s disposition is more surly than sunny, and maybe that’s a net loss so far as the general electorate is concerned. But, as for myself, the current state of fiscal affairs in this country has me more in a Book of Jeremiah kind of mood than in an Arthur Laffer mood, as much as I admire that gentleman.
I had a chance to talk with some of the Perry gang yesterday about his proposal, and I had mixed feelings. I had hoped for something more robust on the spending side, with fewer gimmicks (the balanced-budget amendment, etc.) and less wishful thinking. At 20 percent, the optional flat tax will be attractive to relatively few U.S. households, and I’d have strongly preferred to see the exemptions for mortgage-interest payments and the like repealed across the board, rather than only for households earning in excess of $500,000.
But here’s the thing that gets my attention: Governor Perry has some pretty serious entitlement-reform measures in here: Raising the retirement age for Social Security and Medicare benefits, changing the indexing formula to CPI rather than wages, giving younger workers at least a partial opt-out into private accounts, block-granting Medicaid, putting Medicare recipients directly in control of their own spending—this would be huge. A Republican president who got nothing else done in a four-year term would be a smashing success in my book if he achieved that kind of entitlement reform. I expect Perry to emphasize taxes, but the entitlement measures are the meat of the Perry proposal, in my view, though there’s a lot of good gravy: repealing Dodd-Frank, procedural reform for spending and regulating, repealing section 404 of Sarbanes-Oxley, expanding the “Galveston model” (another Social Security opt-out) to most government employees, etc.
Yes, I, too am inclined to scoff at promises to cut $100 billion in non-defense discretionary spending, as though that were something to call an achievement, and I doubt very much that Governor Perry’s proposal would produce an actual balanced budget in the foreseeable future. But getting a big piece of entitlement reform done would be a major victory that would set the fiscal Armageddon clock back significantly. And beginning the process of flattening and simplifying the tax code is worthwhile as well, though the Perry plan does less along those lines than I would like.
I’ll have a longer and more detailed discussion of the Perry proposal in the next issue of National Review. Did you know that NRO has a fortnightly print magazine, to which you can subscribe and read articles that are not available online? Like my profile of Ron Paul and his band of merry libertarians?