Kudlow’s Money Politics

Put Some Steak on the Plate

Last night’s GOP debate featured strong, pro-growth, supply-side policies from the four major candidates’”Rudy, Romney, McCain and Thompson. As Steve Moore reports in today’s Wall Street Journal political diary, Ronald Reagan was actually the big winner because they’re all continuing the Gipper’s revolutionary policy transformation.

This is all good. But let me remind folks that yesterday I suggested that Republicans were put on this planet to cut spending and taxes. And the proof of the pudding is in the eating. In other words, we need specifics. In other words, where’s the beef?

Aside from a few exceptions last night, there really wasn’t much beef.

Sam Brownback did propose an optional flat tax. And Gov. Huckabee is staying with his fair tax/national sales tax. But none of the big four are touting these ideas. Outside the debate, Sen. McCain has said that he would be interested in either simplification proposal. But none of the candidates offered any real specifics on spending cut proposals.

National Review’s Byron York (one of the best political reporters in the game) is not expecting any specifics on that front. That’s too bad. Voters want to hear more on this subject. This is the year to be specific.

Former Sen. Fred Thompson did talk about cutting social security benefits by shifting to a cost of living index from the wage index. But this may actually be the wrong kind of specific. Democrats were already screaming about this on our program (Jared Bernstein) as a big benefit cut. And in fact it is.

I’ve never been enamored with that approach. It would be much better to grow ourselves out of the social security problem with strong supply-side policies for the whole economy. (And yes, I would extend the retirement age gradual over time. But benefit cuts are a real bad idea.) Private savings accounts, which were endorsed by several candidates including McCain, have to be part of a Republican package.

When you look at the non-defense, non-security budget between FY 2001 and FY 2007 — when the GOP controlled three houses in Washington — spending rose roughly $550 billion dollars. That’s a whopping 38 percent, or 5.5 percent each year. It’s also more than twice the 2.4 percent inflation rate during that period.

The Education Department was by far the biggest transgressor. It posted an alarming yearly growth of 11.4 percent. Other obvious abusers include the Interior Department, which grew at 5.8 percent, and Transportation, which came in at 4.4 percent. Rounding out the profligate herd was Energy with 5.1 percent; Agriculture at 4.5 percent and HUD at 4.0 percent. Every single one of these government agencies ballooned its budget well beyond than inflation rate.

The Republican Party needs to re-brand itself as fiscal disciplinarians. GOP candidates must get specific about which departments and program clusters they’re going to curtail. The sooner the better. The burden is on their backs to reestablish credibility.

And while the Democrats are making hay with middle class anxieties over taxes, health care, tuition, etc, Republicans need to launch an aggressive middle-class tax offensive.

For example, we don’t need six income tax brackets. Here’s a thought: Take the 33 percent bracket that starts at $188,450 dollars and get rid of it. Ditto for the 28 percent bracket at $123,700 and the 25 percent bracket at $61,300. Get rid of them. Collapse it all down into one simple 15 percent tax bracket. Then figure out what kind of spending cuts are necessary to finance it.

Look, the reality right now is that Republicans need to prove their bona fides all over again. The top four candidates are all solid and strong players. But policy proposals are going to be crucial as Sen. Clinton develops her own detailed plan, along with Sen. Obama and Edwards.

Message to Republicans: No more veggies on spending and taxing. Put some steak on the plate.

Larry Kudlow — Larry Kudlow is the author of JFK and the Reagan Revolution: A Secret History of American Prosperity, written with Brian Domitrovic.

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