The Rokita Recovery Plan focuses on creating high-quality, high-pay jobs in the United States and Indiana, while respecting the principles of free market economics. The underlying philosophy of the Rokita Recovery Plan is that economic growth is created by private business and entrepreneurs. The role of government is to protect our citizens and ensure interstate commerce, while creating a level and fair playing field for all participants. This is the type of environment I have worked to cultivate through the Secretary of State's office over the last eight years.
Government and Business
* Businesses and the free market economy of the United States of America have produced one of the highest standards of living in the history of the world.
* The Rokita Recovery Plan strives to encourage honest business dealings, nurture innovation and expand the standard of living for every American by growing the free market economy.
* The role of government is to encourage honest dealing in business, while prosecuting those individuals who break the law and violate the public trust.
* The greatness of American's entrepreneurial spirit comes largely from the purposefully limited role of government in economic development. Wherever possible, government must not become a hindrance to economic progress.
* It is not the role of government to takeover, bailout, or otherwise run companies.
* It is not the role of government to pick winners and losers in the economy, but rather, let the American consumer decide which business ideas should succeed.
* Since the government does not grow the economy, it should use its power in a precise, laser-like fashion, to incentivize business growth and not dictate economic outcomes. Such mandated outcomes are illusionary at best and repressive at worst.
Reducing the Size and Scope of Government
I have led an elected statewide executive branch office with five divisions for eight years. The Secretary of State's office operates on a taxpayer budget that is, dollar-for-dollar and unadjusted for inflation, the same budget used in 1987. Since taking office in 2003, I have reduced the physical size footprint of the office by 30,000 square feet, while taking on an additional division from the BMV and improving services for taxpayers. I understand how to limit the size and scope of government.
The federal government provides necessary services to our citizens in the form of national defense, transportation, education and other areas. These services, while necessary, divert money that would otherwise be used by private industry to grow the economy. Whether money is borrowed from the capital markets or taken directly from citizens in the form of taxes, government spending reduces the funds available to grow the economy. The Rokita Recovery Plan strives to limit the size of government while providing necessary public services. Government spending, by definition, takes money from productive sectors of the economy.
The Rokita Recovery Plan rejects the Economic Recovery and Reinvestment Act of 2009. The Act, as originally proposed, cost $787 billion and has done irreparable harm to the economy. In fact, unemployment has increased to over 10 percent and this budget allocation has ballooned to over $850 billion. Since President Obama took office on January 20, 2009, the national debt has increased from $10.6 trillion to $12.37 trillion as of February 15, 2010.
The last Bush budget contained a deficit of $459 billion. The first Obama budget deficit was $1.414 trillion. The forecasted 2010 Obama budget deficit is $1.349 trillion. According to the Congressional Budget Office, the Obama budget deficits will all be higher than the last Bush deficit. The first two Obama budget deficits will represent the largest deficits in the history of our nation and the highest as a percentage of GDP since World War II. All of these deficits are unacceptable.
President Obama's own economic advisors think the current spending program will not help the economy. According to Christina Romer, chairwoman of the White House Council of Economic Advisers, in Congressional testimony on 10/22/09, she said "The government's economic stimulus spending has already had its biggest impact and probably won't contribute to significant growth next year."
Government spending must stop growing at alarming rates. The government, like every Hoosier household, must be required to balance its checkbook and stop living on a credit card.
Blueprint for Reducing Federal Government Spending
* Constitutional Amendment to Cap Federal Spending -- A spending limit amendment, such as the one proposed by Rep. Mike Pence and Rep. Jeb Hensarling, would limit the size and scope of the federal government by allowing spending to be no more than one-fifth of the economy (the U.S. historical spending average post-World War II).
* Revenue-Based Federal Budgeting -- While implementing a federal spending amendment, require Congress to use the previous year's federal budget revenues as the cap on maximum spending with an allowance for the rate of inflation. This sensible reform will allow for more spending in times of more revenue and less spending in times of less revenue while ensuring a balanced budget.
* Debt Limit Reform -- Eliminate the ability of Congress to increase the debt ceiling higher than the rate of inflation for the previous year.
* Biennial Budgeting -- Moving to a two-year budget, like we do in the state of Indiana, would give Congress one year of budget making and one year of oversight over how the money is spent and will help Congress look further into the future.
* Line-Item Veto -- Give the president authority over federal budget line items that are deemed non-essential; allow Congress to override the presidential veto within a specific time period by a majority vote. It would also hit earmarks.
* Presidential Impoundment Authority -- Return impoundment authority, which grants the president the authority to not spend discretionary program funding. Every president from George Washington to Richard Nixon had this authority, but Congress removed it in the 1970s.
* Regulatory Savings -- Require an up-or-down vote on all federal regulations costing more than $50 million to the U.S. economy.
* Appropriation of Reauthorization Bills -- By requiring Congress to either reauthorize legislation within one year after expiration or discontinue funding for the program, the practice of appropriating funds for non-authorized programs is eliminated.
* Truth in Reporting -- Move to a system of accrual accounting for the federal government; creation of a public sector entity similar to the Federal Accounting Standards Board (FASB) that will oversee all accounting rules. The Federal Government uses cash accounting. If it showed the full extent of what it owes, every family in the U.S. would owe over $400,000 per family.
* Employee Pay Disclosure -- By requiring the Internal Revenue Service (IRS) to supply each business with listings for all Federal Insurance Contributions Act (FICA) taxes for each employee's paycheck, including payments to income taxes, Social Security taxes, and Medicare payments, taxpayers would know exactly how much of their earnings the Federal government truly takes from their paycheck.
Repeal the Economic Recovery and Reinvestment Act of 2009
According to the White House website (www.recovery.gov 2/8/10), only 22% of the money has been spent. The President's own economic team admits this earmark heavy bill has not produced economic prosperity or created job growth. The continuation of this bill merely passes a huge burden to our children in order to fund enormous pork barrel spending today.
* The Rokita Recovery Plan calls for an immediate repeal of these federal policies.
* Remaining funds must be used for deficit reduction, in addition to immediate and permanent tax relief.
Personal Income Tax Policy
While I approve of tax rebates and most proposals that return money to the taxpayer, I oppose the temporary nature of such measures. Temporary income tax breaks are political ploys that produce no long-term economic benefit. Individuals and businesses make investment decisions based on long-term certainty, not short-term tricks. Policies should be geared towards long-term growth, wherever possible.
* The Rokita Recovery Plan seeks to stop looming tax hikes. If no action is taken, next year's income tax rates will increase for almost every working adult.
* To simplify the tax code, the number of tax brackets should be reduced from six to three -- ten percent, twenty percent, and thirty percent. Additionally, the Alternative Minimum Tax should be eliminated to simplify the tax code for individuals with families. The IRS estimates that Americans spend nearly $200 billion a year complying with the tax code. Freeing even a fraction of these costs would be an economic benefit to taxpayers and the economy.
* Tax relief should be provided to all Americans and should not be used to punish any single category of wage earner.
* "Tax the rich" and "class warfare" are not compatible with American values. Americans should not covet or envy the success of others. Instead, we must all be treated equally and given the same opportunities. The Rokita Recovery Plan will respect our values, while making public policy decisions.
* There are many good long-term ideas relative to income tax policy such as the Flat Tax and Fair Tax. A vigorous public debate should occur on which is best. The focus must first be on reducing the size and spending of government and cutting taxes to stimulate the economy. Cutting spending is how we should fund the tax cuts described above. Currently, such cuts aren't accompanied by reductions in government spending and they are funded through a debt load placed on future generations.
Indiana has benefited tremendously from innovation in life sciences, advanced manufacturing, auto racing and logistics. Research and development are required for innovation to occur. I believe the government should encourage research, development and innovation in all industries.
* The Rokita Recovery Plan will expand existing R&D tax credits and encourage companies to spend more resources developing new products and bringing them to market.
* The profits generated by new products will be exempt from corporate incomes taxes for a period of 5 years.
* The R&D tax credit and reduced tax rate on new products will provide a huge incentive for companies to create new products. Such incentives will ripple across the economy and benefit everything from alternative energy to health care
Reducing the Corporate Tax Rate
Economic growth can only come from an expansion of business. The ability of a business to grow is directly related to its ability to sell a product at a price above the cost to produce that product. The Rokita Recovery Plan seeks to reduce the cost of producing goods and services by reducing the corporate tax rate from 35 percent to 25 percent.
The United States' corporate income tax rate is the second highest in the industrialized world. Reducing this rate will make American corporations more competitive with corporations in other countries with which Americans do business.
Indiana is one of only a few states with a trade surplus. Many Hoosier businesses make profits around the globe. These companies pay taxes in the countries where they earn those profits. While some reciprocal tax agreements exist, current US law punishes firms that make profits overseas. During his campaign, President Obama announced he would seek more penalties on companies who move operations overseas or make profits overseas. As a result, many companies establish shell companies around the globe to protect profits from the government, create partnership arrangements to limit their liabilities, develop transfer-pricing mechanisms to avoid onerous taxes, or move their entire headquarters overseas in order to avoid the wrath of the US government. I believe the government should stop punishing businesses seeking to make a profit and instead incentivize investment in the United States and Indiana. Free trade incentives are tools that have worked in creating economic growth.
* The Rokita Recovery Plan will implement immediate and 90% tax exemption for all repatriated profits of US companies, when those profits are used to expand businesses in the US, hire US workers and purchase capital assets.
* Foreign companies who agree to relocate headquarters or manufacturing facilities to the US will pay the same corporate income tax as they would in their home countries on profits generated from goods manufactured in the US and exported for sale in other countries.
* Given the industrial expertise of Indiana, it is likely that Indiana will see the fastest and most profound benefit from such a policy.
Protecting Shareholders and Financial Literacy
As Secretary of State, our office led the nation in protecting shareholders from securities fraud and providing every citizen with expanded access to financial literacy. I believe strongly that the current economic crisis could have been avoided by better and smarter enforcement of securities laws in Washington, DC and by better financial education for all Americans. I will take this message of "Protecting Your Pocketbook" to Washington, DC.
* All citizens should be encouraged to participate in financial literacy programs wherever they can be found. An informed citizen will help prevent another financial market meltdown.
* Securities law enforcement and banking regulations must be strengthened. Fraud, when found, must be vigorously prosecuted.
* Securities regulation must not merely be a job interview for Wall Street investment bankers. Instead, securities law enforcement must be a career for talented individuals.
* Shareholders' rights must be expanded at the Federal level in order to make corporate managers accountable to the owners of a company.
* Fiduciary duty standards should be employed across the industry.