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Blog: Congressional Budget Office Warns of Impending Recession; My Plan to Revive the Economy

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Date:
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Over the past decade, I have been studying the critical historical events that have enabled liberty around the world and here at home. I have written about these events in The Seven Miracles that Saved America, and The Miracle of Freedom: Seven Tipping Points that Saved the World. As I have researched these topics, I have become increasingly convinced that America has played, and will continue to play, an important role in the world.

People of almost every nation and culture admire the "American Dream' that anyone can achieve prosperity and success through hard work. That dream has made America the world's leading economic power, a leadership role that influenced the spread of democracy to every corner of the
world.

Unfortunately, I have also become increasingly convinced that we are at a critical time in our nation's history. Like never before, America's economic future is in danger. Spending over the past several years has spiraled out of control, placing us at a tipping point in our history.

The most recent Congressional Budget Office (CBO) report issued a strong warning. The report states that in 2013 there will be another recession unless Congress and the President make the hard decisions to curb our out of control spending. The CBO predicts the economy will experience slow growth and even shrink by 0.5%. Additionally, the unemployment rate is expected to spike to 9.1%, leaving 1.6 million more Americans without a job. That's on top of the 12.8 million already struggling to find work.

The facts behind this crisis point to reckless spending and political posturing, including Obamacare and two rounds of stimulus packages. The federal deficit has ballooned to an unprecedented level of nearly 16 trillion dollars, saddling American businesses, families, and individuals with debt.

The Democratic-controlled Senate has gone three years without passing a budget. Instead, it has passed stopgap measures to continue out-of-control spending. This method of avoiding the hard decisions while funding the government has caused a budget deficit of more than $1 trillion for four years in a row.

Moreover, much of our spending occurs through entitlement programs such as Medicare, Medicaid, and Social Security, which consume 66% of our federal spending. It is estimated that financing future entitlements will require doubling the marginal tax rates for all income brackets over the next 30 years. Just think about that. Without significant reforms, all taxpayers are expected to pay significantly higher taxes just to continue the programs at current levels.

So, is there any cause for optimism? I believe the answer to this question is undoubtedly YES. We as a nation have been through tough times before. We have been through Jamestown, the American Revolution, the crafting of an inspired Constitution that has been a model to the rest of the world, the Civil War, the Great Depression, WWII, the cold war, and many other challenging times. All of these were great challenges that we were able to rise above, and I am certain that we will rise above this too. We are still as Ronald Reagan said the shining light upon the hill. We can fix this, and I believe that we will.

Herein lies the importance of the upcoming November election. We must elect officials who have the courage to make necessary changes and address explosive government spending and regulations that have taken us away from our Founding Father's vision of the role of the federal government. The list of wasteful federal spending programs goes on and on: stimulus spending, bailouts for Wall Street, management of local education, AMTRAK, alternative energy development, transportation programs…and that's just the tip of the iceberg.

We need to examine every line of federal spending to ensure that it falls within the Constitutional limitations envisioned by our founding fathers. Rather than voting on omnibus spending bills, where Congress lumps all federal programs into one massive bill, Congress should be required to pass spending bills on an agency by agency basis, thus effecting an actual review of agency spending.

We need to implement pro-growth and pro-family tax reforms. The current tax code is unjustifiably complex and unfair. It is designed to benefit those who have the money to pay lawyers and accountants and to disadvantage those who are trying to play by the rules. Worst of all, it has the enormously divisive element of not requiring a fair distribution of the burden. Will Rogers once said, "Any government that robs Peter to pay Paul will always have Paul's vote." This is the situation we find ourselves in now. To remedy this, we need to implement real tax reform. While many ideas may accomplish this, I support a plan that will:

* Reduce the power of the IRS by allowing taxpayers to complete their taxes on a postcard if they

so choose.

* Create a new code consisting of just three rates: 10%, 15% and 25%

* Allow tax deductions only for home mortgages and charitable giving.

* If they choose, taxpayers can stay with the existing tax structure.

* Protect the working poor through a $2,000 (individual) and $3,500 (married) tax credit.

* Implement a straight 15% corporate tax.

These reforms would allow for average tax revenues of approximately 18.5% of GDP, (our historical average) while greatly reducing the power of the IRS. More, the economy would experience enormous growth as we eliminate distortions and inefficiencies that occur through tax avoidance.

Finally, while it may not be popular, we must also address our entitlement spending by enacting real reform. Anyone who suggests we can fix our fiscal crisis without addressing entitlements is not being truthful. I believe we should preserve the existing Social Security program for those 55 or older. Many seniors (including my own parents before they passed away), rely upon these benefits as an important part of their incomes. We cannot pull this safety net away. However, we can create Personal Savings Plans that would allow workers under 55 to invest one third their Social Security tax into personal retirement accounts. These private accounts would allow future generations to be independent of the government when they reach retirement age. They also have the added benefit of being owned and controlled by the individual and not the government.

We should repeal the unsustainable spending incorporated in Obamacare, and allow individual states the freedom to innovate and experiment with Medicare programs through federal block grants. Additionally, we should allow free market competition to drive cost down by transitioning Medicare
from a defined-benefit entitlement system. This can be accomplished by providing future retirees (those currently under 55) with a federal contribution that they can use to purchase Medicare's premium-based plan or one of other private health care plans. This payment will be risk adjusted so those with greater medical needs receive a higher payment. Finally, if individuals choose, we should allow retirees to enroll in the current Medicare program. However, providing additional choices would allow superior medical care and lower costs. Through making these reforms, I am convinced that our nation will survive and thrive again. We will reclaim the American Dream. Our nation has great days ahead. It is a great time to be in the fight for freedom.


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