Issue Position: Clawson Economic Growth Plan

Issue Position

Clawson Economic Growth Plan
Target Growth Rate of 5%

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EXECUTIVE SUMMARY

Curt Clawson is an outsider running for Congress. He is running to change the direction of our country. What follows is his economic plan that will restore America's economy and provide families and businesses with real opportunities. Curt's plan will restore the promise of a stronger America for every successive generation of Americans.

Congress needs to make economic growth its primary goal. Our nation should set a target goal for economic growth of 5.0%. We should then adopt policies necessary to allow the private sector to achieve that goal. In large part, government needs to get out of the way!

Here's how we do it:
PRO-GROWTH TAX POLICY

Cut the corporate tax rate in half, to 17.5%.
Eliminate corporate loopholes to simplify the corporate tax code.
Lower taxes on economic investment, such as capital gains taxes, to 15%.
End the unfair and punitive inflation tax imposed on investment gains.
Reduce the top individual income tax rate to 30%.
Reduce taxes on small businesses income, cutting it to 17.5%.
Create an alternative flat tax system and let taxpayers opt-in to that system.

SPENDING RESTRAINT

Adopt a constitutional balanced budget amendment.
Create budget-cutting committees in Congress.
Block grant many spending programs to the states.

REINING IN OUT-OF-CONTROL GOVERNMENT

Congress should approve all major regulations before they take effect.
Congress should know the cost impact of every regulation.
All regulations should sunset regularly unless Congress votes to renew.
Congress must exercise better oversight over rogue agencies.
On healthcare reform, we should repeal ObamaCare and start over with a new approach that ends denial of coverage for pre-existing conditions, that puts patients and doctors, not bureaucrats in charge of health care decisions, and which empower patients putting them in control of their health care dollars.

INTRODUCTION

America has a legacy of leaving to the next generation a nation that is stronger, freer and more prosperous. This legacy was always possible because America had a rich history of protecting the free market, adopting policies that encourage economic growth and an unwavering commitment to economic opportunity. It happened because every generation of Americans embraced the values of leadership, ingenuity, hard work and sacrifice.

This legacy of a better America is now in danger. Career politicians, lobbyists and Washington special interests have used the power of government to run up enormous debt, enriching themselves and their friends at the expense of America's families, businesses, economy, and our way of life.

Curt Clawson is an outsider running for Congress. He is running to change the direction of our country. What follows is his economic plan that will restore America's economy and provide real opportunity. Curt's plan will restore the promise of a stronger America for every successive generation of Americans.

FAILURES OF GOVERNMENT ECONOMIC CONTROL

Over the last decade, many Americans have suffered and fallen behind. Americans suffer from a lack of job prospects and limited economic opportunity. These are the unfortunate, but also predictable, consequences of Washington's failed policies.

Washington has been focusing on redistributing wealth rather than policies that create wealth.

There are lessons to be learned from years of stimulus spending, subsidies for the politically connected, and from ObamaCare.

The first lesson to be learned is that the private sector is the only way to create productive jobs to create real prosperity. Government is ineffective at creating jobs and has zero ability to "stimulate" job creation on its own. If a stimulus strategy were truly effective, America would be awash in jobs today -- but, of course, we are not. In 2009, Congress passed a stimulus bill.

= $278,000

*AMOUNT SPENT PER STIMULUS JOB "CREATED" OR "SAVED"

By the Obama Administration's own admission, the government spent $278,000 for each stimulus job "created" or "saved". While Democrats hailed this law as the single most important effort to save jobs, an honest assessment would view the government action as extremely unproductive.

The second lesson we can learn is that government spending and debt often crowd out productive activity. As a consequence, private sector spending, which leads to efficiency, productivity, innovation and the generation of real wealth, declines. ObamaCare, which burdens businesses and families with higher premiums, fewer choices and costly mandates, demonstrates this point. For example, the promise was that ObamaCare would reduce the uninsured but instead has caused millions of individuals to lose their insurance.

REDISTRIBUTION'S ECONOMIC REALITY

The failures of President Obama's redistribution policies should be obvious to every American. Here are a few key metrics that demonstrate that these policies have failed:

Last year, Forbes referred to the 2008 to 2013 period as "The Worst Four Years of GDP Growth in History", noting that current growth (0.73%) was one-fourth of what it was during the period that included the Clinton presidency (3.05% from 1988 to 1997) and the Reagan presidency (3.15% from 1978 to 1988).

Nearly 3 million people dropped out of the labor force in 2013.

*AMERICANS NO LONGER IN LABOR FORCE, IN TENS OF MILLIONS

More than 92 million Americans are no longer in the labor force. People dropping out of the workforce is the real reason America's unemployment rate has dropped.

Nearly 11 million people are on disability. More people apply for disability each month, 250,000 on average, than the number of jobs created, 75,000 (in December 2013). America's two largest disability programs now cost taxpayers $260 billion per year.

A record number of Americans, 47.4 million, are now dependent on food stamps. Reliance upon food stamps by able-bodied adults who have no dependents has increased by 127% between 2007 and 2010 (an increase of 2.2 million people).

As of January 17, 2013, the National Debt stood at $17.27 trillion. That is an increase $6.65 trillion since January 20, 2009 (the start of the Obama Presidency).

To be clear, the people who are dependent on many government programs are not to be blamed. Like the taxpayers who fund these programs, the beneficiaries are too often victims of failed government policy that rob people of economic opportunities. We have to give people viable alternatives to government programs.

But we must remain compassionate for those who are truly disabled.

ECONOMIC GROWTH PROMISES A BRIGHTER FUTURE

America's current economic policies are not working. We need a new direction for America, with new policies. Curt Clawson has proposed a pro-growth, economic freedom agenda.
The goals of Curt's pro-growth agenda will:

Unleash America's competitive spirit
Make America the best place for foreign capital investment
Ensure America retains its place as the world's leading innovator
Support the creation of good paying, productive, private sector jobs

Curt's plan includes the following:

① Focusing Government Policy on Economic Growth
② Simplifying the Tax Code
③ Imposing Budget Discipline and Spending Restraint on Washington
④ Limiting the Impact Regulations Can Have on our Economy
⑤ Real Health Care Reform

1
Focusing Government Policy on Economic Growth

Policies that focus on economic growth are the right policies for America.

During the Reagan Presidency, between First Quarter 1983 and Fourth Quarter 1987, the United States averaged quarterly growth of 5.04%. During this time: unemployment fell by 4.6 million; the unemployment rate was cut by 45% (dropping from 10.4% to 5.7%); the United States created 11.0 million jobs; and the size of the United State workforce grew dramatically.

During the Clinton Presidency, similar growth occurred. Between Second Quarter 1996 and Fourth Quarter 1999, the United States averaged quarterly GDP growth of 4.78%.

30%
DECREASE IN UNEMPLOYMENT RATE
*BETWEEN 1ST QUARTER 1983 & 4TH QUARTER 1987

During this time: unemployment fell by 1.8 million; the unemployment rate was cut by 30% (dropping from 5.6% to 4.0%), the United States created 11.5 million jobs and the size of the United States workforce grew dramatically.

During the Obama Presidency, the economy has only averaged quarterly growth of 1.8% (close to 2.2% since the start of 2012). Since 2009, unemployment has remained high, moving downward largely because people stopped looking for work and America's employment level remains 1.2 million less than its January 2008 peak of 138 million.

The reason that we have not seen comparable growth in the last decade is because Washington has not, in large part, focused on pro-growth economic policies. With the right policies, we can create similar economic growth as we saw in the pro-growth Reagan and Clinton years and we can put people back to work. If we cut the unemployment rate like we did under Reagan, the unemployment rate would fall below 4.0%. If we created jobs like we did under President Clinton we could create 11.5 million jobs in a little over 3 years.

Congress needs to make economic growth its primary goal. Our nation should set a target goal for economic growth of 5.0%; we should then adopt policies necessary to allow the private sector to achieve that goal. In large part, Washington needs to unleash the American competitive spirit and then government needs to get out of the way!
2
Simplifying the Tax Code

America's tax code is clearly a barrier to economic growth. It is too complicated, cumbersome and inefficient. It imposes a huge compliance burden on every business and family in America.

Corporate Income Tax Reform

We need a tax code that creates a level playing field for American businesses.

The reality is that American businesses are engaged in worldwide competition. In many instances, particularly in manufacturing, agriculture and retail, businesses are not only competing locally, they are competing globally.

39%
*U.S. STATUTORY TAX RATE

25%
*GLOBAL AVERAGE

56%
*PERCENTAGE HIGHER THAN AVG

At 39.1%, the United States has the highest statutory (federal plus state) corporate tax rate in the world. The average statutory rate among developed countries is 25%. The U.S. statutory tax rate is 56% higher than the average in developed nations.

U.S. companies pay an average effective corporate tax rate of 27% compared to an average of 20% that their foreign competition pays. As a result, U.S. companies pay taxes up to 35% higher than most of their foreign competitors.

In order for America to compete, we need a tax code that recognizes the reality of global competition. We need a tax code that makes it easier for American companies to succeed. Curt Clawson's economic plan includes significant reform to the United States' corporate tax code.

Curt proposes:

Cutting the corporate tax rate in half, to 17.5%.
Eliminating corporate loopholes to simplify the corporate tax code.

These proposals will lower the effective tax rate for U.S. corporations below that of our foreign competitors. As a result, we will see greater capital investment in the U.S. and American businesses would be able to compete on a level playing field.

Reducing Taxes on Investment Income

There is an old adage "if you want less of something, tax it." Despite the fact that our economy is struggling and we need investment to grow the economy and create jobs, Washington has actually increased taxes on investment income since December 2012. In that month, the top federal long-term capital gains tax rate was 15% but today it can be as high as 23.8%. That is nearly a 60% tax hike on investment income.
60%
TAX INCREASE ON INVESTMENT INCOME

In addition, Washington actually imposes taxes on capital gains attributable to inflation. If you bought stock for a $1,000 in 1999 and sold the stock for $1,400 today, you have not increased your wealth on an inflation-adjusted basis. The $400 of capital growth equals the value of the initial investment adjusted for inflation. The investor's wealth, based on purchasing power, has not changed over 15 years. Despite this, the government imposes up to $140 in taxes on the $400 of gain. This method of taxing capital gains is unfair. It is a tax on inflation. It discourages savings and investment, hurts our economy and imposes a hidden tax on investors and retirees who are living off of investment income.

Washington says they want to create jobs and encourage investment. The tax code, however, tells a different story. Based on the tax code, it looks like Washington wants fewer investors who are willing to invest in the American economy.

Curt has an entirely different view. Curt wants to make America the most attractive place to invest domestic and foreign capital. Curt understands that if people across the world are investing in the U.S., then the world's innovation, economic growth and job creation will be happening right here in America.

Curt proposes:

Permanently lowering the top long-term capital gains tax rate to 15%.
Allowing investors to index their cost basis for inflation in order to eliminate the unfair and punitive tax imposed on gains attributed to inflation.

These simple reforms will end the unfair tax on investment income and on capital gains attributed to inflation. It will also encourage greater investment in our economy. Finally, it will provide very real help to retirees in Florida's 19th Congressional District who are living off of their investment income.

Individual Income Tax Reform

Recent federal income tax changes have dramatically increased taxes on income. According to The Tax Foundation, top earners face a top federal rate of 39.6%, Congress imposed a cap on the personal exemption and itemized deductions, and Congress imposed a 0.9% tax on Medicare wages on anyone making more than $200,000. As a result of these changes, many Floridians now face a top marginal tax rate of 42.8% and might also lose various deductions that were previously available to them.

Many small businesses are "pass through" entities, meaning that the owners of these small businesses pay the business's income taxes on their individual income tax return. The latest tax increases pushed by President Obama are actually tax hikes on Florida's job creators. According to The United States Census Bureau (Census) and The Small Business Administration (SBA), there are more than 2 million small businesses in Florida; these Florida business employ more than 2.5 million people or 42.3% of our state's private sector workforce.

As someone who ran several businesses, Curt understands that increased taxes on small business owners hurt our economy and discourages innovation, growth and job creation. If we want more entrepreneurs, if we want more small businesses, if we want the benefits that come with these, we must have policies to encourage this.

Curt proposes:

Reducing the top individual income tax rate to 30%.
Reducing taxes on small businesses by cutting the tax rate on income earned from a "pass through" entity to 17.5% so that it matches the proposed change in the corporate income tax rate.
Giving taxpayers the ability to opt into an alternative tax system where they would pay 17.5% on their earnings. These taxpayers would be voluntarily giving up deductions under the current system in exchange for a much simpler system.

3
Imposing Budget Discipline and Spending Restraint on Washington

Between 1997 and 2005, federal spending averaged 19.6% of the overall economy (ranging from a low of 18.2% in 2000 and 2001 to a high of 19.7% in 2003). While many economists would suggest that the level of spending from 1997 to 2005 is too high, it looks very responsible compared to the current level of federal spending.

19.6%
*AVERAGE FEDERAL SPENDING AS
PORTION OF TOTAL ECONOMY, 1997-2005

24%
*AVERAGE FEDERAL SPENDING AS
PORTION OF TOTAL ECONOMY, 2009-2012

Since 2009, when President Obama took office, federal spending has averaged more than 24% of the economy. Accordingly, the spending under President Obama is 23% higher under Obama than it was during President Clinton's second term or President George W. Bush's first term. This level of spending is not sustainable.

Congress does not have a very good record when it comes to limiting government spending. When Congress has been successful, it has usually been because Congress was willing to put in place strict budget rules that forced fiscal discipline. Congress needs a mechanism to impose fiscal discipline to hold spending in check. Curt Clawson's economic plan contains several methods to impose fiscal discipline in Washington.

Curt proposes:

We must cap federal spending at no more than 19% of economic output. Curt supports a constitutional balanced budget amendment to impose this cap.
The House and Senate should create a budget cutting committee to find ways to curb spending (without raising taxes). The Congressional Budget Act should be amended to require that this committee propose at least two different spending reduction bills in each year that spending exceeds 19% of the economy. Any bill reported by this committee should receive an up or down vote in the House and Senate. Congress used this approach in the past and it worked to reduce waste in government spending.
Congress should block grant education funding and Medicaid funding to the states. Currently, the states manage their Medicaid program and the federal government and states share the costs. The feds pay nearly 59% of Medicaid's costs in Florida while the state pays 41%. The system deters Florida from finding cost savings because for every dollar saved, Florida only keeps its share (41%) of every dollar saved. Even if Florida wanted to find cost savings, the state must first get approval from the feds. This ties Florida's hands. Block grant would fix these issues. First, it would end federal control of the day to day operations of state administered programs and, second, it would let states keep 100% of every dollar saved due to innovation in the way Medicaid services are delivered.

4
Limiting the Impact Regulations Can Have on our Economy

A 2012 Heritage Foundation study found that in the first three years of the Obama Presidency the Administration had issued a total of 106 major regulations (a major regulation is defined as imposing a cost of at least $100 million on the economy). The total fiscal impact on the economy of Obama's early major regulations was $46 billion. According to Heritage, "a majority of the major regulations came as a consequence of the Dodd-Frank financial regulation law, Obamacare and the EPA's global warming crusade." Heritage also noted that "[m]ore regulations are looming. Obamacare is imposing rules faster than the regulators can write them."

MAJOR REGULATIONS, 2009-2011
211%
MAJOR REGULATIONS, 2012

The problem has only grown worse. At the end of last year, the U.S. Chamber of Commerce noted that there were 224 major regulations in 2012. In addition, when Senate Democrats invoked the nuclear option late last year, they eliminated any check to ensure that Obama's regulatory agency nominees were not extremists.

These regulations pose great harm to Florida families. ObamaCare regulations resulted in the cancellation of millions of insurance policies across the country. ObamaCare regulations are making insurance more expensive. Obama's proposed EPA regulations will make your family's energy bills more expensive. And that is not an accident. Back in January 2008, then-candidate Barack Obama told editors at the San Francisco Chronicle that under his energy plan "electricity rates would necessarily skyrocket."

Floridians cannot afford higher health insurance costs or skyrocketing energy costs imposed by a runaway, unelected bureaucracy in Washington. Curt has a plan to rein in Washington bureaucracy. The root of regulatory overreach is actually a result of Congress delegating its own authority to unelected bureaucrats. Congress must stop this practice and reassert its role over the regulatory procedures. This will help small businesses and economic growth.

Curt proposes:

Congress should vote to approve all major regulations before they can take effect. Any regulation approved by Congress must sunset within five years.
Before Congress can vote to approve a regulation, Congress should first know what the fiscal impact of the regulations will be on the federal budget, the economy, small businesses and families.
All current and future regulations must sunset within five years unless Congress votes to continue the regulations.

5
Real Health Care Reform

ObamaCare has negatively impacted millions of Floridians. Despite the promises, people can't keep their insurance, they can't keep their doctor and costs are going up, not down.

HEALTHCARE COSTS

Businesses are struggling with the increase in costs and increased taxes due to ObamaCare. The individual mandate is causing business owners to hold off or delay hiring and to reduce their employee's hours to avoid the burdens of ObamaCare.

As someone who has run several businesses, Curt Clawson understands the struggles ObamaCare is imposing on businesses. Curt understands that America needs smart healthcare reform in order to get our economy back on track.

Curt proposes:

Repealing ObamaCare.
Starting over with a new approach to health care reform that end denial of coverage for pre-existing conditions for people who maintained insurance coverage
Reforms that put patients and their doctors, not bureaucrats, in charge of health care decisions
Empowering patients and giving them control of their health care dollars with the use of high deductible health plans and health savings accounts
Restoring funding for Medicaid Advantage

Conclusion

America has a bright future but we must elect leaders who will make economic growth a priority in Washington. Curt Clawson is that man for Florida's 19th Congressional District.

Curt has a plan that will reform our corporate tax code to make America competitive in the world. His plan will ease tax burdens on small businesses and families. His plan will restore budget discipline in Washington and give flexibility to states for Medicaid. Curt's plan will reform the regulatory process and make the Washington bureaucracy accountable to the American people. Curt's plan will also repeal Obamacare.

Congress needs to make economic growth its primary goal. With Curt's plan, we can make the goal of economic growth a reality.

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SOURCES

Jeffrey H. Anderson, "Obama's Economists: "Stimulus' Has Cost $278,000 per Job," The Weekly Standard, July 3, 2011. Available at: http://www.weeklystandard.com/blogs/obama-s-economists-stimulus-has-cost-278000-job_576014.html

J.T Young, "The Worst Four Years of GDP Growth in History: Yes, We Should Be Worried," Forbes.com, April 12, 2013. Available at: http://www.forbes.com/sites/realspin/2013/04/12/the-worst-four-years-of-gdp-growth-in-history-yes-we-should-be-worried/

Dave Andrusko, "More People Have Lost Insurance Under ObamaCare Than Signed Up For It," LifeNews, December 31, 2013. Available at: http://www.lifenews.com/2013/12/31/more-people-have-lost-insurance-under-obamacare-than-signed-up-for-it/

J.T Young.

Bureau of Labor Statistics (BLS), Labor Force Statistics from the Current Population Survey, December 2013. Available at: http://www.bls.gov/web/empsit/cpseea38.htm

Wynton Hall, "Government Spends More on Disability than Food Stamps, Welfare Compared," Breitbart, March 25, 2013. Available at: http://www.breitbart.com/Big-Government/2013/03/25/Govt-Spends-More-On-Disability-Than-Food-Stamps-And-Welfare-Combined

J.D. Heyes, "Seven Devastating, Inescapable Facts for America," January 20, 2014. Available at: http://www.naturalnews.com/043583_economic_facts_america_financial_demise.html

Congressional Research Service Memorandum, "FY2007-FY2012: Able-Bodied Adults Without Dependents (ABAWD) Requirements, Statistics, and Waivers," September 14, 2012. Available at: http://www.scribd.com/doc/106346145/CRS-Memo-ABAWD

U.S. Bureau of Economic Analysis (BEA), http://www.bea.gov/national/index.htm

U.S. Bureau of Labor Statistics (BLS), http://data.bls.gov/pdq/SurveyOutputServlet

BLS, Employment Hours & Earnings from the Current Employment Statistics Suvery (National, Total nonfarm), http://data.bls.gov/timeseries/CES0000000001

BEA

BLS

BLS

Tax Foundation, "Another Study Confirms: U.S. Has One of the Highest Effective Corporate Tax Rats in the World," May 31, 2013. Available at: http://taxfoundation.org/blog/another-study-confirms-us-has-one-highest-effective-corporate-tax-rates-world

Tax Foundation, "Inflation Can Cause an Infinite Effective Tax Rate on Capital Gains," December 17, 2013. Available at: http://taxfoundation.org/article/inflation-can-cause-infinite-effective-tax-rate-capital-gains

The Tax Foundation, "High-Income Taxpayers Could Face a Top Marginal Tax Rate over 50 Percent this Tax Season," January 23, 2014. Available at: http://taxfoundation.org/blog/high-income-taxpayers-could-face-top-marginal-tax-rate-over-50-percent-tax-season

Small Business Administration, "Small Business Profile: Florida," January 2012. Available at: http://www.sba.gov/sites/default/files/fl11.pdf and United States Census Bureau, "State & County QuickFacts: Florida," 2013 data. Available at: http://quickfacts.census.gov/qfd/states/12000.html

https://www.fas.org/sgp/crs/misc/R42941.pdf

Allison Meyer, "Chart of the Week: Obama Tops Bush With More, Costlier Major Regulations," March 18, 2012. Available at: http://blog.heritage.org/2012/03/18/chart-of-the-week-obama-tops-bush-with-more-costlier-major-regulations/

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