What Would Kemp Do?
An important factoid: The President’s fiscal commission based its recent deficit report (p. 10) – and its alarming diagnosis of “fiscal cancer” – on CBO's budget analysis (p. 28), which, according to Louis Woodhill, assumes annual GDP growth of 2.16% for the next 75 years.
Yet, as Woodhill notes, average growth over the past 75 years was 3.73% per annum. If the U.S. grew at that rate going forward, CBO's more pessimistic budget scenario balances in 2052 with no spending cuts or tax increases.
This isn't to say we shouldn’t cut government waste and bloat. We should.
But, in the middle of painfully high unemployment, shouldn’t conservatives be ringing alarm bells mainly over slow long-run growth? Restoring rapid growth through the proven formula (sound money + lower tax rates) would help the jobless and improve the budget – a win/win – and would move the right beyond the zero-sum austerity debate.
Update: This item has been reworked for clarity.
At RCM, Joseph Calhoun argues the malaise is rooted in bad economic policy.
In The WSJ, likely presidential candidate U.S. Rep. Mike Pence (IN) proposes to repeal the Fed’s full employment mandate.
On The Kudlow Report, Pence explains his plan:
IBD notes that after tax rates were cut in 2003, the wealthy paid a higher percentage of taxes.
At The Washington Times, Richard Rahn suggests government caused the financial crisis, though he omits the falling dollar.
On Kudlow, David Goldman assesses the market’s decline:
On Charlie Rose, U.S. Rep. Paul Ryan (WI) repeatedly mentions sound money.
At the Peterson Institute, lead currency warrior C. Fred Bergsten insists China must revalue the yuan.
From YouTube, a viral video mocks the Fed’s QE2: