Rush Limbaugh has a serious, and very interesting, plan to restart the American economy, and to underscore his seriousness he presents it in an op-ed in the Wall Street Journal. It's not only a genuine bipartisan compromise it's also a great empirical test of two conflicting philosophies on how best to deal with recessions. I suspect that it's going to attract a lot of attention from both the right and center left. A lot of honest people, not just among Republicans but also in the Democrat party, are dismayed by what they see as a welfare/pork barrel bill masquerading as an economic stimulus measure.
Here's the heart of Limbaugh's proposal:
Fifty-three percent of American voters voted for Barack Obama; 46% voted for John McCain, and 1% voted for wackos. Give that 1% to President Obama. Let's say the vote was 54% to 46%. As a way to bring the country together and at the same time determine the most effective way to deal with recessions, under the Obama-Limbaugh Stimulus Plan of 2009: 54% of the $900 billion -- $486 billion -- will be spent on infrastructure and pork as defined by Mr. Obama and the Democrats; 46% -- $414 billion -- will be directed toward tax cuts, as determined by me.
Then we compare. We see which stimulus actually works. This is bipartisanship! It would satisfy the American people's wishes, as polls currently note; and it would also serve as a measurable test as to which approach best stimulates job growth.
I say, cut the U.S. corporate tax rate -- at 35%, among the highest of all industrialized nations -- in half. Suspend the capital gains tax for a year to incentivize new investment, after which it would be reimposed at 10%. Then get out of the way! Once Wall Street starts ticking up 500 points a day, the rest of the private sector will follow. There's no reason to tell the American people their future is bleak. There's no reason, as the administration is doing, to depress their hopes. There's no reason to insist that recovery can't happen quickly, because it can.
In this new era of responsibility, let's use both Keynesians and supply-siders to responsibly determine which theory best stimulates our economy -- and if elements of both work, so much the better. The American people are made up of Republicans, Democrats, independents and moderates, but our economy doesn't know the difference. This is about jobs now.
I'd prefer we cut the pork and transfer payments out of the bill altogether, but that's not going to happen with the Democrats in control of everything. So, why not give Rush's plan a go and settle the question for the next three generations of whether it's better to inflate the currency and throw money around like we're frantically bailing water out of a sinking boat or to cut tax rates and let businesses and private citizens kickstart the economy by creating more wealth.
RLC