GOP candidate Tim Pawlenty has released his plan for saving the economy and, quite predictably, it adheres to conservative fiscal dogma. Let's take a look at a few of the points.
Eliminate capital gains tax, interest income tax, dividends tax and the estate tax.
We already have a problem with the cap gains tax and now he wants to eliminate it? Great. The wealthier people in this country already claim more of their income in cap gains since the rate is only 15 percent. This would shift even more of it under that protective umbrella and we'd lose even more revenue.
Cut business tax rate from 35 percent to 15 percent.
Well, as Notes From The Front has shown recently, they already pay less than zero so what does it really matter?
Privatize the Postal Service, Amtrak, Fannie Mae and Freddie Mac.
I'd actually go further on Fannie and Freddie...how about eliminating them entirely? I suppose privatizing them would accomplish the same goal. But privatizing Amtrak and the Post Office are not good ideas. With the former, one need only look to the deregulation of the airline industry to see how well privatization has gone. Find a pilot and ask them about the differences between today and when the government used to set the price. It's also amusing that the PO is now the right's favorite whipping boy. UPS and FedEx are both private companies and have the same crappy service issues that the post office has today.
Individual rates would be whittled to two tiers: 10 percent on income up to $50,000 ($100,000 for married couples), and 25 percent for "everything above that."
Well, you can forget about that 25 percent as most people in this tier will just put all their earnings in the newly minted 0 percent taxes on cap gains. But he does get closer to an idea that hasn't been floated out there in a while and that's the flat tax.
Suppose everyone was taxed at the same rate. For purposes of this demonstration, let's say 25 percent. And let's say that all the loopholes were removed so no matter what, 25 percent was what everyone paid. A person making 50K a year would pay $12, 500 dollars a year on federal income taxes. A person making 100K a year would pay $25,000 a year. Seems like everyone is paying their fair share, right? That's why it will never happen. We don't hear anything about the flat tax anymore from the right because they know they can game the system so they will always pay less.
So, how is Pawlenty selling all of this?
"If you can find a good or service on the Internet, then the federal government probably doesn't need to be doing it."
Huh. Well, I can find web sites that show me how to make explosives. Does that mean the army should stop making them? I can also find web sites that can teach me how to hack into other countries' computers that control their weapons and power systems. Or teach me how to spy on people. Should our government stop providing those services as well? Well, probably not since that falls under the "protecting us from bad guys" umbrella.
Once again, the overly simplistic approach to solving problem is laid bare. Personally, I'd rather have a president who understands the complexities of the world as opposed to someone who speaks awshucksian.
The real head scratcher to all of this is Pawlenty would roll back ALL federal regulation renewed by Congress. How he gets to this point after seeing the very clear causes of the collapse of 2008 is completely puzzling. Like many of my readers here, he must be cloaked in his Randian shield-impervious to the mere suggestion that governments can, in fact, sometimes improve market outcomes.
Like the socialist utopia, his eyes are filled with fantasies of a libertarian paradise where the people at Goldman Sachs, Morgan Stanley, and Wells Fargo would (gasp) never consider behaving like money grubbing whores. Even if they did, the magical power of the market would always allocate its resources efficiently, right? None of them would ever put the entire financial system at risk simply due to ambitious greed.
Geez, something like that has NEVER happened!