The Washington Post had this to say recently on the economic ideas presented by GOP candidates for president:
Republican candidates are trying to capitalize on discontent with “Bidenomics.” Despite strong job gains, cooling inflation, blockbuster third-quarter growth at an annualized rate of 4.9% and no recession in sight, Americans tell pollsters President Biden is doing a poor job on the economy. They remain scarred by the COVID-era inflation surge, which caused pay hikes to lag behind price increases during Mr. Biden’s initial two years in the White House. Real wages have improved in recent months, but many Americans remain nervous about the future.
The GOP field offers many of the usual partisan proposals: cut taxes, cut government, cut regulation. On top of that, some Republicans, starting with former president Donald Trump, have added crude trade protectionism. Mr. Trump is even floating an across-the-board 10% tariff that would impose ruinous costs on American consumers. Yet some in the GOP field have floated a few more interesting ideas, mixed in with a lot of unserious ones.
Many candidates pay lip service to controlling federal debt, which grew $1.7 trillion in the fiscal year that ended last month, but former South Carolina governor Nikki Haley has some potentially sensible ways to save money.
She would cap federal spending as a percentage of the economy closer to pre-COVID levels. (She doesn’t give specifics, but spending was 21% in 2019 vs. 24% in the latest fiscal year.) This is not a permanent solution, as programs such as Medicare and Social Security will naturally grow in cost, if not in generosity, as more Americans retire. Over time, a hard cap on federal spending would force cuts in other parts of the budget.
More promising, Ms. Haley would end the state and local income tax deduction, which largely benefits the richest households. She would be wise not to stop there. Limiting more tax deductions would make the tax code fairer and generate much-needed revenue.
Ms. Haley and Mike Pence, who was vice president under Mr. Trump and has since dropped out of the 2024 race, also speak often about reforming Social Security and Medicare by lifting the retirement age for younger generations and limiting benefits for the wealthy. (Florida Gov. Ron DeSantis is also open to Social Security changes for the young.) This contrasts with Mr. Trump’s irresponsible uninterest in making the relatively modest changes needed to keep these programs vibrant.
Meanwhile, several GOP contenders tout an “all of the above” energy approach. This is meant to contrast with Mr. Biden’s green energy expansion. In fact, if Republicans are serious about welcoming green as well as fossil-based energy technologies, there should not be much difference. Oil and gas production are near record highs under Mr. Biden, even as the federal government finally invests heavily in deploying greener alternatives. Russia’s invasion of Ukraine and growing Middle East instability underscore the need for strong domestic oil and gas production in the near term, even as the country pursues long-term climate solutions.
Not fiscally responsible would be another corporate tax cut. Mr. Trump signed the largest corporate tax cut in U.S. history in 2017, slashing the rate from 35% to 21%. Now Mr. Trump and Mr. Pence say it should be 15%. This would result in higher deficits: The 2017 reduction put the corporate rate on more equal footing with those of global competitors, but it also reduced corporate tax revenue to historically low levels. Republican predictions that such tax cuts pay for themselves have not come true.
Even worse is the rising urge to attack the Federal Reserve. While in office, Mr. Trump mused publicly about firing Fed Chair Jerome H. Powell. Entrepreneur Vivek Ramaswamy wants to restrict the Fed’s mandate to “stabilize the dollar & nothing more.” Mr. Pence wants to end the Fed’s dual mandate — minimizing inflation and maximizing employment — in favor of an inflation-fighting-only mission. Mr. DeSantis vows to “rein in” the Fed and stop its development of a digital currency. Since the early 20th century, Fed independence has undergirded U.S. prosperity; meddling with the central bank would cause immediate and immense economic harm.
So would an idea from Mr. Ramaswamy to eliminate three-quarters of the federal workforce. Other candidates, such as Mr. DeSantis, have said they would seek to replace career civil servants with political loyalists. Such dramatic cuts would harm everything from education to national security. This rhetoric also glosses over the fact that the big uptick in the federal government’s effective size has been in federal contractors.
Yes, Mr. Trump is far ahead in polls. But if Republicans want alternatives, there are clear differences between him (and the similarly simplistic Mr. Ramaswamy) and those, such as Ms. Haley, who would try to solve problems rather than exacerbate them.
