Read Gov. Perry's editorial in which he outlines his tax and spending plan. React to his proposals in a thoughtful way that demonstrates your understanding of the economics reading from Chapter 16 (including the major economic theories), the political ideologies and Party Tendencies.
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ReplyDeleteGovernor Rick Perry’s “Cut, Balance and Grow” plan fits within the supply-side economic theory, as well as embodying some monetarist policies. Perry’s advocating of a simplification of the tax code shows his supply-side tendencies, for supply-siders decry corporate tax evasion. Perry also supports a reduction of the corporate tax rate, as well as the elimination of “death taxes”, dividends taxes, and long-term capital gains taxes. Supply-siders would support such lower taxes, for they believe that lower taxes lead to greater investment and a prosperous economy. Perry also wants to increase federal monetary responsibility by capping federal spending at 18% of the country’s GDP and by passing a Balanced Budget Amendment to the Constitution. Also with the goal of hindering government over-spending, Perry’s plan freezes federal civilian hiring and salaries until the budget is balanced. These governmental regulations embody monetarist theories, which advocate a government of steady spending, which would be ensured in his plan. Both Perry’s monetarism and supply-side tendencies exemplify his link to conservatives, who want minimal government interference in the economy.
ReplyDeletePerry argues that the United States spends too much, citing the growing deficit. His solution is based in lowered taxes, an optional flat tax, and loophole reform. These measures fit the Republican tendencies of self-reliance, because the wealthy would not contribute a higher percentage of their income than low-earners; limited government, because lower taxes leads to lower government spending and fewer government programs; and more active state governments, which is a natural consequence of a weakened federal government. Perry’s plan moves away from the Keynesian ideology of President Obama, in which deficit spending and variable taxation is used to optimize consumer spending, towards a supply-side and monetarist view, which emphasizes tax cuts as a way to encourage investment and indirectly stimulate the economy and a government with limited economic influence to prevent disruption. Keynesian economics are more typical of Democrats like Obama, and supply-side and monetarist economics are more typical of Republicans like Perry.
ReplyDelete-Will Tobias
Rick Perry’s plan is classically conservative, with monetarist and supply side economic strategies. The core elements of his strategy are to cut spending and lower taxes, which follows the conservative ideology of limiting government involvement in the economy. One specific proposal is to give the option of a flat 20% tax rate. Since our current system is graduated, with those with a higher income paying a higher percentage of their income, the flat tax would help more the higher one’s income is. This is a tenant of supply side economics, since protecting the wealthy encourages investment and spending. Lowering corporate tax and making it easier to trade outside the country is also a mark of a freer economy, which conservatives support. Finally, he addresses balancing the budget primarily by cutting spending, such as spending on healthcare. I disagree quite strongly with this plan. For one, the tax cuts help more for the wealthy. The poor and lower income people, who already pay less than 20% of their income would not be helped at all by the flat tax and the wealthy, who pay much more, would benefit. This would actually worsen the wealth distribution, which is a huge issue today. Finally, he is proposes specific large tax cuts but his proposals for cutting spending are vague, so I doubt how effective his plan will be in dealing with the budget.
ReplyDeleteNathan Posener
From the start, Perry asserts that the federal government has too much power in the economy. He advocates for lower taxes and less spending. He wants to cap federal spending at 18% of the GDP, and ban future bailouts. Perry also wants to allow young workers to put their Social Security contributions into personal retirement accounts, preventing politicians from touching any of their money. These policies of a more hands-off government adheres to the conservative view of the economy, in that it supports less government involvement in the economy. Perry suggests lowering the corporate tax rate to 20%, which again, follows conservativism. Overall, his proposals for less government interference and lower taxes follow a supply-side economic view. Perry's suggestion to lower the tax on capital gains also supports a supply-side view, as this involves less taxing as an incentive for Americans to invest more in the economy.
ReplyDelete-Ian Cohn
Governor Perry’s proposals are fresh, but rooted in traditional conservative economic theories. His proposal to freeze regulations reflects the monetarist view, such as that advocated by Milton Friedman, in which the government should let the free market operate on its own. Additionally, this plan would allow people to replace their current tax bracket with one in which they pay a flat 20%, reflecting supply-side tax cuts, more commonly known as the trickle down theory. The plan would also lower corporate taxes from their current level at the second highest in the developed world with the goal that some of the $1.4 trillion American dollars overseas will be repatriated. This is a central goal of supply-side economics, that has the goal of actually increasing tax revenue by lowering tax rates. The final portion of Perry's plan is to institute a series of cuts to entitlement programs to reduce deficits and balance the budget by 2020. Overall, Perry’s promise to lower taxes, decrease entitlements, and balance the budget, reject the Keynesian theory of economics that has had such a profound effect on the fiscal policies of the Obama Administration.
ReplyDeleteRick Perry’s economic plan is very typical of a conservative such as himself. His idea of cutting taxes and spending seems to be a fit within the conservative wing of the Republican Party. Conservatives generally believe that less government intervention is better from an economic standpoint, and Perry’s plan seems to be a very good fit within this philosophy. There is certainly an element of Milton Friedman’s monetarist views, with Perry’s belief in cutting deficit spending being a cornerstone of Friedman’s theory. There is also an element of “supply-side” economics, with Perry’s support for the general reduction of taxes embodying a valuable part of Laffer’s economic theory. Again, this plan puts him very much in line with his Republican counterparts, who generally seem to favor cuts in both taxes and spending. In particular, Perry believes in cutting capital gains, dividends, and estate taxes, all key points of most conservative Republican platforms.
ReplyDeleteGovernor Perry’s editorial describes a plan that drastically reduces federal spending and lays out a plan for a flat tax. Perry’s plan finds similarities to the mindset of a supply side theory proponent and also a monetarism proponent. Perry feels that government spending should be capped and that the fed should have less of an influence on the economy. Perry believes that the government spends more than they should and his plan cuts back on federal programs and spending. A supply-side theorist believes that less government interference in the economy is better for the economy. Perry siding with supply-side believes that regulatory measures like the Sarbanes-Oxley act should be abolished along with any death tax. The “cut balance and grow plan” moves away from the previous Keynesian ideologies of Obama by cutting programs and taxes. Perry’s believes are consistent with that of a conservative, he wants a hands off method of the economy which is similar to supply-side, a system which would make the market more free and open to more spending by citizens.
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ReplyDeleteI almost find his opening jargon on his prospective plan reminiscent of “Supply-Side” economic ideology, which correlates to his Republican/Conservative standing. When he first presents his supposed new policy on taxes, at first I felt unimpressed by his supposed efforts to win over a reader. The 20% tax rate hardly seems different from what total tax rates appear to be for the majority of working Americans. As well, his proposed statement makes me feel skeptical about how ingenuous he perceives the audience of those taking account of his stance on current economics and what should be done:
ReplyDelete“the new flat tax preserves mortgage interest, charitable and state and local tax exemptions for families earning less than $500,000 annually, and it increases the standard deduction to $12,500 for individuals and dependents.”
It was in particular, this section that blatantly seemed to be a ploy to attract the support and attention of the large percentage of Americans currently taking a radical stance on fighting for a new economic policy that favors the ”average American” above any other demographic.
Further, instances of skepticism on my part are instigated by his determination for his plan to be carried out all the way to 2020 without any unexpected hindrances, which sounds more deluded than anything else, or his implications that America does not have an impressive standing in the global market.
--Sabrina
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ReplyDeleteMr. Perry’s ideas are very similar to his party’s tendencies on tax reform. By allowing people to not pay income tax and instead pay a flat tax, he half follows the standard conservative view, which is to eliminate or lower the income tax. His stance on government spending, which is to strictly limit it to 18% of the United State’s GDP, also follows with the Republican Party’s desire to create a small government. He advocates for supply side tax cuts because he wants to reinvigorate the economy. He believes that the lower taxes will spur people to invest more and spend more money in the economy. Perry said he would try to help the economic growth by limiting regulations for business, which follows the Republican Party’s current goals. Overall, this plan seems to be very similar to his party’s tendencies.
ReplyDeleteBen Magalaner
Perry's "Cut, Balance and Grow" plan uses supply-side economics. Perry believes that "dividends and long-term capital gains [will] free up the billions of dollars Americans are sitting on to avoid taxes on the gain." He thinks this will "renew incentives for entrepreneurial risk-taking and investment that creates jobs, inspires Americans to work hard and forms the foundation of a strong economy." Keeping with supply-side economics, Perry wants the gov. to do less. He promotes cutting federal spending by getting rid of such programs as ObamaCare, Dodd-Frank and Section 404 of Sarbanes-Oxley.
ReplyDeleteThough Governor Perry's reform plan may lead to economic growth, it will sacrifice the security and welfare of many American citizens. Perry's plan is a conservative one, hinging on the principals of supply-side economics and an economically uninvolved government. In accordance with supply-side economic theory, Perry believes that economic growth will be achieved primarily by the free market alone, so the government should be as uninvolved in the economy as possible. He believes cutting taxes (on both individuals and corporations), and therefore leaving more money in private hands, will "renew incentives for entrepreneurial risk-taking and investment that creates jobs, inspires Americans to work hard and forms the foundation of a strong economy." Though this may be true, Perry also plans to cap federal spending at 18% of the GDP, chiefly by privatizing federal programs like health care, and encouraging individuals to "own their Social Security contributions though personal retirement accounts." Though this might benefit the economy as a whole, it will leave many Americans without the security of a health insurance policy. Without health insurance, these people won't go to the doctor for regular check-ups, and run the risk of contracting a serious illness without it being detected. Is this sacrifice of personal safety worth economic growth? Also, Perry's suggestion that individuals privatize their Social Security also reduces security. Giving people the option to "seek a market rate of return" means they will invest their Social Security funds, and therefore risk losing much of them. The purpose of Social Security is to provide a retirement fund that isn't vulnerable to the ups and downs of the free market, and Perry's plan fails to guarantee this stability.
ReplyDeleteAfter reading Perry’s editorial, I agree with his supply side tax cut ideals (also somewhat aligned with the Monetary system), putting more money in the pocket of the consumer. His attack on the complexity of the tax code and the ability of corporations to evade taxes, along with his plan to reduce corporate taxes, and expunge “death taxes,” estate taxes, and capital gains taxes place him strongly in line the supply side tax ideals. I also agree with his philosophy that the government should interfere less, allowing free trade to create more jobs. Perry also takes very republican stance of scaling back government and regulations. These ideals place him squarely in the conservative economic school of thought. While I think his heart is in the right place with this, I don’t think he can possibly stick entirely to conservative views, because I don’t think he can, between lowering taxes and scaling back government, lower the deficit at this juncture.
ReplyDeleteAs a hardcore economic conservative, Perry's priorities lie in a supply-side model. Perry wants to cut taxes to a flat rate of 20%, in an attempt to stimulate the economy. This top-down approach can also be noted in Perry's proposal to cut capital gains and corporate taxes. Additionally, Perry proposals to shrink the federal government by freezing regulations, auditing federal agencies, preventing any new federal hiring, banning bailouts, and repealing other progressive regulations. Implicit in Perry's proposal is the capitalist expectation that when business are given regulatory and tax freedom they will grow the economy. Another main focus of the "Cut, Balance and Grow" plan is social security. Noting its instability Perry plans to revamp the program by instituting personal retirement accounts in addition to SS, and ending the SS benefits tax. Obviously this economic plan is highly political. Perry says he intends to cut entitlements but does not divulge which entitlements, while he emphatically states his desire to cut taxes. Ultimately this proposal is typical of a GOP presidential candidate: small government, low taxes, and simple tax code to encourage entrepreneurs.
ReplyDeleteGovernor Perry’s plan exemplifies most Republican beliefs of flat (regressive) taxing, supply-side tax cuts, generally lower taxes, and a lesser role of the federal government. The idea of a flat tax is a remnant of the monetarist policy, which encourages overall lower role of the government, and surely a key idea to any conservative – who believes that everyone should pay the same amount, and not be penalized for ingenuity. The decrease of the corporate tax is a supply-side policy, and is a characteristic of the Republican’s trickle-down policy. The simplification of the tax code policy, and the elimination of the dividends, capitals gain, and the estate tax are all parts of the monetarist policy. His advocation of a lesser federal government - through a balanced budget, eliminated deficit, spending cap, etc. is characteristic of the monetarist policy and key ideals of Republicans. Finally, allowing people to invest with their social security is a characteristic of monetarist policy, and very conservative in that people should be able to determine their own future. Overall, his policies are very similar to that of supply-siders and monetarists, in that the government should have little interference, and that that affecting the supply (businesses) is the best way to stimulate the economy. It is not characteristic of Keynesians, who believe that the government should be able to have deficit spending, and have the power to extensively regulate the economy to ensure that it is working to efficiency.
ReplyDeleteSamriddhi :)
Governor Perry's editorial outlines his economic plan of Cut, Balance, and Grow. He talks about cutting taxes: giving the option of a 20% flat tax rate to Americans, rather than the current graduated income tax. Perry also calls for lowering the corporate tax rate to 20%, eliminating taxes on social security benefit, capital gains, and dividend taxes. These cuts correlate with Supply Side economics, which says that giving more money to businesses gives them the opportunity to spend in order to create jobs. Supply Side economics argues with a more conservative approach to business and the economy, stating the need to eliminate business regulations that might cripple growth. This is also a Republican ideal: that prosperity comes from individual achievement rather than government interference. In addition to tax cuts, Perry argues for spending cuts. He wants to pass a constitutional amendment stating that the government must have a balanced budget; this would decrease federal deficits because government would not legally be able to spend more than it takes in. These goals are also consistent with the conservative standpoint of “small government,” or less government interference in day do day life.
ReplyDeleteReaction - 2nd part (samriddhi)
ReplyDeleteAs a Keynesian, and an overall liberal, I find his plan appalling. The most offending part of his plan is certainly his flat tax; it essentially requires people scrounging to make ends meet pay the same rate of tax as those who are drowning in wealth – in policy and practice, this idea if very regressive. Further, while I am not necessarily opposed to reducing the corporate flat tax and thereby encouraging companies to move to America, my concern is with the loss tax revenues. Those revenues go to fund essential programs and help Americans in need. Personally, I would rather keep a slightly higher tax rate and use the funds wisely rather than reduce it; rather, I think that taxing the companies and feeding it back to the economy is better spent. I oppose repealing the dividends, capitals gain, and the estate tax; in regards to the capital gains tax, I am reasoning that Americans do eventually have to sell (and therefore make profit) off of their stocks and will not be too deterred from selling given that they will receive profit regardless; the tax may makes people even more wise with their investments. I reason that since an individual’s entire assets are subject to tax – it should not differ when the assets are passed down the generation, especially given that the basement for tax application is so high and yields so much revenue. The ideas of a balanced budget, etc. are not smart – especially during a stagnant growth period. Reducing spending will worsen the economy greatly; rather, I am in favor of using the power to print money to stimulate the economy when during these times, and then using surpluses later on to pay off the debts. Having a balanced budget severely restricts the power of the government, and in many cases, is bound to leave the people in desperate situation.
The tax and spending plan outlined by Gov. Perry attempts, as the title, "Cut, Balance, and Grow", suggests, to balance the federal budget, cut spending, and close loopholes in order to promote economic growth. In line with supply-side tax cut economics, Perry's plan removes most government regulations, such as ObamaCare, Dodd-Frank and Section 404 of Sarbanes-Oxley, and proposes a new tax code. The new tax code he proposes offers a choice between their current income tax and a flat tax rate of 20%, removes dividends taxes, capital gains taxes, and estate taxes, while keeping deductions, such as Mortgage Interest. This cutting of taxes and lessening of government regulations demonstrates conservative economic values and advocates for the free market economy supported by Republicans. Its approach to stabilizing the US economy is far to the right of today’s Keynesian economics.
ReplyDeleteVered Schwell
Perry quickly states his belief that taxes are too high and confusing, and that the federal government assumes too large a role in people’s lives. In changing the state of these problems, Perry asserts that many of the currently implemented programs are unsustainable. His “Cut, Balance and Grow” Plan would lower taxes, set an option for flat tax rates, eliminate taxes on social security benefits, control federal spending, and repeal ObamaCare and the Dodd-Frank Act. Perry’s goal to consolidate primarily endorses the supply-side theory, as well as monetarism. By cutting taxes, people will receive greater incentive to work, invest, and revive the economy. Perry’s proposal would allow young people to invest in their own, safe social security accounts, displaying the Republican tendency that individuals are largely responsible for their own well-being. Perry professes individual control explaining that his plan would eliminate the “Washington-knows-best mindset”. Government should be stricter in their efforts to reduce the federal deficit, reducing taxes and giving individuals greater financial responsibility.
ReplyDeleteThe Rick Perry “Cut, Balance and Grow Plan” is heavily based on Conservative “supply-side” economics, which involve tax cuts aimed at creating incentives for investment. Federal spending under this plan would also be capped at 18% of GDP to balance the budget, and there would be a balanced budget amendment to the Constitution, which is a conservative ideal. In addition, a freeze on federal civilian hiring and salaries until a balanced budget integrates monetary philosophy, as do the audits on government regulations that prevent excessive government involvement in the economy. Social Security would undergo reform (privatization), as would the tax code (including a lower corporate tax), which are both classically conservative policies. Perry contends that with a balanced budget, cap on spending, incentives for business, and reform on tax code and entitlements, there would be more freedom granted to Americans with a shift of money from bureaucrats to families.
ReplyDelete- Adam Cohen-Nowak
According to Gov. Perry’s Cut, Balance, and Grow plan, he aligns mostly with supply-side and monetarism economic theory. Perry’s plan proposes: an optional flat tax rate of 20% individuals, keeping mortgage interest, charitable and state and local tax deductions while phasing out corporate loopholes and special-interest tax breaks; eliminate estate, dividends, long term capital gains taxes, and benefits on Social Security; and to implement a territorial tax system. In the part of lowering taxes, and giving a choice for it, he attempts to appeals to majoritarian politics. He then demonstrates his monetarism views through the “balance” part of his plan, aiming to balance the budget by 2020, rejecting the Keynesian acceptance of deficit spending. He additionally wants to control more and cut federal spending by entitlement reform, which could be carried out by heightening the standards on the means test or shortening the time one could receive the benefits, or other ways not specified. All of these endeavors will result in the “grow” part of his plan, creating jobs and incentives to invest and innovate. Perry therefore fits tightly and appropriately into the Republican Party, which pushes for low government interference in the economy, for reform on entitlement programs, and for lower tax rates.
ReplyDeleteGovernor Perry's plan is a perfect example of Supply-side Economics, and is a very standard conservative approach to managing the economy. Supply-side Theory involves reducing government interference in the private sector and cutting taxes to increase economic productivity, which will then in turn generate more revenue for the Federal Government. We can see this in Perry's initiative to lower the corporate tax rate to 20%, moving towards a flat tax system, and removing the "death tax" Perry also plans on capping the countries spending to 18% if the GDP and remodel our funding system for entitlement programs. Although removing restrictions on the private sector may encourage businesses to take entrepreneurial risks, it will significantly reduce the ability of the federal government to provide a financial safety net for citizens. Also, Perry does not go into great detail about how he plans to alter/trim funding to entitlement programs, which concerns me because of the significance of social programs such as Medicaid. He briefly talks about repealing "ObamaCare", but offers no new ideas on how he would revise government healthcare spending.
ReplyDeleteIn his editorial outlining his new economic plan, Perry takes a combative tone calling for "significant change quickly" to the current methods of taxation and spending in Washington. His "Cut, Balance, and Grow" plan would dramatically change the way Americans are taxed with a new flat tax rate of 20%. Overall this would reduce the amount of tax revenue the government is able to collect, and do away with the idea of a progressive tax where wealthier people rightly pay more to the government. Perry's choice of words when presenting his tax proposal also is interesting: “The plan starts with giving Americans a choice between a new, flat tax rate of 20% or their current income tax rate.” Instead of
ReplyDeleteIn his editorial outlining his new economic plan, Perry takes a combative tone calling for "significant change quickly" to the current methods of taxation and spending in Washington. His "Cut, Balance, and Grow" plan would dramatically change the way Americans are taxed with a new flat tax rate of 20%. Overall this would reduce the amount of tax revenue the government is able to collect, and do away with the idea of a progressive tax where wealthier people rightly pay more to the government. Perry's choice of words when presenting his tax proposal also is interesting: “The plan starts with giving Americans a choice between a new, flat tax rate of 20% or their current income tax rate.” Instead of proclaiming that he will enact these reforms, he only says that American's will have a "choice" make. This softer language may hint at the political unreality of his plan.
Perry's Supply-side beliefs shine through his entire proposal. Perry strongly believes that reduced government involvement in the economy will actually help growth: “My plan restores American competitiveness in the global marketplace and provides strong incentives for U.S.-based employers to build new factories and create thousands of jobs here at home.” Perry derides the activist role government has come to play in the economy and takes a strikingly anti-Keynesian tone when he calls for "banning earmarks and future bailouts". Restricting government's ability to react to catastrophes is exactly opposite the Keynesian model where the government ensure the right balance of demand exists in the market through intervention. Perry is a hard-core supply-sider, cut and dry.
A lot of the points Governor Perry brings up are valid; however I am not entirely sure that his plan will be effective. He is proposing a twenty percent flat tax and lowering corporate taxes, transitioning to a "territorial tax system," eliminating dividend and capital gains taxes and getting rid of the death tax, in essence all measures to lower taxes. Governor Perry's proposal matches up with Republican party tendencies and the conservative ideology. Part of his plan uses the supply-side economic theory which involves huge tax cuts . The underlying belief is that less government involvement is better and that by reducing tax rates it will will increase people's incentives to work, save, and invest. The supply-side theory is correlated with more conservative political ideologies. Perry's solutions do not deal with monetary policy as he is not trying to affect the economy through an attempt to use the amount of money and value of money. Perry began his editorial by stating that the entitlement programs are unsustainable in the long run. This matches with the Republican "belief that each person is an individual who is responsible for his/her own place in society." It seems as though he believes entitlement programs are weighing the economy down, and that something needs to change about the programs. A hardcore liberal or democrat would be more inclined to oppose what Perry is saying, and they would try to defend entitlement programs. Though he briefly mentions eliminating a tax on social security benefits for the benefit of social security beneficiaries, this is a political move to counter his mentioning that entitlement programs are unsustainable. Additionally Perry mentions the territorial tax system, which would mean that businesses are only taxed on their incomes within the United States. Though not conceding entirely to a completely uninvolved role in businesses, this does match with the Republican tendency to "believe that the free enterprise system is the key to individual and national prosperity." Like the book mentions, it's a tug of war when it comes to picking how to fix the economy- cut spending, increase taxes, decrease taxes, etc. Ultimately I feel as though these tax cuts may actually hurt the economy and will not alleviate the deficit. With that being said I am a liberal and therefore am not unbiased in my reading of this editorial.
ReplyDeleteRick Perry’s tax plan, which removes tax code, lower tax rates just to name a few help grow the economy and make more jobs. He also greatly in the supply-side tax cuts theory since he’s trying propose lower taxes to help save money, make more jobs and with more jobs being added, a larger amount of productivity will be created. His tax plan also follows a conservative ideology by making sure that government will be smaller and less intrusive. He also wants to abolish the death tax, which would provide needed certainty to American families. Along with that, he wants to help Americans in social security, by removing tax on social security for the older citizens while for the younger adults, they be able to own their social security contributions through personal retirement accounts. He also wants to eliminate tax on dividends and long-term capital gain meaning that one wouldn’t exactly lose money, but have the ability to gain. He also wants to implement a flat tax of 20% or allow American families to keep their income tax even though with the flat tax it will help preserve mortgage interest for one. As a result Rick Perry definitely follows the conservative ideology throughout his whole tax plan.
ReplyDeleteThe plan proposed by Governor Perry adheres to one of the economic theories advocated most by conservatives: Supply-side Economics. Supply-side Economics states that in order for the government to properly manage the economy, they must lower taxes in order to increase the level of investment and productivity, as well as lowering the level of interference in private business. This will supposedly lead to higher government revenue, despite lower tax rates, due to higher levels of income. Supply-side has several similarities to the “Trickle-down Effect” theory. Perry’s Supply-side proposals include a flat-tax system, lowering corporate tax rate to 20%, dissolving the “death tax,” capping federal spending to 18% of the country’s gross domestic product, banning earmarks and future bailouts, and Balanced Budget Amendment to the Constitution. The potential issue with this plan is whether or not citizens will actually invest as much as they are supposed to. Although halting government involvement with the private sector may encourage businesses to make investments, there is no guarantee that they will, leaving citizens in a riskier financial circumstance and the nation under-funded, balanced budget or not.
ReplyDelete-Molly