Ten years of annual GDP growth below 3%, averaging 1.8% yearly under President Barack Obama, according to data from the Commerce Dept.
Continue Reading Below
The grinding aftermath of an historically rare balance-sheet recession. Average monthly job growth trending lower this year than in 2014. Wage growth and homeownership rates back to levels seen in the mid-‘90s.
An escalating federal deficit, now at $19 trillion, with even bigger unfunded liabilities for Social Security and Medicare bearing down. Increasing numbers of baby boomers retiring, retirees who historically spend less in their golden years, adding to deflation.
The moral astigmatism of porous borders, financial bubbles, D.C. policies inimical to growth, and persistent threats of a default by the U.S. government.
All big challenges. As were the economic problems in every decade before, with eleven recessions since 1946, according to Federal Reserve data.
It’s fair to say that this GOP presidential debate is about a story of vision. A unifying vision that can electrify a skeptical voting public growing uncomfortably accustomed to 24/7 government and an activist Federal Reserve. Poll after poll show that the majority of Americans think the U.S. is on the wrong track, 59% in a recent Reuters poll, versus just 24% who say it is heading in the right direction.
Continue Reading Below
The position of the U.S. on the World Bank’s landmark Doing Business rankings gives credence to that perception. The World Bank ranks countries around the globe on how their regulatory regimes boost economic growth. The U.S. listed only seventh on the ease of doing business ranking, behind Singapore, South Korea and the U.K.; 49th on the ease of starting a small business; and 53d in the paying taxes ranking. But it ranked second in getting credit and fifth in resolving insolvency.
The often rosy Congressional Budget Office is now dialing back 2016 GDP to 3%, and Goldman Sachs is more downbeat, with a 2.4% GDP forecast.
It’s a congested GOP race, with voters still unconvinced that any of the candidates have that unifying vision. Polls show none of them have won voter backing that consistently and solidly stays above 30%, which any candidate needs to build beyond his or her base toward a winning margin of plus 50% in the general election. A summer survey by Pew Research showed roughly 60% of voters had an unfavorable view of the Republican Party, with about a third of those surveyed calling themselves Republican.
As the polls continue to show just how attenuated the GOP race really is, shades of the uneasy march to the GOP nomination in 1996 come to mind. Back then, the question was, will it be Newt Gingrich? Colin Powell? Steve Forbes? Bob Dole?
Also, at this point in the 2008 presidential race, New York City Mayor and GOP contender Rudy Giuliani was in the lead, and Hillary Clinton was besting Barack Obama—a time when 72% of Americans said the country was going in the wrong direction.
And yet the candidate who will be the GOP nominee stands among them, the one whose policies will suddenly anneal under a heavy barrage of questions, whose ideas will suddenly catch fire. That’s what the FOX Business GOP debates are all about.
While most of the candidates agree to a certain extent on energy policies and the need to repeal Obamacare, they display interesting differences on the policy prescriptions for the pressing economic issues of the day. And most all of them will have to defend their tax-cutting plans against criticism they will blow out the deficit, with evidence their tax cuts will spark economic growth--and bring in a tax revenue bonanza. Here are the GOP candidates in the second debate, in their own words, their comments to various media outlets all in one place:
Jobs, Wage Growth
Donald Trump “China's ripping us, all of these companies, Japan, Mexico, Brazil, every country that we do business with is taking our base, they're taking our jobs… We're losing our manufacturing -- all of that will stop. You know, Ford is building a $2.5 billion plant in Mexico right now. Tennessee just lost a big, beautiful auto plant from a German manufacturer, car manufacturer, going to Mexico…Listen, they're [illegal immigrants are] not paying taxes. They're taking jobs from other people. We have a country that desperately needs jobs. They're taking jobs from other people…the Keystone pipeline should be approved immediately because number one, it's jobs. Immediately, you're building it, it's jobs, it's good.”
Dr. Ben Carson “How do we fix the economy so that it encourages entrepreneurial risk taking and capital investment? How do we create a ladder that allows those people in the lower income brackets to move up that ladder? The thing that is really impacting that person making $30,000 or $40,000 is all of the regulations that we're coming up with. Every single regulation costs us in terms of goods and services. It increases the price of everything.”
Sen. Marco Rubio “We are going to responsibly but fully utilize our oil, our natural gas, in addition to nuclear energy and coal technology and everything else that's available to us. Energy not only allows us to grow those industries but it allows us to grow our economy to be globally competitive. It will help bring manufacturing back to the United States and create millions of jobs for Americans, both in energy and in manufacturing…we need more vocational training -- why don't we teach people to be welders anymore in America? These are good jobs.”
Sen. Ted Cruz Would “create a tax and regulatory environment to bring cash companies have stockpiled overseas back home to create jobs…the best way to promote growth would be creating a flat tax rate, regulation reform, and repealing the Affordable Care Act, the biggest job-killer in the country.” Co-sponsored energy legislation that would create jobs: the Keystone XL Pipeline Act; amendments to expedite liquid natural gas (LNG) exports to World Trade Organization (WTO) members; repeal the ban on U.S. crude oil exports; and the North American Energy Infrastructure Act, which removes barriers to cross-border energy development, including the need for presidential approval of cross-border energy infrastructure.
Gov. Jeb Bush “We need to lower rates as far as possible. A 20% corporate tax rate, full expensing of all capital investing. That would create high wage jobs. My [tax] plan looks very similar to the 1986 plan, which was a bipartisan tax plan under the Reagan administration that created an explosion of investment and higher wage growth and economic growth for our country over an extended period of time. The simple fact is, we can grow at 4%, but it's going to require fixing some really big, complex things. You get rid of Obamacare and replace it with something that doesn't suppress wages and kill jobs. You embrace the energy revolution in our country. This president and Hillary Clinton, who can't even say she's for the X.L. [Keystone] pipeline even after she's left? Give me a break… I'm not sure how they [the State Dept.] got in the pipeline permitting business, but they did. The pipeline would create jobs..Taking from the successful people to provide for those that aren't isn't the solution.”
Gov. John Kasich “When we took the control in the '90s, we began to see -- the conservatives -- we began to see the economy improve. And then with a budget agreement, of which I was a chief architect, we then begun to see very rapid economic growth…We need to begin to deregulate. We have so many regulations that are choking not only big but small businesses and -- and I think combined with corporate incentives, balancing budgets, deregulation, I think that the American economy will begin to grow again.”
Carly Fiorina “We have a regulatory environment that is crushing jobs…the EPA’s lawless overreach..is going to crush jobs…We have to remember what the engine of economic growth is in this nation. You know what it is? Small businesses, family-owned businesses, community based businesses. We have to roll back this regulatory burden and take a 75,000-page tax code and make it three pages, because guess what? When you have a big costly complicated government, only the big, the powerful, wealthy and well connected can deal with it. It's called crony capitalism. We must reduce the power, the scope, the complexity of government…We have to, in particular, disentangle people's lives from the webs of dependence that government has woven around them for decades, that do not encourage them to move forward in their lives but discourage them from doing so.”
Sen. Rand Paul “Companies, and our jobs are being chased overseas by a 70,000 page tax code, so, that's why I've chosen to get rid of the whole thing, and have one single rate, 14.5% for everybody, business, and for corporate income, and personal income. You need to leave more money in the productive economy.”
Donald Trump Establishes four tax brackets, 0%, 10%, 20% and 25%. The top rate applies to income over $150,000 for single filers and $300,000 for joint filers. Eliminates the net investment income surtax. Lowers the top corporate rate to 15%. Would provide a tax-free holiday so that offshore corporate money would be repatriated back into the U.S. Eliminates the estate tax.
Dr. Ben Carson “I based mine [tax plan] on who I believe is the fairest individual in the universe. That would be God. And he said, I want a tithe..It would have to be somewhere between 10% and 15% initially. And there'd be no deductions and no loopholes, no IRS.” No specific proposal on taxes for capital gains, dividends or corporate taxes. Would eliminate the estate tax. Wants to “create a situation that encourages entrepreneurial risk-taking and capital investment."
Sen. Marco Rubio Would reduce the number of income tax brackets from six to three, with incomes under $150,000 taxed at 15%, incomes between $150,000 and $300,000 taxed at 25%, and incomes over $300,000 taxed at 35%. Would expand the child tax credit by $2,500, and would abolish taxes on capital gains and dividends for new investments, among other adjustments. Lowers the top corporate rate to 25%. Eliminates the estate tax.
Sen. Ted Cruz Establishes a flat rate of 10% on all ordinary income. Increases the standard deduction to $10,000 per filer. Lowers the rate on capital gains and dividends income to 10%. Eliminates the estate tax. Replaces the corporate income tax with a 16% business transfer tax, which applies to all capital income and labor payments.
Gov. Jeb Bush Establishes three individual tax brackets, with rates of 10%, 25%, and 28%. The top rate applies to taxable income over $85,750 for single filers and $141,200 for joint filers. Nearly doubles the standard deduction now taken by roughly two-thirds of all filers. Increases the standard deduction to $11,300 for single filers and $22,600 for joint filers. Eliminates the marriage penalty, expands the Earned Income Tax Credit, ends the estate tax, retires the Alternative Minimum Tax and ends the employee’s share of the Social Security tax on earnings for workers older than 67. Ends the step-up basis in capital gains for estates. Lowers the corporate rates from 35% to 20%. Allow for full expensing for capital investing. Would end the practice of world-wide taxation on U.S. businesses. Would assess a one-time tax of 8.75%, payable over 10 years, on the more than $2 trillion in corporate profits sitting overseas.
Carly Fiorina Would reduce the tax code to three pages because that is “about the maximum that a single business owner or a farmer or just a couple can understand without hiring somebody...Maybe there's one or two loopholes that really help the middle class but most of these deductions and loopholes and complexities actually benefit the wealthy, the powerful, the well connected…our tax code isn't competitive anymore. We have a 75,000-page tax code today. And that complexity favors the wealthy and the big and the well-connected because they can hire the accountants and the lawyers and the lobbyists to figure out how to make all that complexity work for them.”
Gov. John Kasich Would lower the top individual tax rate from 39.6% to 28%, reduce long-term capital gains tax rates to 15% and eliminate the estate tax. Would lower the top business tax rates from 35% to 25%, and double the research and development tax credit for small businesses. Would increase the earned income tax credit, a measure designed to help lower-income taxpayers. Said some of the proposals from Donald Trump and Ben Carson were based in fantasy: “These plans would put us trillions and trillions of dollars in debt…the idea that we're going to start talking about raising taxes, no, no, no, you need to reform and shrink government. That's what you need to do and create economic growth, which is exactly what we have done in Ohio.”
Sen. Rand Paul Would replace the income, payroll and corporate tax rate with a flat tax of 14.5%. Would cut the rate on capital gains and dividends income to 14.5%. Would increases the standard deduction to $15,000 per filer, and increases the personal exemption to $5,000 per dependent. Families of four therefore wouldn't pay taxes on their first $50,000 of income. Eliminates the estate tax. The 14.5% corporate rate would be levied on revenues minus allowable expenses, such as the purchase of parts, computers and office equipment.
Donald Trump Would “insist on a balanced budget relatively soon” after elected along with tax cuts. “There is so much actually scandalous waste in Washington, there is so much fat in Washington, that if you had the right people there you could cut it and you would have no problem whatsoever” in balancing the budget.
Dr. Ben Carson Would cut government agencies. “We have 645 federal agencies and sub-agencies. Anybody who tells me that we need every penny, and every one of those, is in a fantasy world." Says he’s “not in favor of continually raising the debt ceiling. I would say, you know, let's take all of those different agencies. You're going to cut your budget by 3 or 4%. I don't care whether they're Democrats or Republicans, if they continue to vote to increase our debt and to raise our debt ceiling and raise the amount of money that we're going to spend at the expense of those coming behind us, you need to find out who they are and you need to throw them out of office.”
Sen. Marco Rubio Promises a balanced budget in ten years while restraining spending and implementing deep tax cuts. Would use the “leadership of the presidency to move forward on a debate on entitlement reform, in combination with economic growth and regulatory reform….we cannot fulfill our potential if we don't have a competitive tax code…we cannot bring our long-term debt under control if we don't reform and save Medicare and Social Security.”
Sen. Ted Cruz Cut spending, enact tax cuts, and demand reform via the debt ceiling debate. “If Republicans had stood together on the debt ceiling, we had the votes to insist upon meaningful spending reforms…in fact, just a few years ago, Congress used the debt ceiling to get the Budget Control Act, and we did that with Barack Obama as president and Harry Reid as majority leader. If we showed the same resoluteness now that we did then, we could have gotten spending reforms. Unfortunately, we just rolled over instead.. The last 55 times the debt ceiling has been raised, in 28 of them Congress put significant restrictions and some of the most successful structural reforms limiting spending have come through the debt ceiling.”
Gov. Jeb Bush Supports a balanced budget amendment and tax cuts. “It has to be properly designed so that it's a tool to limit government, not to raise taxes…The president should be able to eliminate wasteful spending through a constitutionally sound line item veto…My first reform will be to place a freeze on federal hiring. We can expect that more than 10% of all current -- the current work-force will retire over the next five years. It's a fairly safe bet that not everyone who leaves needs to be replaced. We will go with a simple three-out, one-in rule across the federal work force, with exceptions for critical positions related to our security and to our safety."
Gov. John Kasich Vows to balance the federal budget within eight years as part of a domestic agenda led by broad tax cuts and a years’ long freeze on all spending except the military. "I took the state of Ohio from an $8 billion hole … to a $2 billion surplus… will immediately put us on a path to a balanced budget and I will get it done within eight years.” Says ensuing economic growth would eventually offset lost tax revenue to balance the federal budget “for the first time since Bill Clinton was president. When I left Washington, we had a $5 trillion surplus after I spent 10 years of my life to balance the budget, and it was all blown.”
Carly Fiorina Backs zero based budgeting, which would require agency heads review, justify, and get approval for every single budget line-item at the beginning of each budget cycle. In contrast to conventional budgeting, which uses the prior year’s spending as a baseline and then just adds to or subtracts from it, zero-based budgeting forces federal agency heads to “start from scratch and justify practically every cost.” Would cut government agencies, arguing it’s the morally right thing to do since some “government workers watch pornography all day.”
Sen. Rand Paul Wants to balance the budget and bring in more revenues by lowering the tax rate on overseas corporate profits that are returned to the U.S., using such money for roads and bridges. Would create "economic freedom zones" where individual and corporate income taxes are eliminated or drastically reduced in poor areas for a 10-year period to bring in revenues for the budget.
Regulations, Role of Federal Government
Donald Trump Would cut the size of government, taking aim at federal agencies and waste. “I’m not cutting services, but I’m cutting spending….I may cut the Department of Education, the Environmental Protection Agency..what they do is a disgrace..Every week they come out with new regulations.” When asked by FOX News’ Chris Wallace about who will protect the environment without the EPA, Trump responded: “We’ll be fine with the environment. We can leave a little bit, but you can’t destroy businesses.”
Dr. Ben Carson “Obamacare is really I think the worst thing that has happened in this nation since slavery..And it is in a way, it is slavery in a way, because it is making all of us subservient to the government, and it was never about health care. It was about control."
Sen. Marco Rubio Would back a regulatory budget that limits the amount of regulations on the economy. Each year, “Congress would set a limit on how much regulations can cost the American economy. Agencies would have to get under that number every year by reducing regulations. It will force them to undertake a cost-benefit analysis, and that's something that's not happening right now. And if they want to add a new regulation, they're going to have to get rid of an old one if they want to put it in place.” Would repeal Dodd-Frank: “It is eviscerating small businesses and small banks. 20 -- over 40% of small and mid-size banks that loan money to small businesses have been wiped out over the -- since Dodd-Frank has passed.”
Sen. Ted Cruz “You know, I was out talking to a bunch of farmers in West Texas, and I asked them, what's the difference between regulators and locusts? I said, well, the thing is, you can't use pesticide on the regulators. This old farmer leaned back and said, want to bet? And the most important regulatory reform is we need to repeal every word of Obamacare.”
Gov. Jeb Bush “I think you can shift -- in education, you can shift a lot of the -- a lot of the power back to the states. Certainly. As it relates to EPA, a lot of the delegated authority that used to exist should go back to the states. HHS -- we should -- we should create much less power in Washington for the delivery of health care and the regulation of health care and shift it back to the states…I think there are parts of the government that are no longer relevant…the Dept. of Commerce does a lot of things that just don't relate to the 21st century. What the IRS, EPA and the entire bureaucracy have done with overregulation, we can undo by an act of Congress and by order of the president.”
Gov. John Kasich Would rein in Dodd Frank: “You do not want to kill the small banks and the medium-sized banks. But in addition, you know, the big banks need to reserve against risks. These hedging devices, the CDOs, there need to be reserves on those. And the regulators need to bark. They need to not only bark, but bite when they see the big boys beginning to do things that are inappropriate. And, of course, we've got to look at Fannie and Freddie. But the bottom line here is, let's not kill the midsized and the small community banks.” Has said the regulations “are just out of control. We have a program in Ohio called CSI, not the television show, but the Common Sense Initiative. And we review all owners' rules and regulations systematically and we repealed them. We need a CSI at the federal level.”
Carly Fiorina “Let’s put every regulation out on the Internet for anyone to see… we actually are no longer a nation of laws, we've become a nation of rules. And a lot of these rules are rolled out by nameless, faceless bureaucrats who aren't elected by anyone, and aren't accountable to anyone. We have to have a top to bottom review of every regulation on the books, and every dollar we're spending in every single agency.” Has said: “I think the regulation that we have of Wall Street has been wholly ineffective… So Dodd-Frank has had a demonstrably bad impact on Wall Street -- more power, not less -- and on the community banking system that's been so important to the growth of this economy.”
Sen. Rand Paul “We would actually eliminate departments. Department of Commerce is mostly about corporate welfare. I would get rid of it all tomorrow. Department of Education ought to be done at the state and local level…Department of Energy, I would get rid of it, 95% of it, I would still have nuclear regulation, I'd probably put that in with the Pentagon. You could give that back to the states and have the states involved in housing and not the federal government. The Department of Interior, most of that could be down sized. We passed a law that, the Clean Water Act, that says that no one can discharge pollutants into a navigable stream. I'd vote for that. I think that if you're got a company and you have benzene and you're dumping it in the Ohio River, not only should you be punished if you are doing it purposefully you probably should be in prison for doing that…So I am for that regulation. That's a federal government regulation. However, that was passed in the 1970s. And it says discharging pollutant into a navigable stream. Over time now they have defined dirt as a pollutant and your backyard as a stream.”
Social Security and Medicare
Donald Trump “Secure Social Security, they have to do it. People have a contract. We're going to save Social Security. Save Medicare, Medicaid and Social Security without cuts. Have to do it. Get rid of the fraud. Get rid of the waste and abuse, but save it. People have been paying it for years. And now many of these candidates want to cut it. You save it by making the United States, by making us rich again, by taking back all of the money that's being lost.”
Dr. Ben Carson “One of the things that will be necessary is gradually raising the retirement age for people who are under the age of 55. But we're looking at a number of different ways obviously to save Social Security right now, scheduled to run out of money in 2033. We really don't want that to happen. What about cutting benefits for people with big incomes, guys like just, for instance, Donald Trump? I would love for people to voluntarily opt out of it, I would offer people the ability to opt out of receiving the check in lieu of a tax credit. Now, obviously, only certain people would be able to take advantage of that, but just probably at least probably 20% of our population could take advantage of that..I don’t think we should even talk about entitlements until we fix the economy and I think fixing the economy is not going to be that difficult.”
Sen. Marco Rubio Won’t change Social Security or Medicare for people at or near retirement age. Americans under the age of 50 "are going to have to accept that one way or another, our Social Security and Medicare are going to look different than our parents' did." Would raise the retirement age to 68-and-a-half. Would change the way payments are indexed. Would push for Medicare vouchers to “purchase a private [health coverage] plan in the marketplace that meets your needs better than traditional Medicare does. Anyone and any party who is in favor of leaving Medicare and Social Security the way it is now is in favor of bankrupting it.”
Sen. Ted Cruz “For seniors and for those who are near retirement, you make no changes whatsoever. We ought to gradually increase the retirement age for Social Security. We ought to change the rate of increase in benefits so that it matches inflation, rather than exceeding inflation, both of those for younger workers, people my age…I hope to lead the effort to make it happen and preserve and strengthen Social Security and Medicare for decades going forward no changes for current enrollees.”
Gov. Jeb Bush Asked in August why he supported his brother's plan to privatize Social Security: "I don't. It would have made sense back then. Now, we're way beyond that. What we need to do is to reform Social Security to preserve and protect it for those who already have it and to reform it in the logical ways where there's broad, bipartisan consensus." Says over an extended period of time, the federal government needs to raise the program's retirement age and income-cap limits. Said he would “phase out” Medicare, said the program has to be reformed because of unsustainable costs in the long run. “It’s an actuarially unsound health care system.$50 trillion dollars of debt has been accrued and if we do nothing, that’s the burden that we’re going to place on your children and grandchildren.”
Gov. John Kasich "We can't balance a budget without entitlement reform. What are we, kidding?" Said he was part of the effort to fix Medicare and Medicaid in the '90s, and that his plan to reform Social Security would lower initial benefits for individuals not yet near eligibility. “We can save Social Security, we shouldn't get rid of it, we can save Medicare and Medicaid."
Carly Fiorina “I am not prepared to go to the American people and talk to them about how we're going to reform Social Security and Medicare until I can demonstrate to them that the government can execute with excellence, perform its responsibilities with excellence, serve the people who pay for it with excellence.”
Sen. Rand Paul Called for changes that would put Social Security and Medicare on sounder ground by increasing retirement ages, decreasing benefits for higher-income retirees or changing the formula used to calculate living-cost adjustments.