Iowa Caucus Preview: The Economy -- Candidates differ on how to create jobs

2011-11-29T23:31:00Z 2011-12-13T02:59:40Z Iowa Caucus Preview: The Economy -- Candidates differ on how to create jobsBy Ed Tibbetts etibbetts@qctimes.com Mason City Globe Gazette
November 29, 2011 11:31 pm  • 

It was nearly an hour into the CNBC debate among the Republican presidential candidates on the economy two weeks ago, and a national political analyst tweeted there hadn't been a single confrontation.

There's a good reason for that.

For the most part, the candidates have mostly stuck to a recipe of lower taxes, free trade and less regulation in laying out their plans for the nation's economy. But even though they're mostly harmonious on the topic, there are some differences in how they propose to reshape the tax code, the degree to which they would change the government's regulatory structure and how they would deal with renewable energy incentives.

A Cato Institute economist also says the records of some of the candidates indicate they aren't as conservative as their rhetoric would indicate.

The Republican presidential candidates are making their pitches on the economy to a state that hasn't suffered as much as most of the rest of the country, at least in terms of employment.

With a jobless rate at 6 percent, Iowa is three points lower than nation. But in a state where the annual jobless rate has gone above 4.5 percent only twice between 1989 and 2008, the economy is a concern.

The two candidates who have polled the highest in Iowa lately - Mitt Romney and Herman Cain - offer a strikingly different approach to the economy.

Cain centers nearly all of his energy on his 9-9-9 plan, which would jettison most of the current federal tax code and set flat 9 percent rates on individual income, business income and on sales.

"My proposal is the only one that solves the problem by throwing out the current tax code, which has been a mess for decades," he said during the CNBC debate.

A Brookings Institution study said it would raise taxes on most Americans, but Cain has rejected that.

Romney is more judicious with the tax code. He proposes lowering the corporate tax rate and extending the Bush-era cuts. But it isn't as revolutionary as Cain's plan. His 59-page economic plan, however, is more broad-based.

"Ultimately, I'd love to see - see us come up with a plan that simplifies the code and lowers rates for everybody," Romney said during the CNBC debate. "But right now, let's get the job done first that has to be done immediately. Let's lower the tax rates on middle-income Americans."

Meanwhile, Texas Gov. Rick Perry and ex-House Speaker Newt Gingrich have proposed optional flat tax plans.

Ron Paul criticizes today's monetary system for devaluing the dollar. He's also proposed dramatically cutting more than

25 percent out of the federal budget in a single year.

Nearly all the candidates have proposed ditching the Dodd-Frank financial industry regulations. Some go further and say they would end the accounting industry regulations created after the Enron failure in 2002.

And, of course, they all say they would kill the health care reform law they deride as Obamacare.

An expert in Iowa's economy said he sees precious little in the GOP plans that get at the economy's current problem - a lack of demand.

"It's not a crisis of capital. It's a crisis of consumption," said Dave Swenson, an associate scientist in the economics department at Iowa State University. "To offer up an opportunity to reinvest in more capacity doesn't lead to more jobs."

Chris Edwards, an economist at the libertarian Cato Institute, rejects that view. He said the Obama administration's approach the past two years has failed and companies have a choice where to invest, including at lower-cost locations overseas.

"There's something else going on," he said. "It's about business fears. Investor fears about the future."

Edwards said all the candidates have offered similar rhetoric, but in some cases, their records belie that. He singles out Romney and Gingrich.

An analysis by the conservative Club for Growth faults Gingrich, in particular, for heavily utilizing tax credits while in office, which it says allows the government to "pick winners and losers."

Gingrich, on the other hand, has pointed to the years after Republicans took over control of the House in 1994 - when he was their leader - as among the most prosperous in American history, citing a cut in the capital gains tax.

Romney, meanwhile, has been tagged for Massachusetts' ranking fourth from last in job creation during his tenure. But the ex-governor has cited as strengths his business experience, stewardship of the 2002 winter Olympics and that the state moved from job losses to gains during his years in office. He also cites its improved fiscal condition, leading to a credit upgrade.

Some of the candidates have carefully targeted proposals that affect two of Iowa's most integral industries - agriculture and manufacturing.

Former Pennsylvania Sen. Rick Santorum has proposed eliminating the tax on manufacturers.

Perry, meanwhile, would do away with ethanol subsidies, even the renewable fuels standard, which requires the use of a certain amount of ethanol in the nation's fuel supply.

They say Perry's plan will give the oil industry an advantage because it preserves its subsidies.

"The Perry energy plan is not good for Iowa's economy or America's security," said Walt Wendland, president of the Iowa Renewable Fuels Association.

"I do not think it is the federal government's business to be picking winners and losers and frankly on any of our energy sources," Perry said earlier this month in Pella. He suggests leaving to states the option of investing in such sectors.

 

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(1) Comments

  1. trupatriot
    Report Abuse
    trupatriot - November 30, 2011 3:49 am
    From the article: "An expert in Iowa's economy said... a lack of demand."
    This is a useless statement. Lack of demand due to what? Uncertainty about the future? Pundits warning about European, Chinese, and eventual US collapse? Weak jobs market? The prospect of much higher personal income taxes?
    All of this will be true until we elect the single person who has warned us of these problems for the past 30 years.

    People, learn about Ron Paul. He is our only chance to restore America.
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