Rudy Giuliani

Washington needs a hefty dose of fiscal discipline. To restore accountable and effective leadership to America, government needs to run more like a business.

That is what I did in New York. My administration inherited a $2.3 billion deficit. We responded by imposing fiscal discipline. We cut programs. We cut taxes. And we got results. We turned the deficit into a multibillion-dollar surplus. We cut bureaucracy by 20,000 workers - while increasing cops on the street and teachers in the classroom. And we cut taxes 23 times, all while working with a Democrat-dominated city council. Every year - in good times or bad - I required city commissioners to propose cuts in their own budgets. I wanted to keep my managers focused on saving taxpayers' money, while spending it more effectively. We put management back into the Office of Management and Budget (OMB).

Fiscally conservative governance was at the foundation of New York City's resurgence. Now we need to do the same thing in Washington, building a more accountable government on what I call "the four pillars of prosperity" for sustained economic growth.

1. Reduced spending growth. Fiscal conservatives understand the value of controlling the size and cost of -government. Controlling spending makes -government more efficient and more effective in achieving its core responsibilities. But the performance of the government's fundamental functions must also be improved.

America will need to invest in a stronger military to win the war on terror or, as I call it, "the terrorists' war on us". Homeland security must be improved to ensure that there is never another Hurricane Katrina-like disaster response from the government. And we will need to increase our investment to move more aggressively towards energy independence. Clear priorities must be set to meet the challenges of our times. We must govern better while spending less. One way to reduce the size and cost of government is by waging a war of attrition.

During the next two presidential terms, 42 per cent of the federal civilian workforce is due to retire. This is a chance to revitalise government by making it smaller and smarter. Consider the cost-saving opportunities: permanently retiring just half of the potential retirees, while upgrading services with technology, would mean about 300,000 fewer salaries at an average of $70,000 each. This amounts to $21bn in taxpayer savings every year.

2. Lower Tax Rates. Americans face a monster tax increase because of "bracket creep", the alternative minimum tax and the expiry of the 2001 and 2003 tax cuts. This means cutting taxes just to keep even. Taxpayers deserve the lowest possible tax rates, simplification and certainty about what those rates are likely to be - not the gimmicks and tricks Congress imposes.

One dangerous gimmick is the one-third increase in the long-term capital gains tax rate due to explode on investors and the economy early in the next presidency. I am committed to keeping the rate low. But the strangest trick is that under current law, the "death tax" will disappear for a year, in 2010, and then roar back to oppressive levels. This is unfair. Only Washington could create a tax incentive for death. If you have worked hard and played by the rules, your children should not have to sell the family farm or small business just to pay another round of punitive taxes. That is why the death tax should get the death penalty.

3. Regulatory Reform. The US currently has a regulatory black eye. We are being hurt by heavy-handed regulators, laws such as Sarbanes-Oxley and an environment of hyper-litigation and shareholder lawsuits that can be poisonous to the private sector. When companies such as Enron and WorldCom cheated shareholders, they were rightly punished to the limit of the law. But after a scandal, Washington often overreacts and over-regulates. We now need to reform the unwise excesses of the initial reforms. When regulation becomes too burdensome, it weighs on us like a tax. It hurts the competitiveness of American businesses. That is why regulatory reform must be a priority for the next president.

4. Sound monetary policy. A strong economy and a sound monetary policy are intertwined. The Federal Reserve Board is the ultimate, independent arbiter of monetary policy. It is essential that its appointees are highly qualified individuals who understand that stable, low inflation is an input - not an impediment - to durable economic expansion and stronger economic growth. The Fed should function more like a compass than a weather vane, setting direction rather than shifting with the wind.

When economic policies are built on the four pillars of prosperity, economic growth, upward mobility and more efficient government are the result. That is our goal. Good business leaders always look for ways to cut costs and improve the delivery of services. Government should apply the same principles by measuring the real value of our investments. To do that, the next president needs to put the "M" back in the OMB. Fiscally conservative leadership will help restore the confidence of our shareholders: the American people.


Rudy Giuliani

Rudy Giuliani is the former Mayor of New York City, and currently a candidate for the Republican nomination for President of United States. Learn more at www.joinrudy2008.com.

Be the first to read Rudy Giuliani’s column.
Sign up today and receive Townhall.com delivered each morning to your inbox.
Sign up today