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Finding Strength in the Light

Sigh: Perry Unveils Strong Economic Plan, Indulges in Birtherism

The timing is just incredible -- and probably maddening for many Perry backers.  On the very day Rick Perry gives himself a meaningful leg up by rolling out a fairly strong economic plan, he grabs a Birther gun and shoots himself in that femoral artery.  Let's start with Perry's economic plan, "Cut, Balance and Grow."  The Texas Governor outlines his proposal in a Wall Street Journal Op/Ed this morning:


The plan starts with giving Americans a choice between a new, flat tax rate of 20% or their current income tax rate. 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.

This simple 20% flat tax will allow Americans to file their taxes on a postcard, saving up to $483 billion in compliance costs. By eliminating the dozens of carve-outs that make the current code so incomprehensible, we 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. My plan also abolishes the death tax once and for all, providing needed certainty to American family farms and small businesses.

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.  First, we will lower the corporate tax rate to 20%—dropping it from the second highest in the developed world to a rate on par with our global competitors. Second, we will encourage the swift repatriation of some of the $1.4 trillion estimated to be parked overseas by temporarily lowering the rate to 5.25%. And third, we will transition to a "territorial tax system"—as seen in Hong Kong and France, for example—that only taxes in-country income.


Perry's plan also includes eliminating taxes on Social Security benefits, and pledges to stop raiding that program's "trust fund" -- which doesn't actually exist.  In addition to its tax reduction and simplification elements (his post card prop is very compelling), the Perry proposal endorses a Balanced Budget Amendment to the Constitution, and suggests capping federal outlays at the approximate historical average of 18 percent of GDP.  It also calls for the full repeal of Obamacare, Dodd-Frank, and portions of Sarbanes-Oxley.  In a South Carolina speech unveiling his program earlier today, the erstwhile GOP frontrunner also refused to shy away from entitlement reform.  He discussed the possibility of raising the eligibility age for Social Security and Medicare, as well as means-testing benefits for both programs along a sliding scale.  He also mentioned optional retirement accounts for younger workers, as well as Paul Ryan-style premium support regime for longer term Medicare reform. 

Some conservative critics are already taking aim at Perry's ideas.  AEI's Andrew Biggs suggests the voluntary nature of the flat tax is unworkable, and may actually increase compliance costs, since people may hire tax professionals to run their numbers under both scenarios -- then pay the lower amount.  Biggs also argues this could lead to a significant revenue issue because (presumably) the 47 percent of Americans who currently pay zero federal income taxes would opt for their current rate, whereas the wealthy would likely take the new 20 percent flat rate (unless they believe they can manipulate the existing code to an even greater advantage).  Granted, static analysis of these cuts' effects may be troublesome. Many conservatives argue that such bold tax policy changes will spur dramatic economic growth, which would have a positive impact on employment, wage, and profits -- and thus, government revenues.  Still, the either/or option simply adds to the labyrinth of paperwork because the current tax code remains in place.   Meanwhile, Newt Gingrich challenges Perry to "bump plans" with his version of a flat tax, and Philip Klein breaks down and clarifies a few additional issues with the Perry pitch.


We'll hear a lot more about Perry's plan in the coming weeks, but he deserves to be commended for introducing a specific plan that doesn't shrink from the enormity of the task at hand.  Speaking of which, Mitt Romney's economic plan is equally specific, but it amounts to technocratic edge-nibbling and avoids tackling several controversial, big ticket issues.  This might be smart politics, but it's a bit cowardly and slippery on policy.  It's also not hard to imagine how Romney will demagogue Perry's flat tax idea: Past is prologue. (While you're at it, read this; classic Romney).  There will be quibbles and substantive concerns over various pieces of Perry's blueprint, but overall, it incorporates many robust conservative reforms and has attracted the support of Steve Forbes and the Club for Growth

The biggest question I have is whether Perry will demonstrate a firm grasp of the details and effects of his plan, and whether he can mount a persuasive defense of it.  Paul Ryan anticipates and addresses his political opponents' criticisms -- intellectually honest and dishonest alike -- with such aplomb, fluency, and specificity that he manages tos ably navigate some treacherous political waters.  Perry has proven incapable of acquitting himself even remotely as well in recent debates.  Policy matters in politics.  Salesmanship may matter even more.  We mustn't ignore or underestimate this reality -- lamentable as it may be.


Which bring us to the candidate's inexplicable flirtations with Birtherism over the last few days.  Perry played coy with Parade magazine in an interview published over the weekend, then took things a step further with the New York Times' John Harwood:

The Texas Governor's jabs at Obama's missing transcripts seem warranted, especially since Perry's been raked over the coals for his subpar college marks -- including a 'D' in a class called "meats."  He's also right to label this issue a "distraction," and try to move the conversation back to jobs.  But it's a big mistake to add any fuel to the Birther fire, which should have been totally extinguished in April.  Perry asserts that it's "fun" to revisit this "question," and admits he has "no clue" as to the president's place of birth -- especially after his dinner conversation with Donald Trump.  Oh dear.  Though these comments will delight the remaining conspiratorial fringe, the vast majority of the public considers this issue settled.  A mainstream GOP candidate playing footsie with Birthers isn't credible and may damage the party, which Haley Barbour and Bob McDonnell (among others) seem to understand.  David Freddoso calls Perry's Birther eyelash-batting a "fatal" misstep.  I wouldn't go quite that far yet, but it certainly doesn't help. 


Perry is trying to reclaim his position as the most electable and accomplished conservative alternative to Mitt Romney in the Republican field.  Even if one has faint Birther inclinations, engaging in this silly speculation hands a hostile media an issue to exploit -- and helps shift the focus away from Barack Obama's ruinous tenure in the Oval Office.  Perry wandered way off message during his official economic plan introduction.  That's a problem.

UPDATE - Perry rips a reporter for (again) raising this issue.  Well done:

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