Republican presidential candidate Mitt Romney laid out a 59-point economic-recovery proposal that sets up a clear contrast to the plan President Barack Obama is likely to present tomorrow in a speech to Congress.
Romney proposed a reduction in U.S. corporate taxes, fewer federal regulations, new trade agreements, and sanctions against China for currency manipulation as he highlighted business experience that he said sets him apart both from Obama and other Republican 2012 presidential contenders.
The former Massachusetts governor, speaking at a trucking company in North Las Vegas, Nevada, also called for the elimination of taxes on interest, dividends and capital gains for individuals making $200,000 or less per year.
Romney’s speech came before today’s Republican debate in California, where he will share the stage for the first time with Texas Governor Rick Perry, who has surged in national polls since joining the race Aug. 13 to become the front-runner.
“The right course for America is to believe in growth,” said Romney, whose plan drew criticism from both the Obama and Perry campaigns. “The right answer for America is not to grow government.”
Obama is wedded to economic policies of the past, deploying a “pay-phone strategy” in a “smart-phone world,” he said.
Phillip Swagel, an economics professor at the University of Maryland and a former Treasury official, said the proposal underscored a fundamental divide between Romney and Obama.
“The big difference with Obama is on the size and role of government in the economy,” said Swagel, who worked in President George W. Bush’s administration. “Romney is not trying to be a reflexive ‘government is everywhere and always bad.’ He is saying that too big government holds down growth and job creation.”
Ben LaBolt, a spokesman for Obama’s re-election bid, said in a statement that Romney’s proposals would “tip the scales against hard-working Americans” by repackaging the “same old policies that helped create the economic crisis.”
Romney argued that his plan would promote economic growth, saying it would achieve an average 4 percent annual expansion in gross domestic product during the first four years after its enactment, add 11.5 million new private-industry jobs during that period and lower the unemployment rate to 5.9 percent.
Corporate Tax Cut
A central point of the program is the reduction of the top corporate tax rate to 25 percent, from 35 percent now.
Although the U.S. rate is among the highest in the world, the effective levy that companies pay after taking advantage of tax benefits is often lower. In 2008, it averaged 27.1 percent, according to the Congressional Research Service.
As president, Romney said he’d also seek an immediate 5 percent cut in non-security federal discretionary spending.
He reaffirmed his pledge to repeal the health-care overhaul promoted by Obama that Congress enacted in 2010, as well as the Dodd-Frank measure that toughened financial industry regulations, saying both have injected too much unpredictability for businesses.
Romney said he would initiate an immediate review of all Obama-era regulations, with the goal of eliminating any that unduly burden the economy and job creation. He also pledged to require federal agencies to offset any new rules by eliminating existing ones of equivalent cost.
“It’s still important to have regulations to get rid of the bad actors,” he said, while adding that many of the rules have become a “burden” on small businesses.
Romney said he would direct the Treasury to list China as a currency manipulator and order the Department of Commerce to assess duties on Chinese imports, if the Asian nation didn’t quickly move to float its currency.
“I’ll clamp down on the cheaters, and China’s the worst example,” he said. “I will go after them for stealing our intellectual property and they will recognize that if they cheat, there is a price to pay.”
Romney said he had no plans to start a trade war. “But we can’t have a trade-surrender either,” he said.
Daniel Griswold, who studies trade policy at the libertarian Cato Institute in Washington, said China can only be pushed so far.
“If we go down the road to trade confrontation with China, it could cost Americans jobs in terms of our exports and investments,” he said. “There’s definitely a wing of the Republican Party which is really itching to pitch a trade fight with China.”
Griswold added: “These are good applause lines. They won’t do a thing to put 14 million unemployed Americans back to work.”
Romney also pushed for passage of trade agreements with Colombia, Panama and South Korea.
Without specifying how much he wants to lower tax rates, he said he would also like to overhaul the individual tax code. Cutting corporate tax rates by 10 percentage points would result in about $1 trillion in forgone revenue over 10 years, according to the Congressional Budget Office; Romney says the economic growth it would generate would provide new revenue.
His plan would also permanently extend the Bush-era tax cuts -- set to expire at the end of 2012 -- and eliminate the estate tax.
In his campaign appearances, he talks more about his business career than his 2003-2007 tenure as governor, when Massachusetts ranked among the nation’s worst in job creation. Democrats focused on that in responding to his economic plan.
“As the governor of Massachusetts, the state ranked 47th out of 50 in job creation and was the third worst in the country for manufacturing jobs,” Democratic National Committee spokesman Brad Woodhouse said in a statement.
Romney previously served as the head of the private-equity firm Bain Capital LLC. The Boston-based firm produced profits for Romney, its other executives and its investors, whether the companies they touched boomed, eliminated employees or filed for bankruptcy.
“In the private sector, Romney benefited by laying people off and shipping jobs overseas,” Woodhouse said.
Yet Obama, 50, may be politically vulnerable next year amid an unemployment rate of 9.1 percent and sagging approval ratings in polls.
Since World War II, no U.S. president has won re-election with a jobless rate above 6 percent, with the exception of Ronald Reagan, who faced 7.2 percent unemployment on Election Day in 1984. That rate had dropped more than 3 percentage points during the previous two years. The median forecast of economists surveyed by Bloomberg puts the unemployment figure at 8.6 percent in the third quarter of next year.
Perry Campaign Criticism
For his part, Perry, 61, is campaigning on his record of job creation in Texas and is ahead of Romney in national polls of Republicans and Republican-leaning voters. When asked about Romney’s business experience, the Texas governor has pointed to his own work helping run a family farm in his home state after he left the Air Force and before entering government.
Perry’s campaign criticized Romney’s proposal in a statement issued shortly after his speech.
“As governor of Massachusetts, Mitt Romney failed to create a pro-jobs environment and failed to institute many of the reforms he now claims to support,” Perry spokesman Mark Miner said. “Among all the candidates for president, Governor Rick Perry has the strongest record of creating a climate of job creation by limiting taxes, burdensome regulations and the size and scope of government.”