The Case for Tea Party Economics
Our policy makers and the “experts” debate what the best policy is to fix our economy and get it growing again. Supply-siders argue that we must keep taxes low so that the private sector can create wealth and increase production, and create jobs. They seem to be willing to ignore the problems of our high debt and deficits to keep taxes low on individuals and small businesses. Then there are the deficit hawks who are willing to raise taxes while cutting spending to shrink the overall size of government. Tea Party Economics is about both low taxes, and low government spending. We must tie tax cuts and budget cuts to one argument if we are truly going to shrink the government and grow the free market economy.
President Calvin Coolidge is the prime example that proves that tax cuts and budget cuts are both necessary to grow our economy. Why can't we have an economic plan that does both – focuses on the supply-side of the economy and shrinks government? We do. It's called Tea Party Economics. This economic philosophy has seven core principles: low taxes, sound money, free trade, less regulations, balanced budgets, less spending, and property rights (with an ultimate goal of fundamental tax replacement with a system that is fair, transparent, and simple).
Keeping taxes low will help individuals and businesses, particularly small businesses, keep more of their earnings so that they can save and invest more of their own money. The supply-siders are correct that lower taxes can lead to greater wealth creation and increased production by the private sector. I fundamentally reject the idea that having low tax rates increases our deficits. The belief that tax cuts cause deficits comes from the belief that it's the government's money. Therefore, the Left sees a tax cut as a liability that takes “revenue” from the government. This economic belief is false. It is the taxpayer's money, not the governments. A tax cut is actually an asset because the government is confiscating less of the People's money; allowing the People to keep more of their own money to spend, save, or invest. What increases our deficit is spending in excess of our receipts; i.e. excessive spending.
The real solution that will close our deficit gap and fix our deficits is not to raise taxes, but to cut spending and shrink the size of government. However, I believe deficit hawks are also correct to point out the dangers of having such a high deficit and national debt. That is why Tea Party Economics proposes cutting spending, cutting unnecessary regulations, and shrinking the size of government, while keeping taxes low. I believe the decreased spending and regulations, and smaller government will be what pays for the lower taxes.
How can “We the People” force Washington to spend within its means? Tea Party Economics argues that a Balanced Budget Amendment (BBA) that requires a balanced budget every year, requires a two-thirds supermajority to raise taxes, and limits spending to 18 percent of GDP will bring accountability and checks on the federal government and strengthen our federal system of Constitutionally limited republican government. If we can't systematically encode these principles into the system by law, then we have no ability to force our elected officials to do what must be done.
Tea Party Economics also proposes that we need to expand free trade. Free trade helps grow our economy because when American companies can buy and sell more goods and services to more people, we get more jobs and growth. According to Kim Holmes at The Heritage Foundation, free trade has “created millions of jobs and is responsible for almost a third of the nation's gross domestic product (GDP).”
What about our money? Tea Party Economics argues for sound money. A good example of seeking sound money is that during the Ronald Reagan Administration, Reagan's monetary policy was to keep inflation low and strengthen the Dollar through price stability. Another aspect of having sound money is making the value of the US Dollar reliable, constant, and certain. Tea Party Economics endorses the idea of going back to a Classic Gold Standard, and even argues for an International Classic Gold Standard.
The final economic principle of Tea Party Economics is property rights. People should be encouraged to acquire and possess their own property, and have the freedom to use their property the way they think is best and not dictated by central planners. The government can seek justice by protecting property rights against people who encroach on others, which should also include encroachment by government itself.
Therefore, deficit hawks and supply-siders should unite around these core set of economic principles. Tea Party Economics focuses on the supply-side to create jobs and growth by keeping taxes low and expanding free trade while also addressing the dangers of high deficits by shrinking spending, regulations, and government. Tea Party Economics includes accountability and justice by requiring balanced budgets and the protection of property rights against encroachments by people and government.
Trey Mays is an independent Conservative political commentator. Follow him on Twitter @TreyMays and Like him on Facebook @TreyMaysUSA.
Sources: Kim Holmes, a former assistant secretary of state, is a vice president at the Heritage Foundation and author of “Liberty's Best Hope: American Leadership for the 21st Century” http://www.heritage.org/research/commentary/2009/05/free-trade-as-a-stimulus-strategy