Thursday, January 24, 2008

The Economics of Dr. Paul

My biggest reason for supporting Ron Paul is because I am sure he will get us out of Iraq. The war in Iraq is the most important issue of the day. It is the first time in America's history that we have attacked another country without provocation, conquered the country, and the installed a government there backed by our military. Everything else pales in comparison to Iraq.

However, Dr. Paul is also well known for his economic principles. I don't always agree with all of these, so I thought I would dissect his new plan for economic revitalization.

Also, I would like to openly challenge my "collectivist" friend to give his own thoughts on Dr. Paul's plans.

Tax Reform -- This is the biggest part of his plan, clearly. Now several of his tax cuts sound a lot like typical Republican "Reaganomics". For example, eliminate taxes on dividends and savings, eliminate capital gains tax, accelerate depreciation on investment, repeal the estate tax. All of these would benefit wealthy individuals and corporations much more than middle class Americans. The idea is that they would encourage economic growth.
In principle, I favor the first two issues. Taxes on dividends, savings and capital gains are all cases of double taxation. You pay taxes on your income. You take some of that income and invest it, and then get taxed again on that investment. Yes, this will favor the rich, but so what? Do we support something that is logically unfair just because the unfairness is concentrated on a minority group (rich folks) ?
I am more neutral on the other two issues. Reducing corporate tax rates seems like a more direct way to encourage growth, but I would probably put much lower priority on this. The estate tax is "unfair" in the sense that it only taxes estates worth over $2M. It is also a case of double taxation. Again, this would benefit the rich (folks with estates worth over $2M) more than anybody else, but so what? Also, hard coded numbers like $2M are always dubious. You could live where I live and have an estate worth over $2M without being very rich at all.
Spending Reform -- I definitely favor reducing overseas commitments. Well in particular, just get us out of Iraq and stop spending $800M/day there. Freezing non-defense and non-entitlement seems a little too cut n' dry. I would favor freezing or cutting many of those things, but maybe not all. It's hard to know, and hence my reservation from using a simplistic qualifier like "non-defense and non-entitlement."
Monetary Policy Reform -- Yes please! People should know what the heck is going with the Fed (or any other powerful agency.) How can you oppose this? As for allowing precious metals to be used as money ... it would be an interesting experiment to say the least.

Regulatory Reform -- I definitely favor repealing Sarbanes/Oxley. I can tell you first hand that this has a hugely negative effect on companies big and small. It was a classic case of knee-jerk legislation. Now for "Remove Costly and Unnecessary Federal Regulations"... sounds good on paper! More details should be given. I do favor HR 1869, though.

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