Matthew Cavanaugh/Getty Images
Newt Gingrich in Manchester, NH, Dec. 12, 2011.
Newt Gingrich in Manchester, NH, Dec. 12, 2011. Matthew Cavanaugh/Getty Images
Now that he's the frontrunner for the Republican presidential nomination, Newt Gingrich's proposals for the economy are drawing much more of the scrutiny you'd expect.
And the emerging consensus is that Gingrich is trying to grab the pole position against his GOP rivals with plans for bigger tax cuts for the wealthiest Americans and reductions to businesses than they're his competitors are generally proposing.
Gingrich is quick to remind people that he was an early adopter when it came to supply-side economics — the idea popularized by President Ronald Reagan that tax cuts drive higher economic growth. Thus, it's no surprise that his economics plan shows his undying devotion to the Laffer Curve.
One of the best descriptions of Gingrich's approach comes from Jim Tankersley writing for the National Journal:
"It is Reaganomics, cryogenically frozen in 1981, thawed 30 years later, and pumped full of Newt-style steroids in order to save the American people from slow growth."
The former House speaker proposes a raft of tax cuts and changes that should give the richest Americans something to cheer about.
The problem, analysts say, is that Gingrich's plan would explode deficits at the very time policymakers can't agree on how to close relatively smaller budget shortfalls.
Gingrich would make permanent the Bush tax cuts that are scheduled to lapse at the end of the next year.
But that's just for starters.
He would end the capital gains and estate taxes.
Even Mitt Romney, who has repeatedly tried to out-conservative his rivals in the GOP presidential race, has said ending the capital gains tax is a bridge too far for him. The former Massachusetts governor would only eliminate the capital gains tax for voters with adjusted gross incomes of $200,000 or less.
Wage earners with household incomes of $200,000 or less don't generally get the much of their income year after year from capital gains so Romney's approach is more symbolic than anything else.
But many at the top of the income ladder do. For them, Gingrich's approach would be an unmitigated boon.
Gingrich would also drop the corporate tax to 12.5 percent from the current 35 percent.
Furthermore, the former speaker would offer individual taxpayers the option of a 15 percent flat tax, keeping some deductions like those for mortgage interest and charitable giving. Texas Gov. Rick Perry is only talking about a 20 percent optional flat tax.
Gingrich would also get rid of the hated alternative minimum tax which has snagged ever more upper middle income taxpayers.
The net effect of all of this would be to turn federal deficits into gushers of red ink even more than they already are, according to Howard Gleckman, writing for the blog of the non-partisan Tax Policy Center.
"In just the single year of 2015, Gingrich's plan would increase the deficit by about $850 billion. Remember, while we are used to seeing numbers such as this describing the 10-year revenue loss of some tax plan, this is just the one-year cost. It is half again as generous as Perry, who would add merely $570 billion to the deficit.
Keep in mind that among Gingrich's proposals for economic renewal would be balancing the federal budget. So he would need to find nearly an extra trillion dollars in spending cuts just to stay even. Given the recent failure of the legislative supercommittee, that doesn't seem likely.
"Compared to the current law world where the 2001-2010 tax cuts have expired, taxpayers across-the-board do even better. Nearly 82 percent would get a tax cut. About 45 percent of the lowest-earners, and 98 percent of middle-income households come out ahead. For those roughly 130,000 lucky duckies in the top 0.1 percent, the windfall is eye popping. They'd get an average tax cut of $2.3 million. And their total federal tax bill would plunge from 38 percent of their income to barely 10 percent."
A majority of Americans may repeatedly be telling pollsters that they'd like to see the rich pay more in taxes to help close the nation's deficits but Gingrich's plan seems to take no notice of that.
His plan would not only reduce taxes but regulations, too. All the Republican candidates say they would repeal Dodd-Frank, the financial regulation bill passed last year in response to the meltdowns of the housing market and Wall Street.
Gingrich also says he would repeal the law known as Sarbanes-Oxley. That law was a response to the Worldcom, Enron and Tyco International scandals in which corporate executives, company boards and accounting firms either engaged in outright fraud or willfully turned a blind eye to same, leading to the loss of jobs, retirement funds and investments for tens of thousands of workers and investors.
Sarbanes-Oxley requires corporate officials and auditors to increase their diligence and certify as much. For many executives it has become another regulatory headache.
But at the time of the law's passage in 2002, it had an almost unheard of level of support from both parties. It passed the House in a 423 to 3 vote with eight abstentions. In the Senate, it passed with 99 yes votes and one abstention. That's extraordinary consensus in modern Washington.
Given that, it's remarkable that Gingrich would be talking about repealing a law that pretty much had universal appeal.
Meanwhile, Gingrich has big plans for entitlements. He would try to complete President George W. Bush's vision of transforming Social Security into private savings accounts instead of the government system that now exists. Ditto for Medicare. Medicaid would be turned into block grants back to the state.
All in all, it's the Reagan-Gingrich revolution 2.0. While his critics may knock Gingrich for changing his wives or his religious denomination, it appears he has remained fairly steadfast in his conservative tax cutting, regulation-slashing and entitlement-privatizing vision of what the American economy should look like.