Remarks on the Economy at the University of Chicago

How are you enjoying your recovery Summer? That's what the President said we were having. And that was last year.

Now, gas is nearly $4 a gallon. Home prices are in the gutter. Our healthcare system, thanks to ObamaCare, is more expensive. And less efficient. Unemployment's back over 9%. Our national debt has skyrocketed. Our budget deficit has grown worse. And the jobs and manufacturing reports are grim. If that was a recovery, then our President needs to enter economic rehab. And the American people need to stop his policies. Cold turkey.

The addiction to spending must be brought to a halt. And we must have a President who has a growth agenda. With pro-growth policies I will.

The President wrongly thought the stimulus, the bailouts and the takeovers were the solution. He says they worked. They did not.

The President is satisfied with a second-rate American economy. Produced by his third-rate policies. I'm not.

I promised to level with the American people. To look them in the eye. And tell them the truth. I went to Iowa. And said we need to phase out federal ethanol subsidies. I went to Florida. And said we need to raise the retirement age for the next generation. And means-test cost-of-living adjustments for Social Security. I went to New York City. And told Wall Street that the era of bailouts, carve-outs and handouts had to end. I'm willing to tell Americans the hard truth. And I believe Americans are ready to hear it.

But the truth about our economy isn't hard at all. Markets work. Barack Obama's central planning doesn't. America's economy is not even growing at 2% today. And that's what all projections say we can expect for the next decade. That's not acceptable. It's not the American way. The recession may have changed our economy. But it didn't change our character.

The United States is still home to the most dynamic and entrepreneurial people in the world. They're all around us. Ready to innovate, invest, compete and create new businesses and jobs. That will mean opportunities for everyone.

They've been discouraged and weighed down. By President Obama's big government. And heavy handed regulations. They deserve a better deal. I'll give them one. And here it is.

Let's start with a big, positive goal. Let's grow the economy by 5%, instead of the anemic 2% currently envisioned. Such a national economic growth target will set our sights on a positive future. And inspire the actions needed to reach it. By the way, 5% growth is not some pie-in-the-sky number. We've done it before. And with the right policies, we can do it again.

Between 1983 and 1987, the Reagan recovery grew at 4.9%. Between 1996 and 1999, under President Bill Clinton and a Republican Congress the economy grew at more than 4.7%. In each case millions of new jobs were created, incomes rose and unemployment fell to historic lows. The same can happen again.

Growing at 5% a year, rather than the current level of 1.8%, would net us millions of new jobs. Trillions of dollars in new wealth. Put us on a path to saving our entitlement programs. And balance the federal budget.

How do we do it? In short, we create more economic growth. By creating more economic freedom. We should start by overhauling the tax code. Its currently an anti-growth, nine thousand page monstrosity. That's chock full of special deals for special interests. It's main goal, seems to be to generate campaign contributions. Not jobs.

American businesses today pay the second highest tax rates in the world. That's a recipe for failure, not adding jobs and economic growth. We should cut the business tax rate by more than half. I propose reducing the current rate from 35% to 15%.

But our policies can't just be about simply cutting rates.They must also promote freedom and free markets. The tax code is littered with special interest handouts, carve-outs, subsidies and loopholes. That should be eliminated.

Such reform would not only help offset short-term revenue loss from the rate cuts. But it would also reduce cronyism, favoritism and government manipulating markets for political purposes. Business success should depend on winning over customers. Not winning over Congressman. These changes will make American companies immediately more competitive. Investment from around the world will pour into our suddenly inviting market. Creating desperately needed jobs and opportunities.

But just changing business tax rates isn't enough. That's because we know most job growth will come from small and medium size businesses. Typically structured as S corps or LLCs. And their owners are taxed under individual tax rates. Not corporate tax rates.

So, pro-job and pro-growth tax reform must include individual tax reform as well. Small business owners and hard working Americans need a better deal too. Small businesses should also have the option of paying at the corporate rate.

On the individual rates we need a simpler, fairer and flatter tax system overall. I propose just two rates, 10% and 25%. Under my plan, those who currently pay no income tax would stay at a zero rate. After that, the first fifty-thousand dollars of income or one-hundred thousand for married couples would be taxed at 10%. Everything above that would be taxed at 25%. That's it.

A one-third cut in the bottom rate.To allow younger, middle and lower-income families to save and build wealth. And a 28% cut in the top rate to spur investment and job creation.

In addition, we should eliminate all together the capital gains tax, interest income tax, dividends tax and the death tax.Government has no moral or economic basis to claim a second share of the same income. When you deposit a dollar in your bank account. Every penny should be forevermore yours and your children's. Not the federal government's.

Once we unleash the creative energy of America's businesses, families and individuals as we did in the eighties and nineties. A booming job market will reduce demand for government assistance. And rising incomes will increase federal revenues.

In the 1980s, revenues increased by 99%. In the 1990s, revenues climbed high enough to balance the budget. 5% economic growth over 10 years would generate 3.8 trillion dollars in new tax revenues. With that --- we would reduce projected deficits by 40%. All before we made a single budget cut.

The next part of my plan deals with that other 60%.

A balanced federal budget shouldn't be a political sound bite. It should be the law of the land.

As one of 49 governors operating with a balanced budget requirement. I balanced 4 biennial budgets in my two terms as governor of Minnesota. And I know the only reason our legislature ever gave me a balanced budget was because under our constitution they had to.

We have to face the truth, Congress is addicted to spending. And that's true regardless of which party is in control.

The best way, and possibly the only way to ensure fiscal discipline is to put the Congress in a spending straightjacket.

That's why I support a constitutional amendment. That not only requires a balanced federal budget. But also caps federal spending as a percentage of our economy. Around the historical average of 18% of GDP. Only a constitutional amendment has the power to bind future Congresses to keep their promises. Force decision-makers to finally make decisions. And give statutory reforms a chance to succeed.

But passing a constitutional amendment will take awhile. And the crisis that we face is here now. And requires immediate action.

I have and will continue to outline specific proposals to reduce spending, reform government and balance the budget. As mentioned I've already begun that process. With proposals regarding ethanol, entitlements, government employees and Wall Street.

For example, I've proposed capping and block-granting Medicaid to the states. Raising the Social Security retirement age for the next generation. And slowing the rate of growth in defense spending. But we can't trust Congress to do it. We cannot allow the situation to risk being unresolved. And take down America's potential for growth and prosperity.

So, I propose that Congress grant the President the temporary and emergency authority. To freeze spending at current levels. And impound up to 5% of Federal spending. Until such time as the budget is balanced. If they won't do it, I will. As an example, cutting just 1% of overall federal spending for 6 consecutive years would balance the federal budget by 2017.

I know government can cut spending. Because I did it in Minnesota. I cut state spending in real terms for the first time in our state's history. We did it with priority-based budgeting. We did it by setting a record for vetoes. It took a government shutdown. And a long government union strike. But we got it done.

We didn't close our schools. Or empty out our prisons. We cut spending where it needed to be cut. We can do the same thing in Washington.

Impounding the money should only be a last resort. To force policymakers to finally do their jobs. To cut what we don't need. To allow us to keep the things we need most.

There's some obvious targets. We can start by applying what I call “The Google Test.” If you can find a good or service on the Internet. Then the federal government probably doesn't need to be doing it.

The post office, the government printing office, Amtrak, Fannie and Freddie were all built for a different time in our country. When the private sector did not adequately provide those services. That's no longer the case.

What's more, the same competitive efficiency that revolutionized America's private sector over the last three decades should at long last be applied to every corner of the federal bureaucracy as well.

It is no longer enough for government to go on a diet. Government needs to hit the gym.

One efficiency program, Lean Six Sigma, already has a proven track record. Using performance-based management practices to streamline programs at the CIA and the Pentagon. And as I can personally attest various agencies of the Minnesota state government.

If we applied this approach throughout all federal agencies we could save up to 20% in many programs.

Beyond all of this, the real slog of the next administration will be an unrelenting trench battle against the over-regulation. That's suffocating America's entrepreneurial spirit.

Conservatives have long made the federal bureaucracy the butt of jokes. And considering that some bureaucrat in Washington is actually in charge of the strength of our showerheads --- the vigor of our toilet flushes or the glow of our reading lamp it's hard not to laugh.

But the fact is, federal regulations will cost our economy 1.75 trillion dollars this year alone. It's a hidden tax on every American consumer. Built into the price of every good and service in the economy.

And make no mistake. The current Administration is hunting far bigger game than the incandescent light bulb.

Under ObamaCare's individual and employer mandates America's private health care market is in intensive care. And the prognosis is bad.

The Dodd-Frank financial regulation bill called for more than 200 new rules. To be written by more than ten federal agencies. None of them resolving the catastrophic scandal of Fannie Mae and Freddie Mac. Months after the law went on the books, no one yet knows exactly what the law is.

And the Environmental Protection Agency is now regulating carbon emissions. A policy rejected by Congress but putting millions of jobs at risk.

If these policies sound as though they were written by people who have spent no time outside government, well you're right. President Obama's political appointees have been notorious for their lack of private sector experience.

This is unacceptable.

It"s fundamentally immoral to force working Americans to hold down two or three real jobs. Just to afford the whims of “experts” who've never had one.

We don't need ObamaCare to create a one-size-fits-all government-run health care program. We need Washington to allow a personalized, private health care market to flourish. And meet the diverse needs of individual patients.

We don't need Dodd-Frank to further intertwine Wall Street and Pennsylvania Avenue. We need to privatize Fannie and Freddie. And remove the threat that their political slush funds can never again sink our economy.

And we don't need the unelected officials at EPA to do what our elected officials in Congress have rejected. We need less EPA monitoring of our economy. And more monitoring of EPA's affects on our freedom.

I will require sunsetting of all federal regulations. Unless specifically sustained by a vote of Congress. Under my administration the NLRB will never tell an American company where they can and cannot do business.

Just as the federal government must break down barriers within our domestic markets. We must break down barriers in international markets.

Congress should ratify completed free trade agreements with South Korea and Colombia. And complete the agreement with Panama. We should start new bilateral talks with our trading partners. To promote our exports.

President Obama set a goal of doubling exports. Yet his policies have prevented this. Mine will achieve it.

Finally, even if we are successful in changing the way Washington taxes, spends and regulates. Many of the gains we'd realize could be lost by the continued debasement of the dollar. As a result of the loose-money policies of the Fed.

A strong dollar undergirds all that we do for economic growth. Inflation cruelly undermines the life savings and life prospects of every American. If we want to give taxpayers, retirees, investorss, consumers and entrepreneurs a better deal, we have to maintain a strong dollar. No more quantitative easing. No more monetizing debt. No more printing money with reckless abandon

The president and Congress have every incentive to maximize employment. And a limited government, streamlined tax system and competitive marketplace will give the economy what it needs to do so.

We need monetary policy that is focused like a laser on curbing inflation. And maintaining price stability. That should be the role of the Fed. And nothing more.

America is facing grave challenges. And when times get tough, some politicians try to turn the American people against one-another.

Regrettably, President Obama is a champion practitioner of class warfare. Elected with a call for unity and hope. He's spent three years dividing our nation. And fanning the flames of class envy and resentment. To deflect attention from his own failures. And the economic hardship they have visited on America.

But class warfare is not who we are.

I come from a working class background. I didn't grow up with wealth. But I've never resented those who have it.

The top ten percent of income earners already pay more than 70% of income taxes. We could jack that up to 80 or 90% as President Obama would have us do. But that's not the point.While it might make the class warfare crusaders feel better. It wouldn't create a single job in America. And it would destroy many.

President Obama has had three years to turn things around.

And all we have to show for it is 3.7 trillion dollars more debt. Nearly 2 million fewer jobs. A Congress that hasn't passed a budget in more than 2 years. A health care takeover he pretends we can afford. And a fiscal crisis he pretends we can ignore.

We've tried President Obama's way and it has only made the economy worse. Other countries around the world have tried President Obama's way and have met with ruinous results.

We have a choice. Just because we followed ancient Greece into democracy. Doesn't mean we're doomed to follow modern Greece into bankruptcy.

The United States has always chosen its own path culturally, politically and economically. For 235 years we've taken the road less traveled. The road of liberty. Of self-government. And free enterprise. And it has made all the difference.

America is in trouble. There's no question. But the frustration and apprehension of the moment doesn't define us. Where we are, is not who we are.

We are the United States of America. We settled the west and went to the moon. We liberated billions of good people from communism, fascism, and jihadism. We've lit the lamp of freedom --- for the entire world to see.

The strength of our country is our people not our government. Americans believe our country is exceptional. And they deserve a President who does too.

We can fix our economy. Our people are ready to get back to work. We just need to give them to tools to get there. And get the government out of the way.

Thank you. And God bless America.