Presidential Candidate Michele Bachmann (R-Minn.) is a member of the Tea Party
branch of the Republican party. Her economic policies stem from her belief, which is: "As a constitutional conservative, I believe in the Founders' vision of a limited government that trusts in and preserves the unlimited potential of the American people." Her top economic priorities are to restore economic growth and "create millions of new jobs." She believes this can best be done with deep cuts in spending, to reduce America's debt, and tax cuts to stimulate job growth and consumer demand
. What are her specific economic proposals, and will they work?
Bachmann's 10-Point Plan:
Bachmann laid out a ten point plan to fix the economy. If elected, Bachmann would:
- Cut federal spending 25%.
- Repeal Obamacare. She has already filed a bill to do so.
- End federal bailouts for Wall Street and pension plans.
- Privatize Fannie Mae, Freddie Mac and Sallie Mae.
- Make Bush tax cuts permanent.
- Cut the corporate tax rate to 9% or less.
- Eliminate the capital gains tax.
- Repeal the estate tax, which penalizes family-owned companies.
- Cap income taxes at 20%.
- Propose a "flatter tax" and a tax code no longer than 50-pages "double spaced, with a font size no smaller than 9-point.
, November 11, 2010)
Impact on the Economy:
Bachmann's plan to restore fiscal responsibility was needed in 2005, to reduce the bubble. Now, it could plunge the country further into recession
. An across the board cut of 25% in federal spending would probably lead to massive government layoffs, increasing unemployment. Eliminating Obamacare would reduce uncertainty surrounding regulations on small businesses, but that might not be enough to help businesses grow without more consumer demand. It could also increase government costs to Medicare, as health care costs continue rise.
To eliminate bailouts, Bachmann first needs regulations to reduce the size of banks and other businesses that are "too big to fail
." However, Bachmann would also repeal the Dodd-Frank Wall Street Reform Act
, which provides just that regulation. It authorizes the Fed to make banks that become too big to hold more in reserves to offset risky investments and protect depositors.
Privatizing Fannie Mae and her sisters would shut down the mortgage industry, since 90% of all mortgages are now Federally guaranteed. The government's involvement in mortgages did help create the housing bubble, but now housing needs this life support.
Extending the Bush tax cuts in 2010 did not reduce unemployment
, which stayed stuck at 9%
, while economic growth stalled at 1% or less
. Cutting business taxes probably won't create more jobs, since the problem is lack of demand, not constrained supply.
Cutting personal income taxes might help stimulate the economy, although middle income families may use the tax breaks to pay down debt or add to savings instead of spending. A "flatter tax" could raise taxes for the middle income, and lower it for higher income families. It depends on whether Bachmann's plan resembles Steve Forbes' flat tax or the 2003 fair tax plan.
Just Say No to the Debt Ceiling:
In April, Bachmann suggested that legislators "Just Say No" to the debt ceiling
. This quote was a reference to Nancy Reagan's famous "Just Say No to Drugs" campaign. Bachmann advocated that Congress vote against raising the debt ceiling
when it came due in July. This would essentially end deficit spending
. As a result, the U.S. could only pay its bills, such as Social Security, government workers and interest on the debt, only as tax revenue
s came in. This would cause the U.S. to default on its debt
, retirees would go without their weekly check, and perhaps even Congress itself would go without pay.
In fact, this very nearly happened in the summer of 2011. Congress delayed approving a debt ceiling extension until the last minute. As a result, the threat of default caused Standard & Poor's to lower its credit rating on the U.S. from AAA to AA+ for the first time in history.
In 2006, voters selected Bachmann to be the first Republican woman to go to the House of Representatives from Minnesota. She was elected to the State Senate in 2000. She was a federal tax litigation attorney for five years, which helped her understand the need to simplify the tax code. and a small business
owner. She runs a Christian counseling service with her husband, Marcus, who is a therapist. (Source: Iowa Politics.com)
(Article updated September 28, 2011)
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