Ron Paul's Economic Stimulus Plan:
Most of Paul's economic stimulus plan focuses on helping businesses:- Eliminate taxes on dividends, savings, capital gains and tips.
- Freeze non-defense discretionary spending at current levels. (CBO already is budgeted for reducing it.)
- Allow gold and silver to be used as money, televise FOMC meetings, report money supply weekly.
- Repeal Sarbanes/Oxley. Remove some regulations on community banks.
Ron Paul's Long-Term Economic Platform:
Paul's platform includes the points in the economic stimulus plan, and the following items:- Repeal the death tax. Eliminate taxes on Social Security and cut taxes for working seniors.
- Accelerate depreciation on business investment.
- Make all medical expenses tax deductible, reduce regulations to allow small businesses to provide health coverage, and allow doctors to negotiate with insurance companies.
- Allow pharmacists and nurses to perform more health care, and allow everyone to have a health savings account.
- Reduce troops in Europe, Japan and S. Korea.
- Withdraw from WTO, NAFTA and the UN.
- No war without Congressional approval.
Impact on the Economy:
Paul's proposals to cut business taxes may not stimulate the economy, which is dependent on consumer spending. That's because businesses are under so much pressure to keep profit margins high, to satisfy stockholders, that they may not pass the savings onto consumers in the form of lower prices.His proposals to cut taxes will eliminate revenue, which could be offset by the savings from his proposal to reduce the military. Paul is generally in favor of a fiscally responsible balanced budget, which would help support the value of the dollar and strengthen the economy. (See The U.S. Budget Deficit)
His proposal to withdraw from the WTO and other trade organizations, if accompanied by an increase in tariffs on imported goods, will hurt our trade relations with Europe and other countries. They could retaliate by raising prices, thus increasing inflation, and adding tariffs, thus decreasing our ability to export.
Paul's proposal to create gold and silver currency would have no effect on the economy because credit has replaced money as the currency of the realm. In other speeches, Dr. Paul advocates the country return to the gold standard as a way to curb government spending and deficits. However, since the global economy is dependent upon floating exchange rates, a return of the U.S. to the gold standard would isolate the economy from global trade. It would be unworkable. (See How Would a Return to the Gold Standard Affect the U.S. Economy?)Likewise, eliminating the Federal Reserve could cripple the economy. That's because monetary policy is needed to adjust liquidity in the financial markets. Without this guidance, investors would have less trust in the markets, increasing volatility. Furthermore, without controls on inflation, expectations of inflation alone could cause it to spiral out of control.
It would also isolate it from global trade. That's because every other country now has a central bank, and these central bankers coordinate economic policy between countries. Without the Fed, these countries would have less trust in the U.S. economy.
