Ron Paul = Less Government:
Congressman Ron Paul (R-Texas) has always been consistent in his economic proposals. In a nutshell, he is in favor of less government. That means lower Federal spending, and lower taxes. It also means less intervention by the Federal Reserve, if not its complete elimination. Instead of monetary policy, Dr. Paul would prefer a return to the gold standard. These are the main planks of his 2012 Presidential campaign, as they were in his 2008 Presidential bid
Cut Federal Spending:
In July, Dr. Paul urged his Republican colleagues to stop pulling a "stunt" by "Saying no to the debt ceiling
," correctly saying they would raise the national debt ceiling
anyway to avoid severe financial disruption. He urged them to, instead, focus on the important issues facing the economy including real, immediate cuts to the FY 2012 budget
, not just calling for cuts over the next 10-15 years. He said the U.S. is, in effect, defaulting on its $14+ trillion debt by allowing the dollar to decline, making debt held by foreigners less valuable every year.
Reduce Military Spending:
Paul is the only
candidate who has called for a meaningful reduction in military spending
. This has grown to more than $800 billion, and is the single largest discretionary budget
item. Paul said, "Let's start with the military industrial complex and these useless, very damaging wars" in Iraq and Afghanistan. He wants to bring the troops home from Europe and elsewhere, and stop trying to be the world's policeman. Instead, Dr. Paul says one third of the current military budget would be sufficient to defend the U.S.
End the Welfare State:
Although Dr. Paul didn't vote for Paul Ryan's Road Map
, he does want to see entitlement programs, such as Medicare and Social Security, cut. In fact, he would prefer to end the "welfare state" and free up money to create jobs. This would help "poor people" more than the current "cradle to grave" entitlement society, which he says is more like stealing from the middle class. Instead of helping the poor, Paul says most of the money goes to special interests and corporations -- who also get bailed out when they get in trouble. Dr. Paul says income tax is really there to take care of the wealthy.
Dr. Paul. like other Republican candidates, advocates tax cuts. He was in favor of reducing the top corporate tax rate from 35% to 25% to be aligned with average rates in Europe
. He would prefer a zero income tax rate, and instead fund a limited government with excise and import taxes. He's also said he would index the capital gains tax for inflation
, and cut and simplify the corporate capital gains rate. He voted to continue to give $4 billion in tax breaks
to oil companies because it wasn't a subsidy
. (Source: CNBC Interview
2011; Texas Straight Talk, "Economic Stimulus Concerns," January 27, 2008)
Return to the Gold Standard:
Dr. Paul would still like to see a return to the gold standard
as a way to curb government spending
, deficits and inflation. This position is not really feasible, since the global economy is now so dependent upon floating exchange rates
. Even if the U.S. wanted to return to the gold standard, it couldn't without risking loss of all global trade. Dr. Paul's would like gold and silver currency to replace credit. Unfortunately, this position weakens his credibility on his other reasonable economic proposals. (See How Would a Return to the Gold Standard Affect the U.S. Economy?
Eliminate or Audit the Federal Reserve:
Dr. Paul says the Federal Reserve
should be eliminated, or at least audited, because it prints money, thereby devaluing the dollar. As Chair of the Fed Oversight Committee, he has urged it to become more transparent. Fortunately, he hasn't eliminated the Fed, which could cripple the economy. Monetary policy is needed to adjust liquidity
and control inflation
. Without this guidance, investors would lose trust in financial markets, increasing volatility
. Expectations of inflation would cause it to spiral out of control. Ending the Fed would isolate the U.S. from global trade, since central bankers coordinate economic policy between countries.
Impact on the Economy:
Dr. Paul's proposals to lower the deficit by cutting defense spending is right on target. Military spending is now more than $800 billion, and isn't as efficient at creating jobs as it used to be. Cutting income taxes would stimulate demand
by giving more money to consumers when they need it. 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
So far, cutting business taxes haven't really helped create jobs
. That's because the economy is so dependent on consumer spending, which hasn't risen. The old saying goes "You can't push a string." No matter how low business taxes are, if there isn't demand, they won't hire.
His proposal to increase tariffs on imported goods could hurt our trade relations with Europe and other countries. They could retaliate by raising their tariffs, thus increasing inflation, and decreasing our ability to export.
Compare the 2012 Presidential Candidates on the Economy:
Conservative Economic Policies