by Michael Ramirez

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By Mark Steyn

The other day, wending my way from Woodsville, N.H., 40 miles south to Plymouth, I came across several “stimulus” projects — every few miles, and heralded by a two-tone sign, a hitherto rare sight on Granite State highways. The orange strip at the top said “PUTTING AMERICA BACK TO WORK” with a silhouette of a man with a shovel, and the green part underneath informed you that what you were about to see was a “PROJECT FUNDED BY THE AMERICAN RECOVERY AND REINVESTMENT ACT.” There then followed a few yards of desolate, abandoned, scarified pavement, followed by an “END OF ROAD WORKS” sign, until the next “stimulus” project a couple of bends down a quiet rural blacktop.

I don’t know why one of the least fiscally debauched states in the Union needs funds from “the American Recovery and Reinvestment Act” to repair random stretches of highway, especially stretches that were perfectly fine until someone came along to dig them up in order to access “stimulus” funding. I would have asked one of those men with a shovel, as depicted on the sign, but there were none to be found. Usually in New Hampshire, they dig up the road, and re-grade or repave it, while the flagmen stand guard until it’s all done. But here a certain federal torpor seemed to hang in the eerie silence.

Still, what do I know? Evidently, it’s stimulated the sign-making industry, putting America back to work by putting up “PUTTING AMERICA BACK TO WORK” signs every 200 yards across the land. And at 300 bucks a pop, the signage alone should be enough to launch an era of unparalleled prosperity, assuming America’s gilded sign magnates don’t spend their newfound wealth on Bahamian vacations and European imports. Perhaps if the president were to have his All-Seeing O logo lovingly hand-painted onto each sign, it would stimulate the economy even more, if only when they were taken down and auctioned on eBay.

Meanwhile, in Brazil, India, China, Japan, and much of continental Europe the recession has ended. In the second quarter this year, both the French and German economies grew by 0.3 percent, while the U.S. economy shrank by 1 percent. How can that be? Unlike America, France and Germany had no government stimulus worth speaking of, the Germans declining to go the Obama route on the quaint grounds that they couldn’t afford it. They did not invest in the critical signage-in-front-of-holes-in-the-road sector. And yet their recession has gone away. Of the world’s biggest economies, only the U.S., Britain, and Italy are still contracting. All three are big stimulators, though Gordon Brown and Silvio Berlusconi can’t compete with Obama’s $800 billion porkapalooza. The president has borrowed more money to spend to less effect than anybody on the planet.

Actually, when I say “to less effect,” that’s not strictly true: Thanks to Obama, one of the least indebted developed nations is now one of the most indebted — and getting ever more so. We’ve become the third most debt-ridden country after Japan and Italy. According to last month’s IMF report, general government debt as a percentage of GDP will rise from 63 percent in 2007 to 88.8 percent this year and to 99.8 percent of GDP next year.

Of course, the president retains his formidable political skills, artfully distracting attention from his stimulus debacle with his health-care debacle. But there are diminishing returns to his serial thousand-page trillion-dollar boondoggles. They may be too long for your representatives to bother reading before passing into law, but, whatever the intricacies of Section 417(a) xii on page 938, people are beginning to spot what all this stuff has in common: He’s spending your future. And by “future” I don’t mean 2070, 2060, 2040, but the day after tomorrow. Democrats can talk about only raising taxes on “the rich,” but more and more Americans are beginning to figure out what percentage of them will wind up in “the richest 5 percent” before this binge is over. According to Gallup, nearly 70 percent of Americans now expect higher taxes under Obama.

But the silver-tongued salesman sails on. Why be scared of a government health program? After all, says the president, “Medicare is a government program that works really well,” and if “we’re able to get something right like Medicare,” we should have more “confidence” about being able to do it for everyone.

On the other hand, says the president, Medicare is “unsustainable” and “running out of money.”

By the way, unlike your run-of-the-mill politician’s contradictory statements, these weren’t made a year or even a week apart, but during the same presidential speech in Portsmouth, N.H. At any rate, in order to “control costs” Obama says we need to introduce a new trillion-dollar government entitlement. It’s a good thing he’s the smartest president of all time and the greatest orator since Socrates because otherwise one might easily confuse him with some birdbrained Bush type. But, if we take him at his word, then a trillion-dollar public expenditure that “controls costs” presumably means he’s planning on reducing private health expenditure — such as, say, your insurance plan — by at least a trillion. Or he’ll be raising a trillion dollars’ worth of revenue. Either way, under Obama nothing is certain but death panels and taxes — i.e., a vast enervating statism, and the confiscation of the fruits of your labors required to pay for it.

That’s why the “stimulus” flopped. It didn’t just fail to stimulate, it actively deterred stimulation, because it was the first explicit signal to America and the world that the Democrats’ political priorities overrode everything else. If you’re a business owner, why take on extra employees when cap’n’trade is promising increased regulatory costs and health “reform” wants to stick you with an 8 percent tax for not having a company insurance plan? Obama’s leviathan sends a consistent message to business and consumers alike: When he’s spending this crazy, maybe the smart thing for you to do is hunker down until the dust’s settled and you get a better sense of just how broke he’s going to make you. For this level of “community organization,” there aren’t enough of “the rich” to pay for it. That leaves you.

For Obama, government health care is the fastest way to a permanent left-of-center political culture in which all elections and most public discourse will be conducted on Democratic terms. It’s no surprise that the president can’t make a coherent economic or medical argument for Obamacare, because that’s not what it’s about — and for all his cool, he can’t quite disguise that. Apropos a new poll, the Associated Press reports that Americans “are losing faith in Barack Obama.”

“Losing faith”? Oh, no! Fall on your knees and beseech the One: “Give me a sign, O Lord!”

But he has. They’re all along empty highways across rural New Hampshire: “This Massive Expansion of Wasteful Statism Brought to You by Obama Marketing, Inc.”

Over the last two weeks, the main-stream media and the stock market have greeted new economic data released by the Commerce and Labor Departments with enthusiasm. Although these data show that the recession is not deepening as fast as it had been during previous months, they still show that the economy is contracting.

• GDP Numbers. On July 31, the Commerce Department’s Bureau of Economic Analysis released preliminary GDP data for the second quarter (March through June) of 2009. These new data showed that the economy contracted at a 1.0% rate of decline during the second quarter. This was considered good news because the economy has been contracting at a 3.9% clip over the last year. Leading the decline was a 29.3% rate of decline in residential investment, an 8.9% rate of decline in business investment, and a 1.2% rate of decline in consumption expenditures.
• Unemployment Numbers. The other “good news” was released on August 7 by the Department of Labor’s Bureau of Labor Statistics. The data for July showed the unemployment rate decreasing from 9.5% in June to 9.4% in July. But at the same time the new data showed that 247,000 more jobs were lost in July, including 76,000 jobs in construction and 52,000 jobs in manufacturing. So how did unemployment and jobs both fall at the same time? The answer is that the labor force shrunk from June to July. The labor force is not a constant; people are entering and leaving it all the time.

The best news for the economy in recent months is an improvement in the trade deficit. Most of this decline has been driven by the reduction in consumer spending and the reduction in business investment, exports decreased at a 7.0% during the second quarter, but imports diminished even more (at a 15.1% rate). The trade deficit continues to require Americans to borrow roughly a billion dollars a day from abroad to pay for our consumption, but a year ago it required us to borrow two billion a day. Unfortunately, further declines in the trade deficit will be difficult to achieve because nearly two-thirds of the deficit is now with China, a country that is implementing a beggar-thy-neighbor trade policy that Peking University Professor Michael Pettis calls “Smoot-Hawley-with-Chinese-characteristics.” As a result, our trade deficit with China has been growing steadily since February.

Although GDP may increase slightly due to increased government deficit spending during the third quarter, that won’t mean the recession is over. The government borrowing and spending that might produce such a rise cannot be sustained. As the government’s debt grows (in proportion to GDP), foreign lenders demand higher and higher long-term interest rates when they lend to the United States government. Eventually a crisis is reached where the continuing government borrowing cannot be continued.

The only way to achieve sustainable growth is through increased business investment. Not only does increased investment result in increased demand for American products, but it also results in production of new products and the development of more efficient technologies. These new products and technologies, in turn, cause increases in manufacturing employment and consumer incomes, and thus increase consumption. That’s why the 8.9% rate of decline in business investment during the second quarter and the 19.6% rate of decline over the past year are especially disheartening.

Instead of doing things that would enhance business investment, Obama’s proposals (including his cap and trade climate bill) threaten to increase business costs, thus discouraging business investment. Also his various giveaways, paid for through government borrowing, tend to raise long-term interest rates for business borrowing. In general, Obama’s policies are discouraging, not encouraging American business investment. They are contributing to the high unemployment rate.

If President Obama had competent economic advisors, he would be doing things that would lead businesses to increase their investment. For example, he could lower the corporate income tax. Such action would cause businesses (both American and foreign) to build new factories in America, factories that would implement the most efficient modern technologies.

What the new statistics really show is that American unemployment is in an economic depression which will probably continue until something happens that causes American business investment to increase.

Now President Obama says in The Washington Post that he never envisioned that his stimulus package would afford quick relief to the American economy, but would do so only after it had run its two-year course. But when it was passed, Obama sang a different tune, urgently demanding its enactment to speed relief to a sagging economy. He claimed it would “create or save” 600,000 jobs. Now, even as the economy loses 450,000 jobs each month, he pretends that it is a matter of time until the stimulus kicks in.

He now justifies the stimulus package by saying it was adopted to prevent the “collapse” of the economy and the banking systems. But it was really the Troubled Asset Relief Program (TARP), first passed under President Bush, that stopped the banks from going under. At the time of the enactment of the stimulus package, Obama never mentioned that he was counting on it to save the banks.

All these shifting justifications are designed to explain why the stimulus package has totally failed to accomplish anything. Not only has it done no good. It has done significant harm by ballooning the deficit, driving up interest rates, creating doubts about the U.S. currency and fanning inflationary fears.

But Obama has paid and will continue to pay dearly for betting on his stimulus package. Because of it, the Bush recession is becoming the Obama recession much faster than it would have had he adopted a more gradual approach to solving economic problems. By jumping in immediately, as he did, in order to increase government spending and pass eight years of Democratic dreams in one day, he made the public expect a solution.

At first, a sick patient looks forward to seeing the doctor. But when the medicine his physician gives him fails to make him better, he is likely to turn on his doctor. And then, gradually, when it dawns on him that the cure is making the disease last longer and get worse, he will really get mad at the physician. This is Obama’s fate.

The stimulus package used up all the wiggle room he had to increase the budget deficit. He probably could have passed the healthcare program without a tax increase had he not already sent the deficit soaring with his massive spending. (Hillary and Bill pretended that there was no need to raise taxes to pay for their 1993 reform package and few questioned their presumption.) But now that the deficit has soared to 12 percent of the gross domestic product, everyone realizes that taxes must go up to pass healthcare “reform,” making its adoption even less likely. House Ways and Means Committee Chairman Charlie Rangel (D-N.Y.) has passed $550 billion of tax increases, but everyone knows that at least $1 trillion is required. And, in the current environment, Congress will not vote to add the balance to the deficit, even if Charlie wants to “charge it.”

Finally, Obama has laid a trap for himself. Just as the economy is coming out of its recession — in 2010 and 2011 — and he begins to run for reelection, he is going to face massive inflation. The money supply has more than tripled since October of 2008 and is going up each week as the Fed buys Treasury bills and other securities to “monetize the debt” (i.e., give other people money so they can lend it back to the government and charge it interest for doing so). With each new infusion of cash, the problem of avoiding inflation becomes particularly severe. Obama could well lose the elections of 2012 because of the inflation his deficit has created.

Of course, we all know that the only way to put the inflation virus back in the test tube is to trigger a new recession, this time caused by massive increases in interest rates, as Fed Chairman Paul Volcker did in 1979. If the recession doesn’t doom Obama to a single term, the inflation will. And if the inflation doesn’t get him, the subsequent recession will.

The deeper he gets into his term, the more it is apparent that he threw it all away when he first took office and demanded over $1 trillion in stimulus and supplemental appropriation spending. He was doomed to lose the game right after he received the first kickoff.

At last, there is convincing evidence that Obama’s poll numbers may be descending to earth. While his approval remains high — and his personal favorability is even higher — the underlying numbers suggest that a decline may be in the offing. Even as he stands on his pedestal, the numbers under his feet are crumbling.

According to a Rasmussen poll, more voters now trust Republicans more than Democrats to handle the economy, by a margin of 45-39. Scott Rasmussen notes that “this is the first time in over two years of polling that the GOP has held the advantage on this issue.” Last month, he had the Democrats holding a one-point lead, but they lost it in June’s polling.

And the Democratic leads over Republicans on their core issues are also dropping. Particularly interesting is the Democratic decline over healthcare, from an 18-point lead in May to only 10 points now.

A Gallup poll also confirms that the president’s personal ratings are high, but the underlying data less so. While 67 percent of voters give Obama personal favorable ratings and 61 percent approve of his job performance (Rasmussen has his job approval lower, at 55 percent), they give him much lower ratings on specific issues.

Gallup shows Obama getting only 55 percent approval on his handling of the economy (down from 59 percent in February) and finds that only 45 percent approve of his handling of federal spending while 46 percent approve of his treatment of the budget deficit.

As it becomes clearer that the deficit caused by spending has landed us in a new economic crisis, entirely of Obama’s own making, his popularity and job performance are likely to drop as well.

The old recession — that the public says was caused by Bush — shows signs of winding down. But the new recession and/or inflation — triggered by Obama’s massive deficits — is just now coming upon us.

If Obama refuses to cut back on his spending/stimulus plans (despite convincing evidence that Americans are not spending the money), he has three options:

a) He can raise taxes, which will trigger a deeper recession;

b) He can print money, which will trigger huge inflation;

c) He can pay more interest to borrow money, which will send the economy diving down again.

The blame for these outcomes will fall squarely on Obama’s deficit and spending policies. The fact that Americans are aware of these issues, and already disapprove of Obama’s performance on them, indicates that they will be increasingly receptive to blaming him for the “new” recession.

Interestingly, Obama’s polling is now the exact opposite of President Clinton’s in the days after Monica Lewinsky. Back then, the president’s approval for handling specific issues was his forte, while his job approval remained high but his personal favorability lagged 20 points behind. Ultimately, it is a politician’s performance on specific issues that determines his electability. Personal favorability withers in the face of issue differences. Obama is about to find out that you cannot rely on image to bolster your presidency when the underlying issues are crumbling.

All this data suggests that Obama might run out of steam just as he gets to his healthcare agenda. As unemployment mounts, month after month, and Obama’s claims of job creation (or savings) ring hollow, it is possible that he will not have the heft to pass his radical restructuring of the healthcare system. The automaton Democratic majority may pass it anyway, but it will be a one-way ticket to oblivion if they do.

By now, the current recession is officially the longest since World War II. The National Bureau of Economic Research dates the recession as starting some time during December, 2007. The longest recession since World War II was 16 months, with the average being 10 months. By today, the current recession has clearly lasted more than 16 months.

Which raises the question, are President Obama’s economic policies promoting recovery, or delaying it? Why is this the longest recession since World War II? That is a period of almost 65 years! Would other economic policies better promote economic growth?

Still No Recovery

Yes, there are signs that the economy is finally struggling out of its torpor. But the point is that the recovery is now officially overdue. It shouldn’t just be showing signs of recovery. A full recovery should now be in full swing, given the historical record of the last 65 years!

Moreover, the signs of recovery are on Wall Street. But Main Street is still plunging deeper and deeper. Unemployment now at 8.5% will probably jump to close to 9% in Friday’s report, the highest in almost 30 years. Unemployment in the urban areas that supported Obama so heavily is now in double digits. In New York City, the black unemployment rate for men is near 50%.

We are still losing over 600,000 jobs a month. In his press conference on April 29, Obama stated that his stimulus package passed in February “has already saved or created over 150,000 jobs.” But this number is completely made up. Since the beginning of the year, employment is down by 2.5 million jobs. Obama’s statement is not evidence that his economic recovery plan is working. It is evidence that the President suffers from mental delusion.

But even Wall Street is not doing that well. People are cheered because the stock market has reversed a decline that seemed to be heading towards zero under the weight of Obama’s new neo-socialism. But even with that rebound, the market is still down 40% from its highs.

The testimony of Federal Reserve Chairman Ben Bernanke yesterday did point to eventual recovery, but even he said,

[T]he available indicators of business investment remain extremely weak. Spending for equipment and software fell at an annual rate of about 30 percent in both the fourth and first quarters, and the level of new orders remains below the level of shipments, suggesting further near-term softness in business equipment spending. Recent business surveys have been a bit more positive, but surveyed firms are still reporting net declines in new orders and restrained capital spending plans. Our recent survey of bank loan officers reported further weakening of demand for commercial and industrial loans. The survey also showed that the net fraction of banks that tightened their business lending policies stayed elevated, although it has come down in the past two surveys. Conditions in the commercial real estate sector are poor. Vacancy rates for existing office, industrial, and retail properties have been rising, prices of these properties have been falling, and, consequently, the number of new projects in the pipeline has been shrinking. Credit conditions in the commercial real estate sector are still severely strained, with no commercial mortgage-backed securities (CMBS) having been issued in almost a year.

Savings and Investment No, Capital Flight Yes

Indeed, Bernanke here inadvertently identifies the fundamental weakness in Obamanomics. There is nothing anywhere in Obama’s economic recovery plan to promote savings and investment. To the contrary, Obama’s economic policies are focused on attacking savings, investment, capital, and property rights. That is deliberate, because Obama ideologically sees savings, investment, capital and property rights as the preserve of the rich, which he opposes, and, indeed, which he actually wants to displace with big government.

Even though American companies suffer the huge international competitive disadvantage of the second highest corporate tax rates in the industrialized world, Obama continues to scorn doing anything about this as taking us “back to the failed ideas of the past.” On Monday, Obama was out promoting still more tax increases on corporate America. He foolishly thinks that imposing taxes on the overseas investments of American companies will force investment back to the USA. But this is just one more whupping stick in Obama’s arsenal that is going to create full scale capital flight from the U.S. before his term is over. Watch as alert, independent thinking executives start to transform American companies with investments overseas into foreign companies with tentative investments in America at least for now.

Obama’s Hopeless Economics

Obama and his intellectual Minnie Mice defending his policies in think tanks, on the Internet, and on TV are expressly arguing that the way to promote economic growth is by massively increasing welfare, federal spending, federal deficits, and the national debt, to record levels, along with higher tax rates and more costly regulatory burdens. Does this sound like a promising strategy for economic growth to you? If so, you can best help your country by strictly devoting yourself to gardening, and avoiding all forms of political participation.

This is what Obama’s ballyhooed stimulus package was all about. But readers of this column already know that borrowing a trillion dollars out of the private economy to put a trillion dollars of government spending back in does nothing to promote the economy on net. In particular, it does nothing to improve the incentives that govern economic growth. That is why this stimulus package will create or save exactly zero jobs.

This is also exactly what the Obama budget is all about. That budget proposed to increase federal spending for this year by an ear drum popping 34%, to a record total of $4 trillion, the highest ever. The deficit in the budget the Democrats adopted for this year is an extremist $1.7 trillion, more than 7 times Reagan’s highest deficit of $221 billion, which caused so much howling among liberals and Democrats. By the tenth year under this Obama/Democrat budget policy, the deficit is still over $1 trillion. The deficit in the last budget adopted by a Republican controlled Congress, in 2006 for fiscal year 2007, was $162 billion, less than one-tenth as much as this year’s deficit!

Under Obama’s budget, as a result, the national debt doubles after 5 years, and triples after 10, soaring as a percent of GDP from 40% today to a record setting, neo-socialist 82%.

In his speech on the economy given at Georgetown University on April 14, Obama said,  ”We cannot rebuild this economy on the same pile of sand. We must build our house upon a rock. We must lay a new foundation for growth and prosperity, a foundation that will move us from an era of borrow and spend to one where we save and invest.” Do the Obama stimulus package and budget plan look like they are trying to rebuild the economy upon a rock, or on the same pile of sand, a pile of extreme deficits and debt, government spending and welfare? Do they look like they are moving us “from an era of borrow and spend to one where we save and invest”? Where is anything in Obama’s economic policies that will promote savings and investment? Isn’t this statement just further evidence that Obama is delusional, and not living in the real world?

Even Obama’s tax cut for 95% of Americans is not pro-growth. It is just a $400 per worker income tax credit, less than $8 per week, which is economically the same as sending each worker a $400 check. Borrowing $400 from someone else to give you $400 does not add anything to the economy on net. Going forward you still face the exact same economic incentives as before. For a tax cut to stimulate the economy, it must reduce tax rates, which strengthens incentives by allowing producers to keep a higher percentage of what they produce. This is what all of Reagan’s tax cuts did, which is why they were so successful.

Moreover, the party controlled mainstream media is cooperating in a huge coverup of the fact that the budget adopted by the Democrat controlled Congress does not include Obama’s tax cut for 95% of Americans, the $400 per worker income tax credit, for more than 2 years. Obama won the election by promising over and over that he would cut taxes for 95% of Americans, and now in 18 months that will be gone.

Obama’s Delusions

But Obama and Congressional Democrats are continuing with their plan for a massive new tax by enacting their cap-and-trade anti-global warming scheme, imposing probably close to $2 trillion in increased costs on the U.S. economy. Consumers will pay for this through increased costs for electricity, gasoline, home heating oil, food, and any product that uses energy. This added burden will ultimately chase remaining manufacturing out of the country, sharply reduce America’s standard of living, and tumble the American economy into long term decline.

Obama, however, is actually arguing that imposing these massive new cap and trade costs on the economy will promote long term economic growth. In his April 14 speech at Georgetown, Obama said,

Now the third pillar in this new foundation [for economic growth] is to harness the renewable energy that can create millions of jobs in new industries….The only way that we can truly spark the transformation that’s needed is through a gradual, market based, cap on carbon pollution so that clean energy is the profitable kind of energy…. If businesses and entrepreneurs know today we’re closing this carbon pollution loophole, they’ll start investing in clean energy now and we’ll see more companies constructing solar panels and workers building wind turbines and car companies manufacturing fuel efficient cars and investors will put money into a new energy technology and a small business will open to start selling it. That’s how we can grow this economy, enhance our security and protect our planet at the same time.

So dumping $2 trillion in new costs on the economy will actually promote economic growth, because the added costs on suppliers of the proven energy sources that fuel our economy today will enable producers of the much more expensive, alternative, flower power, energy sources, based on sunbeams, the winds, and grass, to compete. No consideration in this vision for the jobs lost because energy costs in this new economy will be so much higher, or because energy supplies based on sunbeams, winds, and grass will be unreliable, or because the coal industry and other producers of traditional energy will be driven out of business. Again, is Obama mentally delusional?

And I haven’t even gotten yet to Obama’s tax rate increases, which will become effective at the end of next year. Top individual income tax rates will increase 20%, tax rates on capital gains and dividends will each rise 33%, and the death tax rate will be permanently restored at 45%. The expectation of these prospective tax rate increases will soon start depressing the economy, because incentives will be worsened.

Obama’s shenanigans in trying to intimidate the senior bondholders in GM and Chrysler to give up their contractual rights to be paid first in favor of the more junior claims of the unions is also not helping. This will only discourage corporate lending from investors at home and abroad, and contribute to future capital flight. The auto bailouts will also be a continuing drain on the taxpayers, and hence the economy.

So, yes, I think Obama’s hopeless economic policies are delaying rather than helping the economy. This is not to say that some economic recovery will not start later this year. I expect some growth to start by this summer only because the recession has gone on too long now, and this is still a fundamentally strong capitalist economy, for now. But this will be in spite of Obamanomics, not because of it.

Moreover, because of Obamanomics, I expect the growth to be relatively weak. I expect unemployment to remain persistently high, and in 2010 interest rates to rise, with renewed inflation then or by 2011 at the latest. I expect higher energy prices around then too, and an energy shortage and another recession in 2011. The expectation of future tax increases can cause higher growth this year, as people scramble to earn income now before tax rates rise, producing a more rapidly increasing stock market, which looks just 6 months ahead. But I expect another serious stock market reversal starting next year.

Gingrich’s Better Alternative

Newt Gingrich has proposed a far more promising, 12-point, alternative economic recovery plan that should receive more attention. Gingrich recognizes that America’s high corporate tax rates, close to 40% counting federal and state levies, leave American companies at an enormous competitive disadvantage. The EU has reduced their average corporate tax rate from 38% to 24%. Germany and Canada have reduced their corporate tax rate to 19%, with Canada’s going to 15%. India and China have lower corporate tax rates as well.

Gingrich would lower the 35% federal corporate tax rate to the 12.5% rate adopted by Ireland 20 years ago, which raised that long poor country from the second lowest per capita income in the EU to the second highest. Our own Treasury Departmetn calculates that Ireland raises more corporate tax revenue as a percent of GDP with this 12.5% rate than we do with our 35% federal rate.

Gingrich would also reduce the 25% income tax rate paid by middle class families to 15%, which would create an effective 15% flat tax for 90% of Americans. He would abolish the capital gains tax and the death tax, both of which involves double taxation of savings and investment. He would reduce spending to balance the budget, as he led Congress to do in the 1990s. He would also remove regulatory restrictions to allow production of more oil, natural gas, nuclear power, and alternative energy sources, providing reliable, low cost energy supplies to power the American economy. This is a prescription for another economic boom.