The best and most effective way to balance the budget is through booming economic growth and prosperity. I know. That is how we did it the last time we balanced the budget, when I was Speaker of the House, and it stayed balanced for four straight years.
We produced, in fact, four straight record budget surpluses, totaling $560 billion over those 4 years. You can check the historical record yourself at omb.gov.
We achieved that not by raising taxes in return for supposed spending cuts, but by cutting tax rates to create booming growth, and cutting spending. The growth then booms tax revenues past the level of reduced spending.
And that is how we would do it again if I am elected President. I have already proposed the most aggressive, pro-growth, supply side tax reform agenda, which Ronald Reagan’s chief economist Art Laffer has endorsed as the best of any candidate’s tax reform plans. That includes an optional 15% flat tax for individuals, a 12.5% corporate tax rate, zero capital gains, zero death tax, and immediate expensing for new investment in plant and equipment.
We have already had the plan professionally scored by Fiscal Associates. They project as a result average, annual, real economic growth over the first 10 years of 4.4%, almost twice what CBO projects under Obamanomics, catching up to restore America to the long term, postwar, economic growth trendline from 1947 to 2007. That growth would produce 6.6 million new jobs in the first two years alone, consistently with the results of the similar policies of Reaganomics, and reduce the unemployment rate within my first term to 4.6%.
With the revenues from the growth the plan would produce, along with reasonable spending reductions, we can balance the budget in four years. When I was Speaker, we balanced the budget within 3 years of adopting the deficit reduction plan, even though we were aiming for 7 years, because the economy boomed so much in response.
Just by returning spending for every budget line item, and that means all of them except for Social Security, Medicare, Medicaid, defense, debt interest and federal retirement, back to 2007 levels, we would save over $500 billion in spending a year right there. We would then freeze discretionary spending for long enough, and adopt whatever other spending cuts from Paul Ryan’s budget and Simpson-Bowles are necessary, to balance the budget within my first term.