House Majority Leader Eric Cantor turned the policy temperature down on austerity this week by rolling out a strong economic-growth agenda. Headlined by a 25 percent top tax rate for individuals and business, the Cantor package includes regulatory relief, free trade, and patent protection for entrepreneurs. It’s job creation and the economy, stupid.
Sounds Reaganesque? Well, Eric Cantor has a lot of Reagan blood in him. Back in 1980, while Cantor was still in high school, his father was the Virginia state treasurer of the Ronald Reagan presidential campaign. So the apple never falls far from the tree.
In fact, it looks like Cantor is restoring the supply-side incentive model of economic growth. Forget tax-the-rich class warfare. Throw out wild-eyed government-spending stimulus and dollar-depreciating Fed money-pumping. Make it pay more after tax to work, produce, and invest. Go for a growth spurt, something the economy badly needs. And -- my thought -- crown such a growth strategy with a stable King Dollar re-linked to gold.
When I interviewed Cantor this week, he made it clear that faster economic growth was crucial to holding down spending, deficits, and debt. As scored by the CBO, every 1 percent of faster growth lowers the budget gap by nearly $3 trillion from lower spending and higher revenues. “Grow the economy,” Cantor said. “It will help us manage-down the deficit and it will help get people back to work.”
This is not to say that spending cuts and structural entitlement reforms aren’t necessary. They are. But it is to argue that lately the GOP has forgotten the growth component that is so essential to spending restraint and deficit reduction.
The GOP should say: In return for substantial federal-spending cuts, we’re gonna more than make it up to you with large tax cuts. You will win. Big government will lose.
I suggested to Cantor that the GOP adopt a 5 percent national growth target, which President John F. Kennedy had when he launched his across-the-board tax cuts in the early 1960s. “That is a fantastic goal,” he told me.