Rick Perry’s “Cut, Balance, and Grow”, Big Reform from the Governor of a Big State

Today in the Wall Street Journal, Rick Perry unveiled the second part of his economic plan, which he calls “Cut, Balance, and Grow”. Unlike the “Cut, Cap, and Balance” plan introduced by a number of Republicans during the debt ceiling debate, “grow” does not refer to the government but to the economy, which Perry believes will, well, grow thanks to his plan.

Let me give you the high points of the plan.

On taxes, Perry will drop the personal income tax rate to an optional 20 percent. Taxpayers may choose the new flat rate, which will also include long-cherished deductions for home mortgage interest, state and local taxes, and a $12,5000 personal exemption; or they can remain in the current system as it exists right now. He would also abolish the “death tax”. Corporate tax rates would also drop to 20 percent, lower the tax on repatriated income to 5.25 percent, and introduce a “territorial” system that would only levy taxes on income earned in the United States. Finally, he would abolish taxes on Social Security income and long-term capital gains.

Perry’s plan goes beyond tax reform as well. He would put a spending cap on the federal budget of 18 percent of GDP and push for a balanced budget by 2020. His plan also includes an attempt at a Balanced Budget Amendment, an earmark ban, and a ban on “future bailouts”.

He has also added regulatory reform, which would fall under the “grow” portion of the three-part plan. His first step would be a moratorium on new federal regulations and a complete audit of all regulations added since 2008. After that, he would move to abolish Sarbanes-Oxley and replace it with more market-friendly reforms.

After all that, he’d move into entitlement reform with an option for young workers to replace their Social Security “accounts” with personal savings accounts.

As with Herman Cain’s 9-9-9 plan, there is much about “Cut, Balance, and Grow” to like and much that will need to be revised as we dig into the particulars. Most of Perry’s plan has been suggested in other forms over the years (like the spending cap tied to GDP, which you saw right here not long ago), which means that many of the criticisms against it will be arguments we’ve already heard. It is a big plan, perhaps not quite as large as Mitt Romney’s 59-point plan, but a good sight bigger than Cain’s simpler 9-9-9 plan. That’s neither good nor bad, but it does mean it’ll take us a little bit of time to work through the particulars, even if we’ve seen most of them before.

So, now we have a third viable economic plan on the table. No matter where you stand on “Cut, Balance, and Grow”, I believe you’ll agree that tax and budget reform are on the table in a way that neither our current crop of elected officials nor our President can easily ignore. That’s a good thing for all of us.