David Malpass: What Would Ronald Reagan Do?

“As Reagan understood, true leadership requires stating goals and taking decisive action, in this case reducing government spending substantially enough to convince the private sector to invest again..” – David Malpass

My main reason for supporting David Malpass is because I feel he actually understand the issues at hand, as opposed to his opponents who just know how to say “socialism” and “Ronald Reagan.” I grew up in the 80’s so the former President was my introduction to politics and patriotism, so like all of you I’m a big fan, but I also feel republicans invoke the name Reagan too much…and usually when they have nothing else to say.

So of course, I get a Google News alert that Malpass asks in a recent Wall Street Journal editorial “What Would Reagan Do?”

All snark aside, he’s a former Deputy Treasury Secretary in the Reagan administration, so he has a little extra clout to ask that question. Plus, the editorial was less a yearning to get back to the 80’s as much as it was economically wonky. A few blurbs…

This approach isn’t working. It is rapidly reducing the capital in small businesses and holding back hiring. The result is very fast growth in the national debt, the opposite of the desired outcome. The Congressional Budget Office projects that under the Obama budget unveiled in February, spending will increase to $3.6 trillion in 2010 and $5.7 trillion in 2020 from $3 trillion in 2008. This plan for profligate government spending creates $20 trillion in marketable Treasury debt by 2020, nearly 2.5 times today’s $8.4 trillion burden. It would amount to 90% of the nation’s annual output. The International Monetary Fund (IMF) estimates for the U.S. debt are even higher—107% of GDP by 2020, based on its less rosy assumptions about debt service as debt levels rise…

Adding to the strain on the private sector, Washington is using complex, heavily lobbied backroom processes to pass huge regulatory expansions. The health-care reform bill alone was a whopping 2,700 pages; the nearly finished financial reform bill is expected to top 2,000 pages. Washington may pass hundreds of pages of tax law late this year, claiming a middle-class tax cut. But with the expiration of the Bush tax cuts most Americans will pay as much or more in taxes in 2011 as in 2010. Congress’s rationale for allowing a tax increase during hard economic times is the erroneous belief that U.S. growth and investment aren’t very sensitive to tax rates. The reality is that the private sector takes the hit…

Instead of tackling the spending problem, most governments are still trying to cover it up. Even if Greece implements its bailout deal with the IMF, taxes and government spending there will rise despite the deep recession. Gross debt will rise to $436 billion in 2015 from $379 billion in 2010. This explains the market’s disappointment with the program. The private sector gets to cash in some of its Greek paper, but Greece is left owing ever more to the IMF and other euro-zone governments.

Yes, David Malpass has a slightly unfair advantage over his opponents that he writes regular for the Journal, or for Forbes. In my opinion though, the fact that he does and has a largest grasp on the issues that he can, is the very reason why he’s my pick as the next junior Senator from New York.


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