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The Conservative Alternative: Gingrich or Santorum? (Pt 1)

Many in The Republican Party are looking for the “Conservative Alternative to Moderate Mitt Romney,” as one Gingrich advertisement put it. Who is the more Conservative; that is, free markets, free people, and limited Republican government. A quick overview of their economic/fiscal policies may help answer that question.

However, what about in other policy realms? What about that of healthcare, their voting records or the perhaps nuanced differences in their entitlement reform plans? Foreign Policy, Immigration? These important differences will be addressed in future papers. I wanted to begin with the most important issue of our day, though; the economy. As my Conservative brothers constantly remind me: “It’s the economy, stupid!”

Well, lets see: Both want to repeal Obamacare. Both want to audit and strip some powers of the Federal Reserve (though, admittedly, they have differences in that Gingrich wants to remove Bernanke and not allow the Fed to produce more inflation, while Santorum wants to remove all Fed powers but the power to both inflate and deflate the currency). Both want to (essentially) repeal every single Obama regulation (Dodd-Frank, etc). Both want 100% expensing on technology innovation, and both want to increase funding for programs that research new business technologies. Santorum wants to cut 50% of our spending to foreign aid, USAID, and the UN. Gingrich wants to cut spending to foreign aid, too, but isn’t specific as to how much needs to be cut. Only that it be “substantive.” Both want a balanced budget amendment that would ensure spending is maximum 18% of GDP. Even with social security reform both want gradual reductions in benefits that will affect those just entering S.S. and not the elderly, set aside the money people pay into S.S. so that government wont spend it or bankrupt themselves by having to pay it back, and as well as a gradual move to an optional private model for those just going into S.S..

A big difference comes with Fannie Mae and Freddie Mac: Santorum wants to completely eliminate them over the course of 5 years, while Gingrich wants to immediately break them up into smaller companies and gradually privatize them during his first term. In this respect, Santorum seems bolder, however a void in mortgage-lending in a five year span will have serious consequences in our economy, in Wall Street, and in banking and mortgage sales; consequences that shouldn’t be risked just after a recession. Gingrich’s plans shows efficiency; he will not create a void in the industry, nor will he continue to allow it to be controlled by government; he will both privatize and cut up the GSEs into small companies.

Santorum wants the elimination of all energy and agriculture subsidies, touting the free-market line. This may, of course, hurt farmers, agri-business, and energy-producers. This “hurt,” however, can be easily assuaged with a promise to eliminate all energy and agriculture regulations, something that would help agribusiness and energy producers. This would amount to FDA and EPA regulations being eliminated (or massively reduced). Santorum only promises one, and only in a limited fashion; the elimination of most EPA powers and regulations. Gingrich also wants to cut all energy and agriculture subsidies. When it comes to cutting regulations, though, he provides. He wants to audit and completely reform the FDA, for efficiency and cuts in regulations, and as well completely eliminate the entire EPA (and replace it with a modest E.S.A. which will be a small board that will work with local governments on what to do about local environmental concerns). So both tout the free-market in cuts of subsidies, which may hurt some businesses, but only Gingrich will reverse/reform all the regulations that affect all the businesses negatively, assuaging the damage of cuts in subsidies.

Santorum wants a “fair-tax” code that only allows five deductions, and each deduction will be increased: charity, mortgage holders, healthcare purchasers, retirement savings, and parenting children. Here Santorum panders to family-values Conservatives. Gingrich, on the other hand, merely calls for a fair-tax code, one with substantively less deductions and loopholes. Both plans essentially amount to the same thing; a more fair universal tax code. Santorum wants a 10% universal income tax for all individual citizens, except those making enough to be considered in the ‘top tax bracket.’ Those very rich individuals will be taxed 28%. Gingrich supports keeping our current tax code, but including an optional flat-tax. All individuals can opt to pay a simple 15% of income. He argues the rich, with loopholes, are already paying around 15% anyway, and the middle and working class will get a massive tax cut out of this option. However, to assure no one is negatively affected by it, one can opt to remain in the current tax structure. Thus, Gingrich offers a lower income tax for Americans more then Santorum does, and furthermore does some political damage-control by making it optional.

Santorum wants a 17.5% Corporate Tax for non-manufacturing business, and 0% for manufacturing businesses. This would allow a small minority of businesses (who manufacture) to pay radically less taxes then the majority (who don’t manufacture). He explains that this will help bring “Made in America” back to our products, and less so of “Made in China.” Gingrich, a history of opposing what he calls “Right-Wing Engineering” says he doesn’t want to ‘pick winners and losers’ in corporations; he offers a 12.5 % flat tax for all Corporations. He explains that the cut is so deep that the corporate loopholes that would reduce it would amount to less savings then the cost to pay the lawyers to find those loopholes each year in the first place, and that in some cases in the end would be paying more taxes then they had before under Obama (since under Obama it was affordable to pay to find all those loopholes). His cut would be bigger then Santorum’s for most companies, and would treat all companies equally. What about capital gains tax? Santorum wants a 12.5% Capital Gains tax, while Gingrich wants a 0% Capital Gains tax. Thus, here, we see a deeper cut, once more, in Gingrich’s plan.

What about spending? All these cuts mean more deficit spending if we don’t cut spending. Gingrich promises to cut extensively across the board (except in certain cases with social security and welfare recipients) to assure that his budgets will incur less and less deficits. By the 5th year in office, he says, there will be a balanced budget. Santorum states that he too will get a balanced budget while in office (not specific as to when). Would his spending cuts would amount to less then that of Gingrich’s because a Santorum presidency would have higher taxes then Gingrich? Gingrich points to the fact that less taxes could incur more government revenue (Laffer Curve) so technically Gingrich may end up with the higher government revenue. Regardless, their cuts in spending will have to depend on their government revenue, to avoid deficits and keep their promises on a balanced budget. Both offer modest freezes in defense spending hikes. Both want similar amounts of cuts in entitlements, though have different ways of doing it (something to be covered in the next paper). In relation to agencies, both want cuts (EPA, etc), however, so far Santorum has come on being more specific; he wants to cut at least 10% of all Federal Workers (non-defense) as well as freeze all of their wages for five years. In summation, their spending cuts will both be quite substantial to match their promises of balanced budgets (assuming both would keep their promises).

So what we see first and foremost is that if we can assume these men will do what they claim they will do, that Gingrich and Santorum are very similar. Both are Conservatives, and tout the free-market, free people, fair taxes, and limited Republic right-wing line. When it comes to the actual substance of their economic/fiscal plans, however, in relation to regulation, The Federal Reserve, tax code, and fiscal matters, Gingrich comes out on top as the more Conservative in relation to free-market principles, and deeper tax cuts that are more universal, and an optional (which is politically smarter) and fairer income tax code then Santorum. So if Conservative Americans are looking for the more Conservative candidate in relation to fiscal/economic policy, Gingrich is their man. Then, of course, by that standard Ron Paul’s the most Conservative… but, like I said, this paper focuses on the viable candidates.

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