Since Ted Cruz walked onto the national stage, he has been consistent in leading the attack against the corrupt Washington Establishments of both parties. Redolent of Mr. Smith Goes to Washington. He has done that with a level of articulate intelligence and perception virtually unprecedented in Washington.
I served President Reagan in the White House Office of Policy Development, and I have studied his speeches and writings for years. Cruz embraces the same three dimensional political and policy framework as Reagan – fearless, consistent, free market economics, Peace through Strength National Defense, and Traditional Values Cultural Conservatism. On issue after issue, I can see no difference between Reagan and Cruz in any of these dimensions.
Like Reagan, Cruz is a convictions politician, in the words of former British Prime Minister Margaret Thatcher. That means that Cruz, like Reagan, and Thatcher, is transparently in politics to advance his conservative "convictions," philosophy, and ideology, not for personal aggrandizement, power, or riches.
Conservatives, from Christian Evangelicals, to Tea Party fire brands, to Libertarian free market activists, to low tax crusaders, to Second Amendment, gun rights advocates, to National Defense, foreign policy conservatives, to traditional, family values, cultural conservatives, are now coalescing around Cruz. I believe they will put him over the top in Iowa, and carry that momentum to New Hampshire, South Carolina, Nevada, and Super Tuesday states throughout the south. That run may resolve the nomination contest much sooner than now expected. Below are the reasons why this is happening.
On economics, Cruz thoroughly supports the pro-growth "supply side" economics embraced and promoted by Reagan, Jack Kemp, Art Laffer, Steve Forbes, Larry Kudlow, and Steve Moore. Cruz has proposed a specific, detailed tax reform plan developed with the assistance of Art Laffer and Steve Moore, which I think is the best tax reform plan proposed by any of the Presidential candidates.
Tax Reform. The Cruz tax reform proposal would scrap the current income tax code entirely, and replace it with a Simple Flat Tax with the same 10% rate for all forms of individual income. That same 10% rate would apply to wages, profits, capital gains, dividends, rent, and interest income. No one would be able to claim that billionaires are paying lower tax rates than their secretaries, or that the system is rigged to favor the rich over the middle class.
The corporate income tax would be abolished as well, replaced with a 16% Net Business Tax. That would include immediate expensing, or deductions, for the costs of plant and equipment, and all other capital investment. That promotes investment in worker productivity, which is the foundation of rising wages, and in businesses providing good paying, blue collar jobs, like heavy industry, mining, energy, farming, ranching and manufacturing. But there would be no more corporate welfare, special interest, credits and deductions, or crony socialism, as under the current corporate income tax.
The 16% Business Flat Tax provides sufficient revenue to abolish the payroll tax altogether, with Social Security and Medicare financed in full from these two Cruz flat taxes, with no funding shortfalls. The payroll tax is the biggest tax working people and the middle class pay today, more than the income tax for the bottom 60% of income earners. That provides major tax relief for business as well, particularly the small and medium sized businesses that create most new jobs on net, since both the employer and employee payroll taxes initially come out of the cash flow of businesses.
Cruz's 10% flat tax for families includes a $10,000 standard deduction ($20,000 for couples filing jointly), and a personal exemption of $4,000. That means that the first $36,000 for a family of four is exempt from all significant federal taxes, with no payroll tax any longer. The plan retains the current Child Tax Credit, and increases the Earned Income Tax Credit by 20%, both favoring poor and lower income workers. This new system is consequently rigged to favor the poor and the middle class.
Each worker would also enjoy a Universal Savings Account, where any adult could save $25,000 a year with taxes deferred, like in an IRA, which could be used at any time for any purpose. Cruz's tax reform would also abolish the Death Tax and the Alternative Minimum Tax, as well as the Net Investment Income Tax of 3.8 percent and the Medicare surtax of 0.9 percent, both imposed by Obamacare.
Most families could file their income taxes on a postcard under this Simple Flat Tax, saving taxpayers hundreds of billions in tax compliance and collection costs each year. That means that "we can abolish the Internal Revenue Service as we know it," Cruz rightly argues.
The Tax Foundation scored Cruz's tax reform plan dynamically as increasing capital investment by 43.9%. That would create nearly 5 million new jobs, and grow wages by 12.2%. That would increase real economic growth over the next decade by nearly 14% more than under current tax policies. The after tax income of all workers would increase, by 21.3% on average. Those in the bottom 20% of income would also enjoy after tax income increases, gaining 15.3% on average.
Cruz's business tax would tax imports into the U.S., but exports would be tax free, just like a national sales tax would. That is why such a tax system is permissible under the General Agreement on Tariffs and Trade (GATT), which permits sales taxes. Most of America's trade partners have such a domestically favorable tax system. Cruz's business tax would especially favor American manufacturers, American exporters (including agricultural exporters), and even 100% service companies would be no worse off because the 16% business tax just replaces the 15.3% payroll tax, which again would be abolished. Moreover, the proposal sharply reduces, rather than grows government like a VAT, because it would abolish so many current taxes – the corporate income tax, the payroll tax, the death tax, the Alternative Minimum Tax, the 3.8% Net Investment Income Tax, and the Obamacare Medicare payroll tax increase add on of 0.9%.
Cruz's tax reform plan is not designed to be revenue neutral, because Cruz is running for President to make government smaller, not to raise the same taxes to pay for the same spending. The non-partisan Tax Foundation scores the reform dynamically as a tax cut of $768 billion over the first decade, which is manageable.
Spending Cuts and Balancing the Budget. Cruz has already proposed $500 billion in spending cuts over 10 years, with a plan abolishing four federal departments, plus the Internal Revenue Service, and 25 more named federal agencies. Those include the Departments of Energy, Commerce, Education (sent back to states in block grants), and HUD.
Cruz's budget plan includes sweeping entitlement reform. Cruz has been the indomitable leader in advancing the repeal and replacement of Obamacare. Gone would be the individual mandate, the job killing employer mandate, and all the other unnecessary regulation increasing the costs of health insurance and care. Costs would be further reduced through the market incentives of Health Savings Accounts, consumer choice, and competition. The poor would be better taken care of by block granting Medicaid back to the states, ultimately involving more Health Savings Accounts, consumer choice, and competition. So would coverage for pre-existing conditions. This would save the economy at least another trillion dollars each year.
The enormously successful 1996 welfare reforms can be expanded to all of the $1 trillion a year means tested welfare programs through further block grants to the states. States would have powerful new incentives to promote work for the able bodied particularly among the bottom 20% in income. That would further promote booming economic growth through tidal waves of new labor supply into the economy.
Cruz mentioned at the October debate that he would propose the freedom of each worker to choose a personal savings and investment account to finance future Social Security benefits. The Chief Actuary of Social Security scored a similar plan introduced by Paul Ryan in 2004 and 2005 as generating savings and investment by working people all across America of nearly $8 trillion over the first 15 years, and $16 trillion over 25 years. That would do more to reduce inequality of wealth than everything dreamed up by Hillary Clinton, Bernie Sanders and Elizabeth Warren put together. All that capital investment would create millions more jobs and higher wages, through increased economic growth.
Through a lifetime of savings and investment in those accounts, seniors would earn higher, not lower, benefits, multiples of what Social Security even promises let alone what it could pay. Each would be free to choose their own retirement age, with market incentives to delay it for even higher benefits. This alone would involve the largest reduction in government spending in world history, as Social Security benefits would be financed through private financial markets, rather than the federal budget through tax and spending redistribution.
Reform of Monetary Policy and the Fed. Cruz raised in the October debate as well fundamental reform of the Federal Reserve, to restrict its wild monetary policy discretion by firm rules holding its course to maintaining a stable dollar. He suggested a commission to determine whether that should include a link to gold. Such guaranteed dollar stability would further draw investment from across the entire globe, as investors would know they would be paid back in dollars as good as the dollars they invested. Indeed, as good as gold.
The most important deregulatory policy for creating another economic boom is to unleash the private sector to produce plentiful supplies of low cost energy. That would provide a lower cost foundation for the entire economy, effectively equivalent to another major tax cut.
America enjoys the resources to be the world's number 1 producer of oil, natural gas, and coal. That would involve thousands and thousands of high paying jobs in those industries alone, and trillions over the years in revenues from those industries to federal, state and local governments.
But the reliable low cost energy supplies they produce would create millions of new jobs throughout the entire economy, and ultimately trillions in new revenues due to the economic boom that low cost energy would support. Such low cost energy is critical to manufacturing in particular, which is critical to restoring good paying jobs for blue collar workers.
Due to new breakthroughs in the technology of "fracking" in oil and gas production, private producers have so far overwhelmed Obama's regulatory barriers intended to stop them. In April, 2014, Senator Ted Cruz (R-TX) introduced the American Energy Renaissance Act, providing for comprehensive liberation of energy producers to maximize energy production, job creation and prosperity for America, with a House companion bill introduced by Rep. Jim Bridenstine (R-OK).
The Climate Change narrative supposedly justifying so much of Obama's anti-energy regulation has been thoroughly rebutted by Climate Change Reconsidered II, comprised of three, one-thousand page volumes of objective, dispassionate, non-political, peer reviewed science, published by the Heartland Institute. The climate has changed since the Earth was born, and will continue until the Earth is gone. That change is controlled by natural causes, not by mankind's comparatively puny effects.
Further powerfully pro-growth deregulation would be achieved by Repealing and Replacing Obamacare, and Dodd-Frank runaway overregulation. Cruz also favors the REINS (Regulations of the Executive In Need of Scrutiny) Act, proposed by Senator Rand Paul. That would require approval by both houses of Congress before any regulation from the Executive Branch with an impact on the private sector of $100 million or more could become effective. That would have stopped dead all of the runaway EPA regulation we have seen under Obama.
Complete Pro-Growth Plan
These Cruz economic policies include all the four components of the Reagan economic recovery plan:
--Reduced tax rates to promote economically productive activity;
--Deregulation, to reduce regulatory burdens and barriers on such activity.
--Reduced federal spending, to reduce the federal drain on the private sector;
--Stable dollar monetary policy, to maximize investment from across the globe.
Foreign Policy and National Defense
In the December debate in Las Vegas, Cruz embraced the original Reagan foreign and national defense policies, focusing on advancing America's security interests around the world, rejecting Bush's Neoconservative policies of sacrificing American lives and treasure replacing foreign dictators with human rights, birthing new democracies, or nation building jobs and prosperity in foreign lands.
Or, as Wall Street Journal columnist Bret Stephens explained it on December 15, "[T]he purpose of U.S. foreign policy cannot be to redeem the world's crippled societies through democracy building exercises. Foreign policy is not in the business of making dreams come true-Arab-Israeli peace, Islamic liberalism, climate nirvana, a Russian reset. It's about keeping our nightmares at bay. Today those nightmares are Russian revanchism, Iranian nuclearization, the rise and reach of Islamic State and China's quest to muscle the U.S. out of East Asia."
When Wolf Blitzer asked Cruz at the debate whether his policy would be "to preserve dictatorships, rather than promoting democracy in the Middle East?" Cruz answered by explaining, "I believe in an America first foreign policy, that far too often President Obama and Hillary Clinton – and unfortunately more than a few Republicans – have gotten distracted from the central focus of keeping this country safe….We need to focus on American interests, not on global aspirations."
Cruz later added, in supporting Rand Paul's well-articulated opposition to regime change, "The question of whether we should be toppling dictatorships is asking the wrong question. The focus should be on defeating our enemies. So, for example, a regime we should change is Iran because Iran has declared war on us. But we shouldn't be toppling regimes that are fighting radical Islamic terrorists…." Cruz explained the roots of his foreign and defense policies in Reagan, saying "We need a Commander in Chief who does what Ronald Reagan did with communism, which is he set out a global strategy to defeat Soviet communism. And he directed all of his forces to defeating communism."
Ethanol. Cruz in Iowa bravely spoke out against the corporate welfare scandal of ethanol, which under so-called "Renewable Fuel Standard" regulations, refiners are forced to mix into gasoline, and consumers are consequently forced to buy. Tariffs protect American ethanol producers from foreign competition. American ethanol producers also receive billions in tax credits each year. That consistently reflects the long standing opposition to government bailouts and handouts for private, for profit businesses, by Cruz and his Tea Party base.
It takes almost as much energy to produce a gallon of ethanol as the amount of energy in a gallon of ethanol. About 40% of the U.S. corn crop is used for Ethanol. Hence its appeal in Iowa. It can be produced from sugar cane, as in Brazil, and from other possible foodstuffs.
But burning food for fuel is not wise. The growing production of Ethanol is causing food prices to rise, which quickly forces out of the market the poorest people who need food for food. That effect is felt not only within America, but worldwide, as environmentalists in the West promote so-called "alternative fuels," from America to Europe to South America, to Australia and the Far East. The effect on food prices has caused riots, and even revolutions, in the Third World.
There couldn't be a more crass example of crony socialism. But Trump spoke out in favor of this policy atrocity in Iowa, in an effective attack on Cruz. Now the Ethanol mafia in Iowa is attacking Cruz, led by long time Iowa Governor Terry Bransted. Is the economy of Iowa really dependent on such corporate welfare handouts?
This is a real test for Cruz, the Tea Party, Republican primary voters, and the Evangelical base of those voters in Iowa.
Natural Born Citizen. The U.S. Constitution provides that to be eligible to hold the office of President, a candidate must be a "natural born citizen" of the United States. That language simply means a citizen by birth, as opposed to a citizen by naturalization. Cruz was born in Canada. But his mother at the time was a citizen of the United States, born in America to U.S. citizen parents. So Cruz qualifies to hold the office of President as a "natural born" citizen.
Note that the Immigration and Naturalization Act of 1790, passed by the same Founding Founders who wrote the Constitution in 1787, which was ratified in 1789, stated, "And the children of citizens of the United States that may be born beyond Sea, or outside the limits of the United States, shall be considered as Natural Born citizens." That settles the matter. Some conservative activists who are not even lawyers, insist on playing amateur Supreme Court Justice, and reading the language "natural born citizen" narrowly to require a natural born citizen to be born of two parents who are citizens of the United States. Cruz, whose father at birth was not a U.S. citizen, but a citizen of Cuba, would then not qualify.
But for a conservative activist to read the Constitutional language narrowly, in a way that actual Supreme Court Justices are unlikely to follow, to exclude the most consistently conservative, viable candidate, is perverse. Requiring both parents to be citizens at birth would also exclude Marco Rubio, and Trump himself, whose mother at his birth was not an American citizen, but a citizen of the United Kingdom.
Why would any conservative vote for the erratic Donald Trump, with no grounding in conservative policy or philosophy, and no history of conservatism, when they can vote for one of the sharpest minds ever elected to Congress, the proven political winner Ted Cruz, who has been steeped in conservative policy and philosophy from an early age, and raised with the training and development to be one of the most skilled advocates for conservatism in history? You can't tell where Trump is going to come out on any issue. But you can be sure of where Cruz is going to stand, based on his consistent public record of conservatism.
No one has ever been elected President before who had never previously held public office, except for Generals who led American troops to victory in major wars, such as Dwight Eisenhower and Ulysses S. Grant. It is Donald Trump, a billionaire, career, real estate developer, who would be a perfect foil for the Democrats, who is not qualified to run for President of the United States.
Peter Ferrara is Senior Fellow for Entitlement and Budget Policy at the Heartland Institute, and Senior Policy Advisor to the National Tax Limitation Foundation. He served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under President George H.W. Bush.