Rick Perry announces economic plan in bid to revive campaign

In a new attempt to reboot his troubled presidential candidacy, Texas Gov. Rick Perry proposed an economic plan Tuesday that would dramatically lower taxes on the wealthy, sanction private Social Security accounts and deeply slash federal spending on domestic programs.

The Republican governor’s proposal would give Americans the option of paying a 20% tax or keeping their current rate, which now rises to 35% for the most wealthy. Perry also would eliminate a variety of taxes that mainly affect the rich, as well as the income tax on Social Security payments, which would benefit millions of retirees.

Perry told reporters he didn’t “have a problem in the world” if his plan would deliver millions of dollars to the richest taxpayers, and that he assumed they would use the windfall to create jobs. He also dismissed criticisms that the plan would widen the federal deficit.

For Perry, the presentation of his economic proposal was an effort to change the subject after weeks in which his faltering debate performances have derailed his campaign. But the day’s announcement was sidetracked in part by Perry’s refusal to dismiss questions he has raised about President Obama’s citizenship.


At a news conference, he dodged when asked whether he believed Obama was born in the United States. Perry said lingering doubts about Obama’s birth certificate were nothing more than a distraction. But in an interview Monday night he called it “a good issue to keep alive.”

“It’s fun to poke him a little bit and say, ‘Hey, let’s see your grades and your birth certificate.’ I don’t have a clue about where the president — and what this birth certificate says. But it’s also a great distraction. I’m not distracted by it,” Perry told CNBC’s John Harwood.

The TV interview was conducted one day after release of a Parade magazine interview in which Perry said he could not say definitively that Obama was U.S.-born. And he quoted businessman Donald Trump, a tea party favorite whose endorsement is being sought by the GOP candidates, as saying that the Hawaii birth certificate Obama released in April wasn’t real.

Perry’s economic announcement came as he sought to bolster his campaign by hiring a raft of new consultants. One of the additions is Austin, Texas, lobbyist Joe Allbaugh, a tight-fisted manager who helped run George W. Bush’s 2000 presidential campaign.

The plan announced Tuesday threaded between those already released by other GOP candidates — including the simple “9-9-9" plan by businessman Herman Cain that would shrink income and corporate taxes to single digits while enacting a national sales tax, and the 59-point economic plan set out by former Massachusetts Gov. Mitt Romney.

Before an invited audience of 150 South Carolina supporters, Perry called his tax proposal “the kind of bold reform that is needed to jolt this economy out of the doldrums.”

Perry said he would balance the federal budget by 2020 by spurring economic growth, cutting discretionary federal spending by at least $100 billion a year, and overhauling Social Security, Medicare and Medicaid, three of the main drivers of future deficits. As an example of where he would cut, Perry said federal spending for elementary and secondary education could immediately be halved, saving $25 billion.

Peter Morici, a conservative economist at the University of Maryland, said the plan “falls short in two important respects: It won’t encourage many better investment decisions and foster growth, and it will spin the federal deficit permanently into the stratosphere.”


He estimated that Perry’s plan would cost the federal government $900 billion a year in lost revenue. A Perry economic policy advisor, Sean Davis, said the campaign could not provide a projection of the potential revenue loss and would leave those estimates to others.

The announcement, at a plastics factory on the outskirts of Greenville, S.C., was part of a brief swing through the first Southern primary state, which is essential to Perry’s hopes of going head-to-head with Romney in later contests.

The latest polls suggest that GOP voters have largely tuned Perry out after initially greeting his candidacy with a burst of enthusiasm. A Perry campaign advisor, asked how the Texan would turn things around, replied simply, "$15 million” — the sum in the governor’s campaign account. Perry is expected to start spending it this week on TV ads in Iowa.

In a sign of his changed circumstances in the GOP contest, Perry took a jab at Cain, who has replaced him as the favorite of tea party Republicans. Unlike Cain’s proposed national sales tax, Perry said, his plan would not “expand the ways Washington can reach into our pocketbooks.”


Perry’s proposal would continue mortgage interest, charitable, and state and local tax deductions for families earning less than $500,000 annually. The standard deduction would be increased to $12,500 for individuals and dependents.

His plan builds on tax proposals of other conservatives over the last two decades, including that of Republican presidential candidate Steve Forbes, who made it the centerpiece of his 1996 and 2000 runs for the Republican presidential nomination and is now advising Perry.

A spokesman for the Obama campaign, Ben LaBolt, criticized Perry’s and Romney’s plans for shifting “a greater share of taxes away from large corporations and the wealthiest onto the backs of the middle class. The belief that middle-class Americans will benefit if we just give another special break to those at the top was long ago discredited.”