President 2008Rudy Giuliani

Rudy Giuliani Watch: The Meaning of Fiscal Conservatism

Republican presidential hopeful, former New York Mayor Rudy Giuliani, shares a laugh with customers after refusing to sign a Boston Red Sox hat Sunday, Dec. 2, 2007, at the Country View Restaurant in Greenland, N.H.

Rudy Giuliani pens this op-ed piece in the Wall Street Journal today:

With economic uncertainty weighing on the minds of many Americans, Congress is preparing to recess after another year of profligate spending, protectionist talk and promises of higher taxes. No wonder some people feel like we’re moving in the wrong direction. But I’m optimistic as I look to the future. It’s not our country that’s moving in the wrong direction — it’s Congress, and Washington’s culture of wasteful spending.

Over the last decade, nondefense spending has increased by 65% — the federal government currently spends $24,000 per household — while the number of earmarked pork projects rocketed from close to 1,000 to a height of nearly 14,000. This year, with only one appropriations bill enacted, earmarks already number 2,161.

A return to fiscal conservative principles can put America back on the right track, while giving Washington a much-needed dose of discipline.

Fiscal conservatism is based on two fundamental principles — cutting taxes and controlling spending. In recent years, the Republican Party has successfully cut taxes, but we have fallen short when it comes to controlling spending. The next president will need to strengthen both sides of the fiscal conservative equation, while reforming the culture of wasteful government spending with transparency and accountability. I believe I can do it because I’ve done it, and in a place that might even be more difficult than Washington.

We need to keep taxes low for our economy to grow. It’s not just a theory for me. I cut taxes 23 times as mayor of New York City with a Democratic City Council and State Assembly, and saw that lower taxes can result in higher revenue. Amid fears of an economic slowdown, now is the time to cut taxes, not raise them. But the Democratic presidential candidates all seem determined to impose an unprecedented $3 trillion tax hike on the American people.

Republicans have a clearer understanding of how our economy works. This summer, I unveiled my tax plan, which committed to making the 2001 and 2003 tax cuts permanent, while aiming for still-lower marginal rates. We’ll give the death tax the death penalty, index the Alternative Minimum Tax for inflation as a step toward eliminating it entirely, expand tax-free savings accounts, and expand health-care choice through tax reform. We also need to reduce the corporate tax rate — which is currently the second highest in the industrialized world, behind Japan — to at least the average of the other Organization for Economic Cooperation and Development nations, or 28%. These actions will protect American jobs, empowering us to compete and win in the global economy.

Controlling spending must be a chief executive’s priority or it doesn’t get done. That’s a lesson I learned from Ronald Reagan, and put into action when I was mayor. Real per capita spending actually fell during my administration. We cut the city bureaucracy by 20%, excluding cops on the street and teachers in the classroom.

We can do the same thing in Washington. Over the course of the next two terms, 42% of the federal civilian workforce is due to retire. We’ll only hire back half, taking the opportunity to right-size government by taking advantage of technology like the private sector did in recent years, and ultimately save taxpayers $21 billion annually.

We also need to return to spending controls and caps, a proven way to make Washington set priorities. As president, I will direct all federal agency heads to find 5% to 10% efficiency savings. If they come back to me and say it’s impossible to find 5% savings in a $2 billion agency, I’ll call on the Office of Management and Budget to identify the cuts. It’s time to put the “M” back in OMB.

Reforming a culture of wasteful spending requires standing up to special interests and insisting on transparency and accountability. Congress spent $29 billion on earmarks last year alone. Earmarks are the broken windows of the federal budget, signs of dysfunction and distress. Recent examples range from the absurd ($1.1 million in 2005 for researching baby food made from salmon) to the self-congratulatory ($2 million for the Charles B. Rangel Center for Public Service). The American people want us to end earmarks once and for all.

But more needs to be done. We need to root out wasteful spending and fraud in benefit payments and contracts by convening a Government Waste Commission, such as the one that closed military bases. It can require Congress to vote up or down on a whole package of recommended cuts, beginning by considering the 3% of programs currently rated “ineffective” by the federal government itself.

Finally, we can both save money and provide better services by consolidating duplicative programs. We don’t need 342 economic development programs or 130 programs serving at risk youth or 72 federal programs dedicated to ensuring safe water (according to a 2004 report). No doubt many of these programs are worthy, but citizens shouldn’t have to navigate a maze of overlapping bureaucracies. Digital one-stop-shop centers will provide better citizen service at lower cost, while transforming industrial age bureaucracies to fit the information-age citizen.

Returning to principles of fiscal conservatism is not an end to itself. We believe these ideas ultimately help government work better for all Americans. Cutting taxes and controlling spending creates a government that is smaller and smarter, more efficient and more effective. It can help balance the budget and reduce the deficit. Most of all, a healthy combination of pro-growth policies and fiscal discipline unleashes the genius of America’s free-market economy — empowering not government, but the citizens it exists to serve.



Here is Rudy yesterday in Georgia where Rudy told them about his optimistic vision for keeping America on offense in the Terrorists’ War on Us, securing our borders, and leading America toward energy independence.


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6 thoughts on “Rudy Giuliani Watch: The Meaning of Fiscal Conservatism

  1. “We need to keep taxes low for our economy to grow. It’s not just a theory for me. I cut taxes 23 times as mayor of New York City with a Democratic City Council and State Assembly, and saw that lower taxes can result in higher revenue.”

    Sorry, but this supply-side rhetoric has been almost completely discredited.

    Bill Clinton raised taxes, and we know what happened to the economy. And it was not coincidental: Clinton took a big risk by committing to balancing the budget, hoping that it would raise bond prices and lower long-term interest rates, which is exactly what happened.

    In any case, see for yourself the publication by the Congressional Budget Office in December 2005, Analyzing the Economic and Budgetary Effects of a 10 Percent Cut in Income Tax Rates, which concluded that only 28% of the lost revenue would be made up by supply-side effects.
    (And that was under the best assumption, which required the foreknowledge that the budget would be stabilized with tax *increases* after 10 years.)

  2. I cannot say what the Mayor’s experience was in New York City but lower taxes will spur economic growth.

    But, you have to rein in spending. Something that President Bush and the GOP Congress did not do.

    Clinton cut spending in defense and used the end of the Cold War “Peace Dividend” to balance his books.

    And, don’t forget the Clinton recession during the first year of Bush’s term before his tax cuts spurred the economy.

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