Rick Santorum showed surprising strength in yesterday’s Republican contests in Minnesoto, Colorado, and Missouri. Santorum won in the caucuses held in Minnesoto and Colorado, as well as the non-binding primary in Missouri. Santorum won three out of three yesterday—a very good day for the Santorum campaign.
Although Romney is still the favorite to win the Republican nomination for president, his appeal to conservatives in the party was clearly lacking in yesterday’s contests. Also, Santorum has benefited from the attacks of the Romney supporters on Newt Gingrich since the South Carolina primary.
But, what if Romney loses momentum, and Santorum wins the Republican nomination. And then, Santorum defeats President Obama in the general election in November. What would a President Santorum mean for the US economy?
It appears that Santorum’s plan for reviving the US economy would include: lowering taxes; a balanced budget amendment; more new free trade agreements; secure the border, while allowing more highly-skilled workers to immigrate; and reform the agricultural worker program for our farmers.
In today’s economy, lowering taxes will not do much to improve our economy, and will not create many, if any, new jobs. Actually, cutting taxes will increase our federal deficit if we continue our present spending rate.
Traditionally, reducing taxes was one way to stimulate the economy and create more jobs. When taxes were reduced, companies and people had more money to spend. With less taxes to pay, companies could afford to build more factories, invest in more research, develop new products, etc. Companies would hire workers to build the new factories, work in the factories, do the research, and develop the new products.
And these newly hired workers would spend their money on goods, creating even more demand for goods produced by our factories. As people increased their spending and purchased more goods, our factories would have to hire even more workers to meet the increased demand.
But, things are different now. The factories are in China, and if we are allowed to keep out tax money and buy more factory goods, more workers are hired in China. The money then recirculates throughout the Chinese economy, not the American economy.
Also, Santorum wants to lower the tax on manufacturers to zero. While this would help some, it would not be enough to offset the lower wages paid to Chinese and third-world workers. And, it would increase our federal deficit even more. Also, if applied to all manufacturers, such as pharmaceutical companies, it would be a huge tax reduction for the big corporations.
Santorum’s plan to reduce taxes may have helped our economy in the 1950s, but it won’t help us today.
And the Balanced Budget Amendment would be not help our present economy. While it is true that we cannot continue to run massive budget deficits as we have for the past three years, our economy is too sick to handle the necessary trillion dollar tax increases or trillion dollar budgets cuts needed to balance the budget.
And, if we cut taxes and balanced our budget, as proposed by Santorum, it would cause our economy to go into a depression, as our present trillion dollar annual deficits would no longer prop up our declining economy.
And securing the border would help keep out the illegal workers who are putting tremendous pressure on the wages paid to entry-level workers and taking millions of jobs from American workers. But, if Santorum puts in place a streamlined way to attract highly skilled immigrants, it would bring in more workers to compete with the unemployed American workers.
And to reform the agricultural worker program so it “works for America’s farmers” sounds like a legal way to bring in low-wage foreign workers who would take jobs from America’s unskilled workers. It would also lower the wages paid to the unskilled workers by the farmers, since increasing the competition would lower the wages an employer would have to pay for unskilled workers.
Santorum wants to bring in more foreign workers, skilled and unskilled, to take jobs from American workers. Also, it would put downward pressure on wages paid to American workers who do have jobs.
It appears that a President Santorum would not take the strong action needed to bring our factories and jobs back from China. It would essentially be more business-as-usual with even more Free Trade agreements. He would continue to support the Free Trade agenda promoted by Clinton, Bush, and Obama.