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Iowa caucus candidates point to deregulation for job creation

BY ALISON SULLIVAN | DECEMBER 07, 2011 7:20 AM

Candidate Profiles:

Michele Bachmann
Bachmann says she would get rid of "unnecessary" taxes and compliance costs to spur economic growth. She also wants to decrease the number of government employees and increase exports.

Mitt Romney
Romney would reduce regulations, taxes, and spending while increasing trade, energy production, and labor flexibility. Romney said he would also change how the Obama administration creates jobs.

Rick Perry
Perry said he intends to spark American job growth by reducing reliance on foreign oil and energy imports and allow more expansion and exploration of off- and onshore drilling.

Rick Santorum
Santorum supports the 2001 and 2003 income tax cuts signed by President Bush to reduce the tax burden on individuals and businesses.

Jon Huntsman
Huntsman would reduce the burden of corporate taxes, which he says hinder small-business growth. Huntsman would also expand the nation's involvement in global free trade.

Ron Paul
Paul would strip back laws such as the Patient Protection and Affordable Care Act and Dodd-Frank. He would also lower corporate taxes to 15 percent to increase the country's competitive edge in the global market.

Newt Gingrich
Gingrich would decrease taxes and return to Reagan-era fiscal policies. Gingrich says he would seek to create more transparency by reforming the Federal Reserve.

Gary Johnson
Johnson intends to simplify the tax code and slash corporate income taxes.

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Repeal and deregulate.

Those are the solutions many Iowa caucus candidates are saying will spur U.S. job growth.

Federal data show unemployment was at 8.6 percent in November. That's down from 9 percent in October and 9.8 percent a year ago, but still well above the 4 to 5 percent range the country saw before the 2008 recession.

And though experts agree unemployment is a problem, some are unsure if Republican plans for deregulation are the answer.

Several GOP candidates are saying strict government regulations such as "Obamacare" — the Patient Protection and Affordable Care Act signed by President Obama in 2010, most of which has not taken effect — the Frank-Dodd Act, and corporate taxes are contributing to unemployment. This problem, conservatives say, is making entrepreneurs hesitant to spend money and provide additional jobs.

"Right now, [businesses are] flush with cash, and they are afraid to commit it because they don't think the investment environment is stable enough," said Mike Franc, vice president of government studies at the Heritage Foundation.

Republican candidates have provided a variety of measures they expect will better the business environment. Former Utah Gov. Jon Huntsman proposed a reduction in corporate income tax from 35 percent to 25 percent. Rep. Ron Paul, R-Texas, proposed lowering corporate taxes to 15 percent to improve competition in the global market. Paul and former U.S. Sen. Rick Santorum, R-Pa., have both proposed extending the income tax cuts signed by President Bush, which are set to expire in 2013.

Candidates say governmental deregulation will give more economic freedom for small businesses.

"The entrepreneur in America, the small business man and woman, is looking for a president that will say, 'We are going to lower the tax burden on you and lower the regulation impacts on you,' and free them to do what they do best: create jobs," said Texas Gov. Rick Perry at a Politico and NBC-sponsored debate in September.

But regulations are about costs and benefits, and politicians need to consider both, said John Solow a University of Iowa economics associate professor.

"There tends to be winners and losers, and the question that we 'd generally ask is, are the benefits big enough to justify the cost?" Solow said regarding deregulation.

Republicans, he said, tend to focus largely on the cost.

Several candidates have proposed tax plans they say will put more money back into American pockets, as well as corporate tax cuts to promote job growth.

Locally, Iowa City has consistently had a lower unemployment rate than the rest of the country. The most recent data show an unemployment rate of just 4.2 percent, down slightly from 4.5 percent in September.

Kerry Koonce, a spokeswoman for the Iowa Workforce Development, said manufacturing industries create the most jobs in Iowa, along with the agriculture industry.

Iowa has added roughly 2,300 in October and throughout 2011, according to federal data.

"So that's a good thing," Koonce said.

But money isn't the issue for corporations, Solow said. Instead, it's lack of product demand.

"Lower taxes doesn't solve that problem," he said. "It may give [corporations] more money, but if they can't sell their product, they are not going to hire workers to produce the product."

Republicans have also considered terminating several federal agencies, including the Environmental Protection Agency, to spur job growth.

"We need to pass the mother of all repeal bills …" Rep. Michele Bachmann, R-Minn., said at a New Hampshire Republican debate earlier this year. "I would begin with the EPA — there is no other agency like the EPA. It should really be named the job-killing organization."

Alex Keysarr, a professor of history and policy at Harvard University, said treating the EPA as a jobs issue is misleading. Cutting the department, he said, would also include cutting jobs.

"… The basic economic impact is two-fold," Keysarr said. "You'll eliminate those jobs and reduce the deficit and, maybe in the long-run, reduce people's taxes. The largest part is to understand why [it was] created and the consequence if [it didn't] exist."

Some plans, like Perry's, aim to increase job creation through drilling for oil or extracting other traditional energy sources.

"It's very tough, I think, to predict at this stage whether in the energy business to take oil out of the ground in the U.S. is going to be… an advantage or a disadvantage," said Gary Burtless, a senior fellow of economic studies at Brookings Institute.


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